Could you cite your sources? Because I can find several sources that make that unmarked graph suspicious.
@uju32 handled that, but I think there's something just as pressing we need to touch on here.
Do you not understand the difference between a year-on-year inflation graph, and a graph of the change in the CPI? Because acting like showing the CPI refutes a year-on-year graph of inflation suggests that might not be the case.
You can literally see my graph in your one. The Civil War shows a spike lined up with the spike of 25% inflation on my graph, and then the graph falls down again because of a period of deflation that basically lasts all the way up to 1900. And then on your graph, the CPI picks up again as on my graph you get a period of inflation past 1900.
And that's
awful. You know why there was an extended period of deflation in the late 19th century? Because of both economic growth which meant the economy was growing faster than the money supply (that's bad and a fundamental flaw of non-fiat currencies), and
also financial instability. The Panic of 1837 caused deflation which lasted until 1844, and the Panic of 1873 caused the Long Depression which lasted until 1879, to name just two of the incidents.
If your axes weren't skewed by the influence of decades of constant low levels of inflation, the "flat bit" wouldn't look so flat. But because of constant low levels of inflation, you get a "hockey stick" of exponential growth. That is because fiat money - and modern economic theory - cares not one whit for "an apple costs the same now as it did 100 years ago", and in fact
wants a low level of inflation because it stops people sitting on their money, saving it and doing nothing useful with it. Because hoarding money - as people do when there's deflation - is poisonous. Complaining that a low level of inflation stops hoarders from poisoning the economy by sitting on money and doing nothing with it is valueless.
To bring things back to Exalted, therefore, there's going to be tension between the more mercantile Realm Houses (V'neef, Peleps, Cynis), the bankers of Ragara, and the others. Ragara
wants deflation because they're creditors - the mercantile houses, by contrast, want funding and loans for their ventures and a low level of inflation serves to both make credit cheaper (because money that's loaned out is earning for itself) and also makes ventures less risky. The same applies to the Realm itself - the Scarlet has an interest in inflation when it serves to pay down the debts from a war where insufficient plunder was gained to pay for itself, but it is also a holder of large amounts of currency and deflation makes the Imperial purse more valuable.
Indeed, from the Throne's PoV, a deflationary period is the perfect time to start a new war as the Imperial Purse has benefited from that and the gains from that can be used to fund conquests. Of course, amusingly enough that's de facto counter-cyclic spending that'll be inflationary as the money that's sitting in the Imperial Purse doing nothing but gathering dust is spent on soldiers and salaries and equipment. Swings like that help the Scarlet.
The common folk, on the other hand, are
super sensitive to spikes in inflation, because they effectively get the mainstay of their income from their harvests and sudden price rises produce immediate pain because the next payment isn't coming in until next harvest. As a result, instability in the inflation rate will cause peasant rebellions (also, lynching of tax collectors and then throwing the body down a canyon making it look like there was a landslide).
