We Are Inherently A Deflationary Society by Todd Sullivan, ValuePlays
The calls for higher inflation by some and higher wages by others and sometimes both by the same prognosticators is a bogus argument. We are inherently a deflationary society primarily because we are a free market creative society. Free markets move forward by replacing former products, services through creativity, Faster, Better Cheaper. The only way for some one to gain market advantage is precisely through this process of continuous reduction in costs, improvement in value provided to consumers. This is the only way consumers are convinced to spend earned capital to replace existing goods and services.
The process of economic competition is constant cost reduction production by which consumers are able to raise their standard of living without an increase in wages. If government did not so interfere with free market processes, natural competition would theoretically let one’s salary be flat for decades yet the life one enjoyed would improve continuously!! Today those in poverty now enjoy hot/cold running water, air conditioning, color tv, cell phones, computers when none of these were available decades ago for these same individuals. This is entirely due to deflationary cost pressure which comes from free markets.
I get frustrated hearing so many experts saying the Fed has not done enough to create inflation. They have done more than enough. Rates are too low and need to rise. The Fed needs to get out of the way. We need our housing and construction markets to revive and the millions of people hired which comes with this
We are truly stupid about how free markets work. We are stupid about inflation/deflation. We are stupid about the ability of government to improve economic activity.
Less government. More free market.