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The author calls this statement by Rothbard "shocking and typically blind": "In a developing free-market economy unhampered by government-induced increases in
by dpatru 16y ago
The author calls this statement by Rothbard "shocking and typically blind":
"In a developing free-market economy unhampered by government-induced increases in the money supply, prices will generally fall as the supply of goods and services expands. And falling prices and costs were indeed the welcome hallmark of industrial expansion during most of the nineteenth century." Planning for Freedom, p.247
The author explains that falling prices of this sort "exhibits an exponential process of sorts when it is rapid . . . . As the currency becomes more valuable, it gets horded, and less is used for economic activity or lent out. What is the point if just holding it gets you regular returns? Less exchange leads to more deflation, and the system seizes up with nothing happening, unemployment prevalent, and no easy way out."
So, to recap, the author seems to think that technological progress resulting in greater societal wealth and lower prices result in "nothing happening" and "unemployment prevalent."
- philwelch 16y agoYou're being massively dishonest if you're going to conflate "technological progress resulting in greater societal wealth and lower prices" with "monetary deflation". In fact, looking at some historical inflation data (http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=0 http://inflationdata.com/inflation/Inflation_Rate/Historical...), monetary inflation tends to correlate with technological process and economic growth, while monetary deflation tends to correlate with recessions and depressions. A growing economy paired with a fixed monetary base, incidentally, will end up resulting in monetary deflation, which will more likely than not put an end to the growing economy. That was the author's point, and it's borne out by historical data as well as nearly all contemporary economic theories (including, perhaps to the author's surprise, the theories of Milton Friedman himself).