Inflation

Since the early 1990s, inflation (measured as the ratio of the amount of money needed to buy something in one year, to the amount of money needed to buy it in a reference year), at least in the United States, appears to have been approximately proportional to the cube root of the difference between the maximum amount of resources and the amount of remaining resources.

If this relationship turns out to be a general one, then it has several major implications for the interaction between consumption and population. For one, it could explain how people sense the direction and magnitude of change in resources that appears to be attenuating the rate of population growth (if the cost of things is increasing, couples may be less inclined to have kids). Another major implication is that inflation, along with population, could be used as a tool for making economic adjustments that could maximize long term survival.

Under business as usual conditions, my population-consumption model projects that the annual change in inflation will fall from this year’s estimated 3.7 percent (from last year) to 2.0 percent by the population peak in 2020 and below 0.1 soon after the beginning of the next century. If we keep per capita consumption constant and create renewable resources (consuming fewer non-renewable resources as a consequence), inflation will decrease more rapidly while population levels off. If we increase total resources and consumption along with it, inflation will increase almost linearly while population increases exponentially.