Republicans and Deflation

Are you a Republican? If you are, chances are the Republican National Committee. (RNC) has you repeating mantras about the danger of deflation. Deflation is automatically bad? Of course, you say. Your mind has recorded it as bad. It has to be bad. They said it was on Fox News. Good boy! Good Girl! No thinking required here. Political parties train their faithful to promote their own poverty. Consider your self trained. All is not lost. Now you can call yourself a conservative and have the respect and admiration of your peers.

Anyone who wants to study deflationary periods in history will learn different. Based on actual situations Common Sense Economics has determined that all with incomes below $250,000 per year would come out way ahead. Those making $250,000 to $1,000,000 per year would end up about the same. Billionaires would suffer for about 5 years and then start to recover.

Germany during the 1920s and the U.S. during the Great Depression are normally all that is mentioned and yes, in both cases everyone was miserable. The economy in the United States Economy has nothing in common with those two situations. Both situations were government induced and neither took place at a time when the productivity of labor was high.

Deflation following vast increases in labor productivity should be studied also, For that circumstance, look at the U. S. economy from the end of the Civil War until the beginning of the 20th century. Prices fell. There were periods where GDP contracted but business investment continued the entire time. Living standards for average Americans increased dramatically.

In a free market system, deflationary periods come and go. So do inflationary periods come and go also. During the latter 19th century, the economic system was largely free market based. At that time in history, the elite of the world did everything possible to rig markets and capture customers by using government but their skills were not as well honed as they are today. Today, that is all government is used for.

Had the U. S. relied on free market principles, our deflationary period would have already come and gone. Instead, the Federal Reserve has kept prices as high as possible as well as profit margins. Despite all of the fancy talk this has all been politically inspired.

When the productivity of labor increases lower prices are the reward average citizens receive. Why did the financial sector contribute so much to the Republicans this year? Controlling government economic economic policy is the easiest way to steal the productivity bonus American Workers deserve.

So there you have it. The Republican National Committee has convinced you that conservatives fear deflation. Promote your own poverty if you wish. Unfortunately everyone else will reap the same misery you do. You deserve the misery. Everyone else does not.

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