Inflation and the Returns to Investors

An unparallelled record of.growth and achievement has been established by the American economy in the past hundred years. Through peace and war, through prosperity and depression, through inflation and deflation, the economy has moved ahead at an average rate of 3.5 per cent a year. At this rate, the production of real goods and services doubles every twenty years; every decade American industry turns out fifty per cent more than in the previous ten years.

No other nation has matched, or even approached, this long-term record. Some countries have had exceptional high growth rates for short periods, and some have maintained these rates for a decade or more. West Germany and Japan provide examples of the enormous changes in living standards that become available within a generation by sustained growth at the rate of 10% a year or more. These achievements, impressive as they are, are brought into perspective when we compare the German and Japanese economies to the-U. S. economy and realize that at current rates of real growth in the three countries, we add the equivalent of Germany's or Japan's total output to our own every few years.