 Okay, let me start off the lecture on deflation myth and reality with a question How many of you think or like when prices of the things that you buy fall? Show of hands there Great. How many of you think that the that falling prices hurt businesses? Come on. Really? How many things? Okay. That's that's good And how many you think how many of you think that falling prices hurt the the economy? Okay, good. All right. I guess I don't have to give the lecture everybody knows the correct answer. So it's the perfluous So what I want to do is is to talk about the myths and reality or myth and reality Involved with deflation. So let me start off by talking a little bit about what what deflation Used to mean and what has come to mean it used to mean a Decrease in the money supply period end of story. Okay Money supplies a volume deflation is is a reduction of the volume of something Towards the end of the 19th century in the early 20th century deflation that began to mean the movement in the money supply relative To the movement in the supply of goods and services in the economy So if if the economy grew by five percent, but the money finally grew by three percent that was considered deflationary okay because prices fell and Then by by the time of John Maynard Keynes in the 30s and later Deflation came to me especially after World War two just came to mean a change in prices the focus on the money supply completely dropped out There's another word that I had coined in the early 2000s and it was called the deflation phobia Okay, so what it mean? Well, it's basically a morbid and irrational fear of deflation now central bankers love to promote this fear and This occurred in the United States Pretty much deflation had dropped out of the American lexicon Except as in historical illusion Okay by by the 1960s No one really talked about deflation. I was worried about deflation. Everyone thought that the Fed could always prevent the deflation But then suddenly in the early 2000s the Greenspan Fed began to stoke the American fears the fears of the American public About deflation. Okay. They began to actively promote deflation phobia So there was a sort of a trial balloon speech made in 2002 by Ben Bernanke helicopter Ben. There he is just, you know throwing money into the air and into the American economy and it was given to a to a group of a prestigious group of businessmen And it was called deflation making sure it doesn't happen here so he goes through In the speech how why it could never happen here will never happen again after the Great Depression We know how to stop it but that the end if you see the bolded part of the statement says So having said that deflation in the United States is highly unlikely I would be imprudent to rule out the possibility altogether. Okay, so so he's opening the door now Okay, well now the US economy was in a recession, you know 9-11 had just occurred Oh, we were just starting to come out a little bit the Fed would like what? Really wanted to gun the money supply really poor money into the economy So then in April Greenspan In his usual Fed speak, which is very difficult to understand very secure this way of speaking Before Congress he said that a further drop in inflation would be an unwelcome development and the newspapers went crazy okay, uh-oh deflation is around the corner and Later on in a press conference In April he said we see no credible possibility that we will at any point run out of monetary Ammunition to address problems of deflation. Well, who's who's worried about that? all of a sudden he's starting to Unilaterally Bring into the picture deflation. Okay, don't worry. We will never run out of ammunition. Well, who said anything about deflation begin with There was no deflation in the US economy at that point. We had a low Low rate of inflation not compared to the 1950s, but compared to the 1970s and 1980s or Rate of inflation was of inflation was low But so there you see you there it began. Okay in April of that year of 2002 2003 excuse me this Concern being expressed very gravely and solemnly by the central bank about deflation So the media immediately jumped on this of course and they promoted deflation story They had I went back and looked at some of the headlines of blog posts and articles and had very lurid titles The deflation monster still lives These are headlines the specter of deflation Why we should fear deflation the deflation boogeyman once fed The greatest threat facing the US economy deflation We hadn't had any for crying out loud Defeating deflation the deflation dilemma to be concerned or not to be now. I'm concerned I can't change this There we go. Okay. So what causes deflation? Okay from the Austrian perspective. Okay, I'll talk a little bit about that I'm like the price of any other good the value of money is determined by the supply and demand okay, and in the case of of Of money an increase in the demand for money can come from two sources It can come from an increase in the amount of goods and services that people Have produced and are and want to sell in exchange for money That's called an exchange demand for money or it can come from people wanting to hold more money and exchange fewer dollars For for goods and services. So in either those cases or in both of those cases together You would have an increase in demand and an increase in the value of money because deflation is really just another word for The value of an increase in the value of money sometime in the 19th century used to be called an appreciation of money and a Depreciation of money. So the bad thing was a depreciation of money the inflation The appreciation of money was an increase in the value of money Okay, so things were looked at a little differently under the gold standard and of course we could have an deflation as a result deflation in the modern sense of a change in the price level as A result of a reduction in the supply of money. Okay This rarely occurs today. Okay, that is if banks fail and People's savings and checking accounts disappear into thin air as they did in the early 1930s That would be a decrease in supply of money that reduced prices and causes the value of money to rise On the other hand the Fed could decrease the supply of money in in the economy Okay through open market operations through selling bonds and absorbing in exchange for for for a bank reserves Okay, but that we'll come to that and we talk a little bit about the 1920s at the end of this lecture So what are the kinds of deflation? Okay, so I've identified a number of different kinds of deflation in an article I wrote right after this this episode had occurred And so the first is growth deflation the second is cash building that is people wanting to hold more cash in relation to their income And in relation to the things that they they buy their their spending It's also known as speculative deflation because when people Increase their their the holding of money to any great extent. It's because they expect prices to fall in the future whether its households doing the increasing of Holding money or or businesses. Okay, and then a third kind of deflation, which I'm not going to get into in this lecture What I call and I named confiscatory deflation. That's where governments demonetize You know certain types of currency certain bills and notes as they did in India a few years back Or where they they actually prevent Depositors from withdrawing money or put a limit on how much money Depositors can withdraw from their checking accounts. Okay, and savings accounts Okay, but the first two kinds of sort of a natural outgrowth of them of the monetary economy and There's nothing to be worried about They're what we call benign inflation or good in sorry benign deflation or good deflation Even Fed economists agree that the first kind of deflation growth deflation Okay, a number of them now are saying that that's a good kind of deflation So but but the majority of economists think any sort of fall in the price level is a bad thing and is Malignant and and is hurtful to the economy So I want to address the first myth if the money supply does not grow fast enough Okay, this is the myth prices will fall and it will stifle or strangle economic growth Okay, what's the reality falling prices are the the natural effect of rapid growth of economic output due to improving technology and an increase in investment and and the accumulation of capital On that if you have that on the one hand, this is this fairly rapid growth in output And you have a sound money like a gold standard Which is a market-based money and the market restrains the cost of production of new gold Okay, is dampened by by the fact that it's very costly to dig gold out of the ground. Well, then what you usually get in a capitalist economy is the supply of goods and services growing more rapidly than the supply of money in Meaning that the prices are going to fall and the value of money will rise okay, and that's our experience is I'll show you in a moment under the gold standard in the US and Throughout the sort of industrial world in the 19th century. So growth deflation is basically caused by what I've just Told you there's an increase in production supply of goods and services in the economy. That's usually called economic growth It's caused by improvements in technology which are then embodied in new and better capital goods okay, and The increased supply of goods represents an increase in the exchange demand for money people are competing for more dollars So if the if the supply of money is fixed and there are more goods to be sold against dollars Then the prices of the goods are going to going to go down So if As the supply of gold decrease very slowly we found that in the 19th century that prices tended to fall Okay, fairly gently wasn't a rapid decline in prices that we faced So growth deflation according to the United States and other market economies throughout the 19th century And the reason was we had a market-based money the gold standard um economic growth exceeded the growth of the supply of money in the economy And this was a good deflation because it was a natural Outgrowth of of the capitalist economy So just to give you an example from 1880 to 1896 Prices fell by 30 percent over that period, which is about 1.75 percent So even if you didn't get a raise in your in your salary or wages a nominal raise you still Had an increase in your real income and your real living standards Real gdp grew in the face of of the 30 fallen prices over those years a real gdp grew by 85 percent or five percent per year So the 1880s gave us the highest decadal rate of growth in u.s history. Okay If we extend the period and go back to 1870 when we began to to deflate the money supply And take take the greenbacks the paper money that was Created to to finance a civil war when that was being withdrawn from the u.s economy. We started in 1870 And go to 1898 we find the wholesale prices dropped by 34 percent. Okay a 1.7 percent annual rate of decline and consumer prices fell by almost 5 percent I'm sorry almost 47 percent or 2.5 percent annually So we see the u.s is really being transformed from an agricultural economy right after the civil war Into one of the major or the the major industrial power in the u.s by 1914 in the world by 1914. Okay So real gross national product grew during those 20 those 18 28 years By 4.5 percent and consumption people's standards of living were growing 2.3 percent every year And there you can see it graphically Okay, so if you look at the peak here In 1819 That was due to banks of Creating money fractional reserve banks creating money To finance the war of 1812. Okay that that run up in prices And then when when when when we had the panic of 1819 which Murray Rothbard wrote a book on Things began to return to normal and prices fell by 53 percent. Okay, and then we had Around 1860 we had the beginning of the greenback inflation. Those were the dollars that the government printed up To finance a civil war the paper dollars unbacked by gold And we had a huge inflation And then prices fell back to pretty much what they were before the war. Okay by by 1896 or in 1900 So prices gently fell over time. Okay By 1879 all the greenbacks have been withdrawn, but we still saw Fallen prices and that was the growth deflation. Okay From from 1870 1879 that was a decrease in supply of money that was brought about By retiring the greenbacks taking the matter of circulation and contracting the money supply, but yet from 1880 Going up to about 1896 when we started to get a small gold inflation We we had this growth deflation okay, okay, so let's look at recent Examples of of growth deflation We'll take a look at laser ice Lasik eye surgery TV sets and Computers, okay Now all of these industries have um Have have grown tremendously And yet prices as i'll show you have fallen. Okay, and they haven't fallen by insignificant amounts They they fell significantly in all of these industries. So these industries were flourishing Increasing their output increasing their employment and so on Um, so let's take a look at mainframe computers. So a mainframe computer in four In 1970 An IBM computer cost 4.7 million dollars today PCs are 20 times faster And they have more memory and they sell for less than 500 dollars. Okay That's that's amazing. So the quality has improved tremendously prices have have have plummeted From 1980 to 1999 Prices fell by about 90 percent But what happened to the size of the industry? Was it stifled because prices were falling? Um, did it have bankruptcies and so on? Well, it had some bankruptcies, but only for inefficient firms The other firms that were efficient were growing tremendously. So between, um, 1980 1999 Shipments went from about a half a million pcs to 43 million And then by 2013 shipments of pcs were up to 315 million shipped So in the face of of of these Sharply declining prices this industry expanded and flourished Okay, if you look at the memory prices, they went from 6,048 cents per megabyte In 1980 to less than one cent per megabyte By 2014 and I don't know what they are they are now And here is a graph showing the decline in in hard drive prices Okay, so if you if you look back in the early 1980s Some of these hard drives are selling for a million dollars. Okay Today they're selling for under 10 cents Okay per gigabyte All right um And just to give you an example Graphical example or a vivid example um on the left You see eight 2.5 gigabyte IBM Um disc systems, okay So, um the estimated value was six up between 648 thousand dollars and 1,137 thousand dollars The weight was four 4400 pounds. It took up a large part of one of these walls. Okay By 2010 We have um Three micro sd cards Uh 32 gigabytes estimated value between 100 and 150 dollars the weight half a gram Okay, and then they're they're even so you get an idea how small they are In the right image there Okay, once again the computer industry despite this fall and all of the various inputs prices of of of their outputs rather Flourished okay, they didn't collapse um HD let's look at hbtv in 2004. There were 32 million television sets sold in north america for an average price of 400 dollars with an average size of 27 inches By 2015 44 million sets were sold to an expansion in the industry large expansion In in north america and the average price is four hundred and sixty dollars But the average size is 38 inches so the and the quality was much better. Okay There are more pixels per square inch But anyway the price per diagonal inch fell from a 14 81 to 12 10 And during this era price of everything else was going up. Okay So the long-term fall on price of hgtv's An hgtv in japan in 1990 sold for 36 000 dollars. Okay by 2003 There were between 3000 and 5000 dollars and then today you can get them for for less than 500 dollars okay, so These are all parts of the economy Okay, in individual industries the fall in prices does not skirt discourage entrepreneurship The increase in output the increase in the improvement in technology and so on. Okay In fact, it's an outcome of all of these things And so i'll give you the last example. Um lasik eye surgery In 1998 It was a four thousand dollars per eye to get your vision corrected By 2013 it was 300 dollars per eye. Okay botox treatment notice by the way Where government's not involved in in health care where it's cosmetic health care, which you know is not ensured and the government's not involved in it um Prices fall Okay, we don't have an increase in in health care costs in these areas of completely elective surgeries and so on and procedures so a botox treatment Was 365 dollars in in 2001 and by 2013 it was between 99 and 149 on discount websites lipo suction went from 1600 over 1600 In 1992 to 999 dollars on discount websites and again in the face of inflation We had a continuing inflation during this period when these prices were falling. So the real prices are falling by even more Okay, so to sum up growth inflation Growth inflation is a way to allow firms who who who have cut their cost of production because they're they're they're so eager to earn profits To sell the additional output. So as as the prices of you know of hard drives and all these things these inputs into computers are falling um firms are are are are You know just looking at these High profits that they can earn by selling more of these computers because their cost of production are falling And they're all doing the same thing. They're all they're all producing more And in order to to to get consumers to purchase more because of the downward sloping demand curve You have to allow prices to fall. It's a natural outcome Of technological improvement and the accumulation of capital So let's look at the second myth about deflation and that is that deflation prolongs and intensifies recession And turns a mild recession into a great depression All right, what's the reality? The reality is that deflation is a cure for a recession and speeds up the adjustment of the economy Okay Allows it to recover more fully and and more quickly And it also prevents recessions from degenerating into into depressions as we'll say So this is um the result this sort of of of um What we call speculative cash holding or cash building is a result of Businessmen during a recession noticing that look the wage rates and other other types of of Input prices have been bid up Above what prices are going to be in the future So they naturally withhold The purchase of these things okay because they're the profit margins have disappeared and they they're looking forward to losses Okay, so as as professor um Newman told us yesterday In the case of of business cycles at the peak of the business cycle You have the wage rates Being much higher than they were when the business cycle when the boom started and the wage rates are um Because because the Fed has stepped on the brakes and and brought about um At least a slowing down of the increase in the money supply and Maybe even a reversal a contraction of the money supply because of that you have businesses Seeing that their prices are falling, but yet these wage rates and costs have not have not yet fallen So by holding money and and in a free market economy what that does by reducing expenditures on these factors of production It brings down their prices Um, so they're speculating that wage rates will soon come down and they will come down because the demand for the For labor is falling now. If if if government intervention doesn't counteract that Okay, that will be the natural effect so um So entrepreneurs really are showing a preference for holding cash And waiting until wages and other input prices come down. Okay before they begin to invest again And the more rapidly the prices fall the the more quickly investment starts again and and the economy does not You know decline further into a into a depression or what's sometimes called a secondary depression um Now let me just say one thing here The prices will fall further than they in some sense need to or or Certain economists observers believe need to be the case. So so certain Both Austrian economists and especially chicago economists claim that this additional fall in prices because people are holding money At the trough of of the recession Will cause uh the recession to deepen. No, it doesn't what it causes is some prices to deflate Okay, and that deflation restores profit margins and restores As long as those those prices stay low restores the confidence of entrepreneurs In their ability to forecast the future They now see profit margins and they see that they've they've stayed there for a while that that these wages are staying low And so that's when they are spurred or stimulated into investing again. All right So the deflation You might want to call it a secondary deflation. It's certainly not a secondary depression secondary deflation is is exactly what's needed to restore what's what we know is called the the natural rate of interest The rate of price Margin or differences between the different stages of production between your product and and and and the cost The cost of production of that product So deflation in that sense speeds up the readjustment of the input prices to output prices Um, let me let me just circle back to that one more time. Remember when the economy crashes Uh and people have not been anticipating this Entrepreneurs start to doubt themselves Okay, there's a certain malaise that that that settles over the business world. Okay, a certain psychological state of pessimism Where they're second guessing themselves and they're also second guessing the market so until prices or until the cost of production falls tremendously and and almost forced them To to to to to to to reinvest they're they're not they're not going to come out of this state of of psychological pessimism All right, so pessimism it doesn't cause recessions But it is it is an effect of recessions and and the way to reverse it is allow prices to readjust as quickly as possible Okay, I think it's a very important point. So I want to reinforce that Um, and then the same thing is true with households that we don't have to go through in too much detail um, people who are going to buy cars with it, you know imminently or you know in the next few months or household appliances or or new homes Once they they they become uncertain about their jobs if they don't actually lose their jobs Or they they have a wage freeze or their bonuses or cut or done away with They they will begin to to to worry about the future and in doing so that to to um To respond to that what what they'll do is they'll they'll build up cash They'll stop spending as much as they have been before and now bring the prices down of consumer goods even more quickly And bring up and and and bring about an increase in spending eventually okay When when their confidence returns So let's look at the um Forgotten depression. Okay, and it was it was actually in some some books and writings was called What's called the great depression the pressure of 1921? So there was an inflationary boom to the finance um US lending to to and and also the US expenditures during world war one uh So the fed had been created in 1914 and and and the fed was doing certain things like cutting reserve requirements and um Lending to banks and so on and so they were expanding the money supply even before the US entered the war And then when the US entered the war they began to to purchase government bonds And increase the money supply for even further to finance the war So from 1915 to 1919 the fed increased the money supply by about 15.5 per cent per year US prices responded by increasing by about the same percentage per year And then from 17 to 1970 to 1920 you can see consumer prices Increased by 14.1 percent per year. Okay So general prices consumer prices were all all all skyrocketing during this period And then we got the depression. All right The fed stopped increasing the money supply cut back on on on its increase the money supply And what happened was that nominal GDP that is total spending in the economy on on on new goods and services Fell by one quarter the economy shrunk To 75 of its previous size in one year. Okay, so from 1920 To 1921 it fell it fell from total spending in the economy fell from 91 billion dollars to 69 billion dollars Uh real real gmp shrank by about nine percent That is 10 of the economy just disappeared. Okay of the real economy Okay between 20 and 21 and unemployment reached 15.3 percent in 1921. Okay, so a very high rate of unemployment okay, so The deflation was very steep money supply grew 2.9 percent only in 50 in 1920 after growing 15 per year up to that point So the fed tightened the money supply sharply. Okay, and in fact contracted it by 7.5 percent in 1920 So we had a sharp monetary deflation. Okay, and it was it was deliberate And as a result general prices fell by 16 over 16 percent in 1921 and by 8 percent in 1922 consumer prices fell by 10.9 percent in 21 6.3 percent in 22 So we see a sharp decline in prices. In fact wholesale prices Were cut in half Okay from mid 20 to mid 21 very sharp for these are basically commodity prices You know that are that are that can decline that are very very flexible and move up and down very very rapidly Wages fell so even wages fell by 11 percent. Okay nominal wages And that comes from jim grants uh book which I recommend. Um, he's a very good writer It's written, you know for for a popular audience. Uh the forgotten depression 1921 the crash that cured itself Okay So let's compare the two two depressions In the first, uh, we we got very rapid recovery deflation and laser fear government policy quickly cured The depression the depression ended by august 1921 only 18 months after it had begun and I wish I had put a this slide in there but people economists in the fed main stream economists almost There's like 10 or 11 quotes from from from these economists who were mainstream or they were a fed economists They all said that what we need is liquidation Okay, and what they meant by liquidation was that things must be sold at the prices at market prices During the depression all prices must adjust. They were all liquidationists, you know, whether whether they were sort of left progressive economists or centrist economists or or economists who were sort of more free market They they all saw that the road to recovery Was was through liquidation The only economists that that objected to this and claimed that it was going to cause the recession to to um be prolonged was John Maynard Keynes and um The swedish economist uh castle or casel Okay, and they were the two who wanted to stabilize prices and and they're unfortunately their arguments won out over these other economists Okay, things really changed in the 1920s and the fed began to Follow the advice of Keynes and Casel and there was a third economist Whose name I forget now, but they were all wrong about the end of the recession, but yet their advice was followed Okay, the great depression on the other hand lasted from 1929 to 1940 and we know why governments interfered Tremendously throughout the economy Had minimum wages force collective bargaining This is the just the us we had price supports for farm products We had the destruction of the gold standard moving off the gold standard devaluation of the dollar monetary expansion higher taxes Higher tariffs and so on so Mises called the great depression Not a regular recession or or depression. He called it the crisis of interventionism Okay, it was a result of government intervention and not allowing the adjustment of the economy to occur A large part of which comes through deflation So the very interesting the Keynesian view even at the height of Keynesian economics of the 1921 depression um There's a famous Well, he used to be famous in the 60s and 70s or Robert A. Gordon who was a Keynesian expert on business cycles and he wrote a few books on business cycles It's actually interesting on historical business cycles And he has some very interesting information in those books um, but here's what he wrote About the 2021 depression. He was he was you know puzzled by it He wrote he wrote the downswing was severe but relatively short Its outstanding feature was the extreme decline in prices Government policy to moderate the depression and speed recovery was minimal. Okay. It's the actual opposite Okay to amplify the recession Okay, and and to slow it slow down the recovery if the government actually didn't interfere He as he goes on the federal reserve authorities were largely passive Nor was any use made of fiscal policy The federal budget was deflationary meaning that they actually had a surplus during during this recession While the downswing was in progress despite the absence of a stimulative government policy However recovery was not long delayed. So I you know, I read the rest of the he doesn't explain Why or what he thinks of it or what what why does he think this occurred? Okay, but he's just confused by it Okay, uh myths in the reality three sort of sums up the first two in a way And it takes a look at the look at the empirical data um So the myth is that the empirical evidence indicates a strong link between deflation and depression That was the mess message of of the book by Milton Friedman on The monetary history of the united states which was published I think the same year as america's great depression 1963. I believe um And in Friedman's book he claims you can forget about all you know all these other causes the causes the canzians were claiming You know fall in spending a collapse of the stock market which caused a Negative wealth effect. He says no that that that wasn't it nor what was the austrian explanation? Correct um The reason why we had a depression uh in the 1930s was because the fed allowed a what he what Friedman called a garden variety Recession which would have been very shallow and and and over quickly to turn into A deep depression by allowing a one-third collapse in the money supply. Okay So since that time Most economists have come over to the Friedman view and ben Bernanke a few years ago before Friedman died in 2006 um Sort of feted Friedman and said you were right and we all believe it now and the fed believes it This was right before the great um the the um great recession hit the us after the financial crisis In 2006 and and and the fed responded as Friedman would have wanted them to okay by providing liquidity to the economy But what's the reality? Okay, so recent empirical studies has shown that aside from the great depression From 29 to 34 there is no empirical evidence of a link between deflation and depression The great depression is an outlier in major empirical data Empirical studies that show no that shows no statistically and economically significant link between falling prices and falling output um So the deflation phobia of these modern mainstream economists like green span Krugman, Bernanke Yellen, um really just rests On on the great depression Okay, so let me just show you the two studies very quickly here You see that it doesn't seem to be a correlation right between what's happening to prices and what's happening to that The solid line up top there. Okay, that's that's output Okay, and prices are going down in the 1800s did output is is is moving moving up very very speedily and quickly and There's really if you just look just eyeball it. There's not a there's not a big link between What's happening to prices and what's happening to output? From 1804 to 2015, but let's look at a little more deeply There was a study in 2004 by two economists Atkinson and Kehoe deflation and depression. Is there an empirical link? um Many economists attacked it and tried to ignore it But they studied 16 countries over 100 years or more broken down to five year periods sort of arbitrarily and covering 73 deflation episodes and 29 depression episodes and guess what there's not much overlap So what they found was excluding the great depression Atkinson and Kehoe find that 65 of 73 deflation episodes involved no depression Okay While 21 of 29 depression episodes were not associated with deflation So in other words 90 of deflation episodes did not result in a depression They conclude The data suggests that deflation is not closely related to depressions A broad historical look finds more periods of deflation with reasonable growth than with depression And many more period many more periods of depression with inflation Than with deflation overall the data show virtually no link between deflation and depression now An even better study was done In the Corley journal of Austrian economics by Pavel Rieska Who has written a long dissertation on this and there's much more in this dissertation He tries to go into micro episodes of deflation, but for now, um, let's just take a look at his studies of of deflation in general and the link between depression and deflation So when he studied 20 countries from 1804 to 2015 using annual data not broken up arbitrarily into five year periods There are 3293 observations in his study and which have readings for both price and output growth Um 72 of all annual observations saw inflation and and 28 saw either zero or negative deflation Okay, so you have a mix of Of different Data you have you have many years where there are observations for for deflation Fewer years, but still a lot of years where there's observations on on deflation so What are they fine the average annual output Growth rate for inflationary years Was 2.85 percent and for deflation years 2.73 percent The difference between the growth rates though was not statistically significant at any level of of significance. Okay Nor was the difference in in the variances the the volatility of output growth in the two cases so I'll I'll skip over that we don't get into that, but what's his conclusion Um, he concludes that the great depression stands out as the only episode in the sample with both a statistically significant and economically important positive relationship between output and prices when one leaves out the great depression which represents only 90 out of 2158 observations. He dropped some of the other observations Using the regressions correlations between inflation output growth in the rest of the sample lose their significance entirely so That's the regression line for those who have taken statistics. There's zero correlation between output growth and inflation okay but if you look at the great depression episode there is There is correlation. That's the only episode in which There is any sort of a positive correlation between deflation and depression Which means that all all of this deflation phobia traces back to this one episode during which the government intervened tremendously and and pervasively throughout the economy So here, of course, they're mistaking mistaking a garden variety Recession for a full blown crisis of interventionism. Okay, so I will stop here. Thank you So so we all should be deflation filiacs deflation lovers deflation filia