Premium Only Content

Myth #7: Deflation — Falling Prices — Is Unthinkable, and Would Cause a Catastrophic Depression
Recorded by the Mises Institute in the mid-1980s, The Mises Report provided radio commentary from leading non-interventionists, economists, and political scientists. In this program, we present another part of "Ten Great Economic Myths". This material was prepared by Murray N. Rothbard.
The public memory is short. We forget that, from the beginning of the Industrial Revolution in the mid-18th century until the beginning of World War II, prices generally went down, year after year. That's because continually increasing productivity and output of goods generated by free markets caused prices to fall. There was no depression, however, because costs fell along with selling prices. Usually, wage rates remained constant while the cost of living fell, so that "real" wages, or everyone's standard of living, rose steadily.
Virtually the only time when prices rose over those two centuries were periods of war (War of 1812, Civil War, World War I), when the warring governments inflated the money supply so heavily to pay for the war as to more than offset continuing gains in productivity.
We can see how free market capitalism, unburdened by governmental or central bank inflation, works if we look at what has happened in the last few years to the prices of computers. A computer used to have to be enormous, costing millions of dollars. Now, in a remarkable surge of productivity brought about by the microchip revolution, computers are falling in price even as I write. Computer firms are successful despite the falling prices because their costs have been falling, and productivity rising. In fact, these falling costs and prices have enabled them to tap a mass market characteristic of the dynamic growth of free market capitalism. "Deflation" has brought no disaster to this industry.
The same is true of other high-growth industries, such as electronic calculators, plastics, TV sets, and VCRs. Deflation, far from bringing catastrophe, is the hallmark of sound and dynamic economic growth.
For more episodes, visit https://Mises.org/MisesReport
-
48:50
Mises Institute
15 days ago $0.05 earnedEssays in Austrian Economics: Honoring Joe Salerno
1492 -
LIVE
Chicks On The Right
2 hours agoOzzy gone, Portnoy vs Schultz, more on Colbert show ending, and Candace's likely new guest
2,190 watching -
LIVE
LFA TV
11 hours agoLFA TV ALL DAY STREAM - WEDNESDAY 7/23/25
16,888 watching -
1:18:00
Game On!
16 hours ago $1.44 earnedJayden Daniels Can Do What Only 8 Other NFL QBs Have Done Before!
8.81K1 -
LIVE
The Bubba Army
23 hours agoTrump accuses Obama of TREASON! - Bubba the Love Sponge® Show | 7/23/25
2,861 watching -
28:26
Producer Michael
20 hours agoIS THIS MY MOST CRAZY PURCHASE YET?!
10.7K2 -
23:21
marcushouse
8 hours ago $1.10 earnedStarship Flight When!? Yea, a LOT Just Happened!
9.29K1 -
23:48
Jasmin Laine
17 hours ago“We Reject Demographic Change”—Carney’s Comment BLOWS UP as Poilievre Drops the Hammer
11.4K19 -
BEK TV
23 hours agoTrent Loos in the Morning 7/23/2025
10.3K -
12:48
Degenerate Jay
15 hours ago $1.17 earnedUbisoft Hates Game Preservation
15.6K5