What’s Old Is New Again

Producer prices fell 0.5% in September, and consumer prices fell 0.2%. The media has taken on board the central bankers’ theme song, “2% inflation is good for you.” Just for a little perspective, here’s a video from the Great Depression (soon to be the Second Greatest Depression):

It didn’t work then. It won’t work now. It is a simple meme to justify money-printing as merely a rational attempt to stimulate “healthy” inflation. Besides, the Fed’s mandate is to target “stable” prices. 2% inflation isn’t “stable.”

The proper state of a healthy economy is mild deflation, as continual improvements in technology and productivity reduce production costs over time.

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