Thursday, March 14, 2013

The 5 Senses and Pi

March 14th. Happy Pi Day! You know, pi. The ratio of a circle's circumference to its diameter? 3.14....

Economists don't usually interact with the number pi that much. To us, pi is inflation or profits or probabilities. Maybe macro people use the number pi, but not that often.

Here's what pi looks like (using the CPI):

Notice that dip in 2009? First time we've had deflation in a long time. Inflation was kept in check from 2007- present partially because of the decline in housing prices. Since CPI uses a basket of goods that consumers purchased, and housing services makes up a big portion of that, downward pressure on housing prices actually makes housing services cheaper reducing inflation!

Here's what pi sounds like (to 31 decimal places; video embedded below):

Doesn't that make you feel good? You know what pi smells and tastes like. Pie. Any kind will do.

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