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I think the main reason behind the better economic situation in the 1871-1914 period was not a deflationary economy, but the steady increase in factory output -

I think the main reason behind the better economic situation in the 1871-1914 period was not a deflationary economy, but the steady increase in factory output -- the industrialization was on its height -- and medical knowledge -- proper sanitation, proper medical procedures, hygiene. Add to that the benefits Europe and the US reaped from colonial imperialism: the "masses" gained access to commodities like sugar, tea, coffee but also cheap alcohol and opium. Usually it was not a gradual improvement in the lifes of common people from poor farmers to well-off middle class. By far the most people not employed in the agrarian sector were working class (working in factories, mines, etc.) and their situation was, compared to today, a hellish nightmare: overcrowded slums, poor access to water and medicine, unstable food-supply. These conditions only improved slightly by the end of that period, usually out of pressure/fear of socialist/communist mass agitation. ----- You are right, the life of most people living in that time period improved significantly. But I would say despite of a deflationary economy, not because of it. And only a minimal percentage of those were middle class.

lawn 7y ago
Couldn't you use the same argument against inflation as well? That the improved life and economic growth in the 20th and 21th centuries have been driven by technological advances, and not by the inflationary economy?
- bboygravity 7y ago
  Yes and no. Yes, technological advances have improved life and have allowed economic growth. No. Society as it is currently could not have been financed by those things alone. Massive loans that cannot and will not ever be paid back cannot exist without an inflationary economy (powered by fiat currency with no limit to currency supply and fractional reserve banking). And those types of loans and the inflationary economy have been crucial for the US/The West to attain and maintain their world domination politically, economically and militarily. That's where the term "military industrial complex" comes from. Nixon moved away from the gold standard for a reason: the US was unable to afford its wars (Vietnam at the time) and keep its military happy and in check without an inflationary economy. Inflationary economy = massive free buying power out of thin air for whoever controls the world currency, until they control the world currency no more and an empire falls. Again: I'm no expert at all, this is just my limited understanding.
  - lawn 7y ago
    That is a good point, particularly your ending that it's for those who control the world currency... Until they fail. But did that really improve the lives for people globally? Couldn't it be seen as a global redistribution of wealth, from countries who used the USD to the U.S? If you were cynical you might even say the U.S. robbed the other countries. I wouldn't be so sure to conclude that inflation has allowed economic growth from your example, but more a redistribution of one.

lawn 7y ago

Couldn't you use the same argument against inflation as well? That the improved life and economic growth in the 20th and 21th centuries have been driven by technological advances, and not by the inflationary economy?

bboygravity 7y ago
Yes and no. Yes, technological advances have improved life and have allowed economic growth. No. Society as it is currently could not have been financed by those things alone. Massive loans that cannot and will not ever be paid back cannot exist without an inflationary economy (powered by fiat currency with no limit to currency supply and fractional reserve banking). And those types of loans and the inflationary economy have been crucial for the US/The West to attain and maintain their world domination politically, economically and militarily. That's where the term "military industrial complex" comes from. Nixon moved away from the gold standard for a reason: the US was unable to afford its wars (Vietnam at the time) and keep its military happy and in check without an inflationary economy. Inflationary economy = massive free buying power out of thin air for whoever controls the world currency, until they control the world currency no more and an empire falls. Again: I'm no expert at all, this is just my limited understanding.
- lawn 7y ago
  That is a good point, particularly your ending that it's for those who control the world currency... Until they fail. But did that really improve the lives for people globally? Couldn't it be seen as a global redistribution of wealth, from countries who used the USD to the U.S? If you were cynical you might even say the U.S. robbed the other countries. I wouldn't be so sure to conclude that inflation has allowed economic growth from your example, but more a redistribution of one.