No one said that price deflation is painless.

It is just the outcome you get when you play around with The Money System the way that our dear friend Alan Greenspan did at The FED for 19 years.

It does not much matter what unions do. Sure wages are “downward sticky”. That is why unemployment does not go down very quickly given the sticky residue and mess of A Broken Money System that Alan Greenspan left behind himself when he left The FED.

If there is resistance to adjusting wages when prices fall, unemployment will stay unnecessarily high for an unnecessarily long time.

And yes, a lot of people will go broke because their debt will increase in real terms. Who’s to blame?

Most importantly, ask yourself whether it was moral for Savers and Lenders to, for so long, subsidize The Borrowing Class? (That subsidization, by the way, continues today, with The FED orchestrating even lower interest rates than our dear Alan did!)

In any case you really don’t have to worry —— our dear Doctor Ben Bernanke has indicated that he feels Price Deflation is to be avoided at all costs —— “IT” will never be allowed to happen, so long as The Great Doctor is our Helmsman at The FED.

Deflation: Making Sure “It” Doesn’t Happen Here

No one said that price deflation is painless.

It is just the outcome you get when you play around with The Money System the way that our dear friend Alan Greenspan did at The FED for 19 years.

It does not much matter what unions do. Sure wages are “downward sticky”. That is why unemployment does not go down very quickly given the sticky residue and mess of A Broken Money System that Alan Greenspan left behind himself when he left The FED.

If there is resistance to adjusting wages when prices fall, unemployment will stay unnecessarily high for an unnecessarily long time.

And yes, a lot of people will go broke because their debt will increase in real terms. Who’s to blame?

Most importantly, ask yourself whether it was moral for Savers and Lenders to, for so long, subsidize The Borrowing Class? (That subsidization, by the way, continues today, with The FED orchestrating even lower interest rates than our dear Alan did!)

In any case you really don’t have to worry —- our dear Doctor Ben Bernanke has indicated that he feels Price Deflation is to be avoided at all costs —- “IT” will never be allowed to happen, so long as The Great Doctor is our Helmsman at The FED.

Deflation: Making Sure “It” Doesn’t Happen Here

WELL SAID! Thanks.

Please see another way how The FED, and the Banking Cartel it operates, steal The Wealth of The People in a well-written essay by Jeffrey Sachs:

Rob rich bankers and give money to the poor

Also more at

Economic freedom and the end of poverty

those interested in deflation should read bagus’ overview of various perspectives on deflation by prominent austrians, and their various inconsistencies.
http://mises.org/journals/qjae/pdf/qjae6_4_3.pdf

Oh, if only to be able to have to give $200 for a new 1920-s car (or even $200-equivalent in today’s dollars = approx. perhaps $4,000) — what THAT car would be worth today! I can picture Jay Leno already formulating the offer-price for his bid.

Same goes for the Ferrari.

Of course those items would show the value attributed due to the scarcity of supply of such mint-condition ‘antique’ automobiles in today’s world.

What bothers me about the ‘ruling’ administrators, managers, and bureaucrats, is that they all tend to assume that the future will behave like the past.

That is, that we can all expect technological progress to continue in the same manner over the next 50 years as it has proceeded in the past 50.

But I should not really be surprised because this is human nature.

But if you or I think this way, it does not much matter —— we are just expressing our ideas in forums like this. What saddens me is that the decision-makers hold the fate and wellbeing of many millions of people in their hands when they make such assumptions.

That such management-types seem ignorant of their responsibilities (or at least seem so, given some of their past behavior and decision-making) is what is so tragic. They, of all people, cannot afford to be making assumptions about the strength or direction of that future wind as if it were a given —— because that is exactly what they (e.g. The FED) are doing.

This haunts me, because I think I have a pretty good idea what will happen if and when such progress does not materialize.

In fact an argument not often made (or at least not promulgated in most forums) is how the ‘Expediency’ Approach to Money Management that The FED takes (along with many other institutions in the West) actually hinders technological progress.

It seems rather strongly possible that there is a logical argument to make that when central banks manipulate the money (Money-Pulation) and thereby send False Signals to entrepreneurs and others in the Marketplace, and thereby force the creation of malinvestments, that they are also thereby skewing the future road to be taken for Technological Advancement.

That is, if they screw up how the economy should work, they are also changing how technology would most optimally unfold in its development to meet the needs of a more naturally (unforced) developing overall Economy.

Ye of little faith. Everyone knows that govt creates wealth from…uh…umm…have a little faith, damnit!

Trade benefits all. Unemployment is from minimum wage laws, high taxes, regulations and counterfeit govt money and bank credit stealing limited resources to fund unsustainable investments. When the unsustainable investments pop the market’s return to equilibrium includes temporary unemployment. Increasing prices and decreasing exports with protectionism will decrease jobs. You reach for a gun because your mind is empty. Protectionism was refuted by Adam Smith in 1776 (and maybe by earlier economists). That early prosperous and free trade zone called the Roman Empire is an application of free trade. Self-sufficient farms are not prosperity. The basic problem is production, not jobs. We can have full employment by banning machines and accepting slavery.

Yes, Mises notes that statistics can mask economic law. BTW, some prices has greatly increased. Average 1920s cars were $200. 1960s Ferraris were $12000! 1950s ice cream cones were 7 cents.

You are correct that re-inflation is not sound money, but neither is deflation. Sound money to Mises was neither inflation nor deflation. See my comment to Shay below.