What this episode is about
Mainstream economics treats deflation like economic poison, a beast to be feared. But Less Than Zero: The Case for a Falling Price Level in a Growing Economy (by George Selgin) offers a counterintuitive answer: there are two kinds of deflation, good and bad. “Good deflation,” driven by an explosion in productivity, is really a universal dividend from technological progress. It may be central banks’ blind war on deflation that is the real force behind asset bubbles and economic crises!
Jump to a section
- 00:00 Why are we so afraid of “deflation”?
- 02:25 Deflation’s two faces: because “nobody’s buying” VS because “we’re making things too fast”
- 05:33 The central bank’s mistaken fixation: from “price stability” to the “productivity norm”
- 07:08 Rebutting the mainstream, 1: menu costs (Is changing price tags expensive, or changing wages?)
- 10:05 Rebutting the mainstream, 2: debt deflation (Can’t lower margins really mean higher sales?)
- 11:42 Rebutting the mainstream, 3: sticky wages (Nominal wages stay put, while real purchasing power explodes)
- 13:00 Rebutting the mainstream, 4: the deflationary spiral (A prosperity report from the 19th-century “Great Deflation”)
- 17:00 A modern lesson: why isn’t the tech industry afraid of deflation?
- 21:25 Rethinking policy: did fighting deflation cause the 2008 financial crisis?
- 23:35 Conclusion: in the age of AI, how should we rethink prices?
The book
- Title: Less Than Zero: The Case for a Falling Price Level in a Growing Economy
- Author: George A. Selgin
- Publisher: Institute of Economic Affairs
- Publication date: 1997-08
- ISBN：9780255364027
Leave a Reply