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Posted: **Wed Mar 17, 2004 9:26 am**

Here are the inflation rate, interest rate of commercial paper and dividend yields of stocks (as represented by the S&P500 index). I have included the overall composite of interest plus dividends for stock allocations of 25%, 50% and 75% stocks as well.

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Year  Inflation  Interest  25%     50%     75% Dividends
1871                  
1872     1.53    7.81      7.21    6.61    6.02    5.42
1873     2.26    8.35      7.74    7.13    6.53    5.92
1874    (4.41)   6.86      6.92    6.97    7.03    7.08
1875    (6.92)   4.96      5.52    6.09    6.65    7.21
1876    (5.79)   5.33      5.68    6.03    6.38    6.73
1877     0.88    5.03      5.82    6.61    7.40    8.19
1878   (15.65)   4.9       5.13    5.36    5.59    5.82
1879   (10.31)   4.25      4.46    4.66    4.87    5.08
1880    20.69    5.1       4.83    4.56    4.28    4.01
1881    (5.71)   4.79      4.66    4.54    4.41    4.28
1882     8.08    5.26      5.30    5.33    5.37    5.41
1883    (1.87)   5.35      5.39    5.44    5.48    5.52
1884    (7.62)   5.65      5.82    5.99    6.17    6.34
1885   (10.31)   4.22      4.96    5.70    6.44    7.17
1886    (3.45)   4.26      4.34    4.42    4.50    4.58
1887     0.00    6.11      5.58    5.05    4.52    3.99
1888     4.76    5.02      4.93    4.85    4.76    4.68
1889    (4.55)   4.68      4.60    4.53    4.45    4.37
1890    (4.76)   5.41      5.08    4.75    4.42    4.09
1891     2.50    5.97      5.61    5.26    4.90    4.55
1892    (6.10)   3.93      3.95    3.98    4.00    4.02
1893     7.79    8.52      7.46    6.41    5.35    4.29
1894   (13.25)   3.32      3.92    4.52    5.11    5.71
1895    (4.17)   3.09      3.54    4.00    4.45    4.90
1896     1.45    5.76      5.43    5.10    4.76    4.43
1897    (2.86)   3.44      3.65    3.85    4.06    4.27
1898     2.94    3.55      3.59    3.64    3.68    3.72
1899     1.43    3.36      3.35    3.33    3.32    3.30
1900    16.90    4.64      4.37    4.10    3.83    3.57

Posted: **Wed Mar 17, 2004 9:30 am**

Code: Select all

Year  Inflation Interest   25%    50%    75%  Dividends
1901   (2.41)   4.3       4.29    4.28    4.28    4.27
1902    2.47    4.72      4.53    4.34    4.14    3.95
1903    9.64    5.5       5.11    4.71    4.32    3.92
1904   (4.40)   4.34      4.55    4.77    4.98    5.19
1905    2.30    4.17      4.05    3.93    3.82    3.70
1906    0.00    5.47      4.95    4.44    3.92    3.40
1907    4.49    6.23      5.73    5.22    4.72    4.22
1908   (2.15)   5.32      5.58    5.85    6.11    6.38
1909    3.30    3.65      3.85    4.05    4.25    4.45
1910   10.64    5.26      5.04    4.82    4.61    4.39
1911   (6.73)    4        4.27    4.54    4.80    5.07
1912   (1.03)   4.35      4.55    4.76    4.96    5.16
1913    7.29    5.65      5.53    5.41    5.28    5.16
1914    2.04    4.64      4.90    5.16    5.42    5.68
1915    1.00    3.65      4.14    4.64    5.13    5.63
1916    2.97    3.64      3.91    4.18    4.45    4.72
1917   12.50    4.25      4.68    5.11    5.54    5.96
1918   19.66    5.98      6.84    7.71    8.57    9.43
1919   17.86    5.56      5.97    6.39    6.80    7.22
1920   16.97    7.3       6.97    6.64    6.31    5.98

Posted: **Wed Mar 17, 2004 9:35 am**

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Year Inflation Interest     25%    50%    75%   Dividends
1921    (1.55)   7.44      7.36    7.28    7.20    7.11
1922   (11.05)   4.58      5.02    5.47    5.91    6.36
1923    (0.59)   4.96      5.16    5.35    5.55    5.75
1924     2.98    4.34      4.76    5.18    5.60    6.02
1925     0.00    3.87      4.21    4.55    4.90    5.24
1926     3.47    4.28      4.41    4.54    4.67    4.80
1927    (2.23)   4.26      4.49    4.73    4.96    5.20
1928    (1.14)   4.64      4.59    4.54    4.48    4.43
1929    (1.16)   6.01      5.37    4.73    4.10    3.46
1930     0.00    4.15      4.23    4.31    4.39    4.47
1931    (7.02)   2.43      3.33    4.24    5.14    6.05
1932   (10.06)   3.36      4.91    6.46    8.01    9.56
1933    (9.79)   1.46      2.84    4.22    5.60    6.98
1934     2.33    1.01      1.80    2.60    3.39    4.18
1935     3.03    0.75      1.78    2.80    3.83    4.86
1936     1.47    0.75      1.43    2.12    2.80    3.49
1937     2.17    0.88      1.70    2.52    3.33    4.15
1938     0.71    0.88      2.41    3.95    5.48    7.01
1939    (1.41)   0.56      1.45    2.33    3.22    4.11
1940    (0.71)   0.56      1.69    2.81    3.94    5.07
1941     1.44    0.53      1.99    3.46    4.92    6.38
1942    11.35    0.63      2.44    4.25    6.06    7.88
1943     7.64    0.69      1.98    3.27    4.56    5.85
1944     2.96    0.72      1.83    2.95    4.06    5.18
1945     2.30    0.75      1.75    2.76    3.76    4.77
1946     2.25    0.76      1.49    2.23    2.96    3.70
1947    18.13    1.01      1.93    2.85    3.77    4.69
1948    10.23    1.35      2.43    3.52    4.60    5.69
1949     1.27    1.58      2.73    3.87    5.02    6.16
1950    (2.08)   1.32      2.69    4.07    5.44    6.81

Posted: **Wed Mar 17, 2004 9:38 am**

Code: Select all

Year Inflation Interest  25%    50%     75%  Dividends
1951    8.09     2.12   3.34    4.56    5.79    7.01
1952    4.33     2.39   3.25    4.12    4.98    5.84
1953    0.38     2.58   3.28    3.98    4.68    5.39
1954    1.13      1.8   2.78    3.76    4.74    5.72
1955   (0.74)    1.81   2.44    3.08    3.71    4.34
1956    0.37     3.21   3.35    3.50    3.64    3.78
1957    2.99     3.86   3.85    3.84    3.83    3.82
1958    3.62     2.54   2.99    3.44    3.89    4.34
1959    1.40     3.74   3.59    3.45    3.30    3.16
1960    1.03     4.28   4.01    3.75    3.48    3.22
1961    1.71     2.91   3.00    3.08    3.17    3.26
1962    0.67     3.39   3.28    3.16    3.05    2.93
1963    1.33      3.5   3.45    3.39    3.34    3.28
1964    1.64     4.09   3.82    3.55    3.28    3.00
1965    0.97     4.46   4.08    3.69    3.31    2.92
1966    1.92     5.44   4.81    4.19    3.56    2.94
1967    3.46     5.55   5.02    4.48    3.95    3.41
1968    3.65     6.17   5.40    4.63    3.85    3.08
1969    4.40     8.05   6.79    5.53    4.28    3.02
1970    6.18     9.11   7.71    6.31    4.90    3.50
1971    5.29     5.66   5.08    4.50    3.93    3.35
1972    3.27     4.62   4.21    3.80    3.38    2.97
1973    3.65     7.93   6.61    5.30    3.98    2.67
1974    9.39    11.03   9.16    7.28    5.41    3.54
1975   11.80     7.24   6.68    6.12    5.56    4.99
1976    6.72      5.7   5.23    4.75    4.28    3.80
1977    5.22     5.28   4.95    4.61    4.28    3.95
1978    6.84     7.78   7.14    6.50    5.86    5.22
1979    9.28    10.88   9.44    8.00    6.57    5.13
1980   13.91    11.37   9.81    8.25    6.70    5.14

Posted: **Wed Mar 17, 2004 9:45 am**

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Year Inflation Interest    25%      50%      75% Dividends
1981   11.83     17.63   14.39    11.15    7.90    4.66
1982    8.39      14.6   12.37    10.14    7.91    5.68
1983    3.71      9.37    8.22     7.07    5.92    4.77
1984    4.19     11.11    9.40     7.69    5.99    4.28
1985    3.53      8.35    7.37     6.38    5.40    4.41
1986    3.89      7.31    6.44     5.56    4.69    3.81
1987    1.46      6.25    5.47     4.69    3.92    3.14
1988    4.05      7.63    6.61     5.58    4.56    3.54
1989    4.67      9.29    7.83     6.36    4.90    3.44
1990    5.20      8.43    7.14     5.85    4.57    3.28
1991    5.65      6.92    6.12     5.32    4.52    3.72
1992    2.60      3.91    3.67     3.43    3.18    2.94
1993    3.26      3.44    3.29     3.15    3.00    2.85
1994    2.52      4.35    3.93     3.51    3.09    2.67
1995    2.80      6.45    5.55     4.64    3.74    2.83
1996    2.73      5.68    4.83     3.97    3.12    2.26
1997    3.04      5.78    4.82     3.87    2.91    1.95
1998    1.57      5.49    4.52     3.55    2.58    1.61
1999    1.67      5.14    4.18     3.22    2.26    1.30
2000    2.68      6.22    4.96     3.70    2.43    1.17
2001    3.14      3.95    3.27     2.59    1.90    1.22
2002    1.78      1.76    1.67     1.57    1.48    1.38

These tables help you place stock market behavior into context. Notice that commercial paper interest rates stayed high long after inflation had peaked.

Have fun.

John R.

Posted: **Wed Mar 17, 2004 8:01 pm**

Notice that commercial paper interest rates stayed high long after inflation had peaked.

I notice also that rates stayed too low long after inflation had risen. This may be a bit ominious if the inflation that the fed is deliberately trying to engineer gets a bit out of control. I remember reading that Weimar Republic officials were only trying to engineer a small amount of inflation, but wound up competely destroying their currency.

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Interest and Dividends

Interest and Dividends