 Okay, let's start. This lecture is on deflation, myth, and reality, and I guess to start with I want to ask how many people think that how many people like falling prices? How many people like low prices for consumers goods? Yes. You're crazy if you don't raise your hand. Okay, how many people think it's good for the economy that if prices fall? Yeah, okay, good. Okay, that's I don't think I have to talk. But I'll just give you some arguments for the position you've already established. So first of all, let me just start with defining deflation. Deflation used to mean in the 19th century a literal reduction in the money supply. Okay, deflation refers to the the reduction of a volume and so that was the initial definition. Then in the early 20th century, there was a bit of a change. People began to call deflation a situation any time there is an insufficient money supply to serve the expanding needs of trade. That is as the economy grew, money had to grow sufficiently so that prices didn't fall. So in that case, the focus began to come in the second definition on a fall in prices. Okay, they still had the money supply in the definition. Okay, and today, unfortunately, the modern definition just talks about a fall in the price level as being deflation. Okay, the problem with that is that falling prices are just one of a number of important effects of a reduction in the money supply or an increase in the money supply. Okay, the same is true with the definition of inflation. Today, all it means is the rise in some price index. It doesn't say anything about the fact that when you increase the money supply, you have a fall in interest rates, you have a redistribution of wealth from one group to another group. So the same thing is true with deflation. I will use this definition as we go on. That is a fall in general prices. Another term I want to introduce is the deflation phobia. Okay, man, I think I was one of the first economists to use this term because I wrote an article in the early 2000s. Criticizing Alan Greenspan, but I would define it as a morbid and irrational fear of falling prices. There's nothing to be afraid of when prices go down. You should be happy, you should be joyous, jumping with glee. Now, however, the central bank wants to promote deflation phobia. It wants the population to be afraid of falling prices. Because this allows them then to say we have the cure. The cure is simply increasing the money supply. So Federal Reserve officials really promoted this, this whole idea of being afraid of deflation. We hadn't had deflation since the early 1930s and suddenly in the early 2000s, mysteriously, or not so mysteriously, we had central bankers suddenly trying to scare people about the prospect, not the actual existence, but the prospect of falling prices. Why would they do that? Well, the economy had been in a recession. And the economy was recovering slowly and they wanted to pump money into the economy. So they wanted an excuse for this. So, now they use FedSpeak. FedSpeak is a form of speech in which you make very equivocal, obscure and ominous statements without really saying much. So for example, in a speech that was at the time no one took note of before a business group, this was in November 2002, a Greenspan who was then was only on the board of governors of the Fed. He wasn't the chair. He said, notice how this flows. The chance of a significant deflation in the United States in the foreseeable future is extremely small. Okay, Ben, move on. Okay, it's extremely small. We have to worry about it. But then he comes back to what he says. The Fed would take whatever means necessary to prevent, now he's using the word significant deflation in the United States. Who said anything about that? And has sufficient policy instruments to ensure that any deflation that might occur would be both mild and brief. Okay. So now he's saying, well, in case it's not very small, you know, we have tools, you know, we'll protect you. And then he ends, so having said that deflation in the United States is highly unlikely, I would be imprudent to rule out the possibility altogether. Not as I said, not many people took note of this speech. But 2002, when 2002 ended, it was one of the lowest inflation rates that we had had in the past 20 years. It was 1.6 percent. Prices had risen. It was still inflation. Prices had risen. That means that prices would have doubled in 45 years. So there's still inflation there. Okay. So this almost seemed like a trial balloon. Okay. Now you had Greenspan, who is as confused as he looks. Okay. So in this pick character here. So he picked this thread up a few months later in testimony before Congress at two different times. He says, a further drop in inflation would be an unwelcome development. So he was the best at Fed speak. What does that mean? An unwelcome development? And then a little bit later, a few days later, he said, after, by the way, the inflation rate had come out for that month, for the month before, and there had been slight decline in prices. Okay. Just for that one month. And so he says, we see no credible possibility that we will at any point run out of monetary ammunition to address problems of deflation. Okay. So he's mixing his metaphors, monetary ammunition to address something. I mean, you don't address somebody by shooting him or her. Okay. What does he possibly mean here? Okay. He's, he doesn't, the meaning is intentionally not clear. It's intentionally nonsensical, but the key is he's trying to scare people, right? I mean, he's talking about monetary ammunition. He's talking about problems of inflation. When you talk about ammunition, it means that, well, you have a serious problem if you have to use ammunition to fight it. Okay. Okay. So the media, of course, immediately jumps on the bandwagon. Okay. Financial writers, media commentators, celebrity economists, and so on. They began to write articles and blog posts. Now, I went through some of these, and these are the actual titles. The deflation monster still lives. The specter ghost of deflation. Why we should fear deflation. The deflation boogeyman wants the Fed. These are actual titles of articles. The greatest threat facing the U.S. economy deflation and defeating deflation. Okay. It's a threat. It's right there. They're saying that it's at hand. If you say, you know, we're defeating deflation, the deflation dilemma to be concerned or not to be concerned, and so on and so forth. So of course, the media has jumped on this. So now everyone's afraid of deflation. Okay. Or everyone had begun to become fearful of deflation. And so the Fed then reinforced it all by picking the terminology up and using deflation in its pronouncements. You know, we're getting close to deflation. So the whole thing was they began to focus on inflation not being too low. Now that we have people afraid of deflation, we don't want inflation being too low because it might turn into deflation. So now you have to be afraid of low and I think the head of the European Union coined the term lowflation, okay, which is inflation. Okay. Okay. All right. So what causes deflation? Well, money is a good like any other good, whether it's fiat currency or gold, it's value and it's value in terms of what it can purchase of all the other goods and services in the economy. It's values determined by supply and demand. So there's two ways that you could have deflation from two sides. You could have it on the demand side. That could cause falling prices. If people produce more goods and they all try to sell more goods and nothing else changes them, there's the same amount of money in the economy, well then the exchange demand for money has gone up. People demand more money. And so prices, the value of money will go up, which means prices will fall. Or if people want to hold more money in relation to their incomes and relation to prices, rather than invest and spend it, that's also an increase in the demand for money, an increase in the demand to hold money. So we demand money in two different ways, by selling things that we have for money and getting money into our possession, or by holding on to the money and spending less of it than we had previously. The other way that prices can fall, that we can have deflation in the modern sense of the word, is if the Fed reduces the amount of reserves in the economy. And that'll be a cold day in hell before that happens. It hasn't happened since the 1930s. Or, in some cases, the central bank could also demonetize certain bills, like the Indian government did that a couple of years ago. But deflation from the supply side rarely occurs, from the supply of money side, rarely occurs. Rarely do central banks reduce absolutely the supply of money in the economy. So where are the kinds of deflation? I wrote an article on this back in the early 2000s, talking about the different kinds of deflation. One kind of deflation, which we'll talk about is growth deflation. Another, which I'll get to, is called cash building or speculative deflation. And I'll get to that. And the third kind is the kind that the government imposes on its people to reverse effects of past inflation. But I won't get to that today. But the first two kinds are benign. They're good for the economy. They're a natural outcome of a progressive capitalist economy. The third, since it's undertaken by government, is really an infringement on property rights that distorts the economy. So I'm going to address three myths that have to do with the first two kinds of deflation. So the first is, if the money supply does not grow fast enough, prices will fall and stifle economic growth. So let me give you the reality. Following prices are the natural outcome of growth. They don't stop growth. In fact, they're one of the benefits of economic growth. In a dynamic capitalist economy, where there is increasing capital investment, improvements in technology, intensification of the division of labor, where we divide up labor even more finely. As long as you have those things happening and the money supply is restrained by some market money, like a commodity like gold or silver that has a supply and demand based in the market, then you'll get naturally falling prices. So this is just repeating what I've said. So growth deflation is caused by an increase in the production supply of goods. It's more goods and services come onto the economy. Supplies of these goods and services individually increase and their prices begin to fall. We call it economic growth. And that's caused by technological progress, more investment in capital goods, which makes labor more productive, productive. If you have more robots aiding and assembling cars, each worker is able to produce more cars per unit of time. And the increase in the amount of goods in the economy causes an increase in the competition among different sellers of different goods for dollars. If you have the same amount of dollars in the economy and people are trying to sell more goods, well that's great, then prices will fall. And if, as has happened in the 19th century under the gold standard, if the money supply increases very slowly because of the high cost of mining gold, well then you will see this actual fall on prices. The increase in the amount or in the rate of production of goods will exceed the increase in the rate of the money supply and prices will therefore fall. So let's look at the history of deflation in the U.S. Just like many other market economies, prices fell in the U.S. throughout the 19th century. The reason being that the rate of economic growth exceeded the rate of increase of the money supply because for the most part throughout that century had a gold standard. And it was a what we call a good deflation. And many mainstream economists are coming around to the view that at least growth deflation is a good deflation. You can even see some articles in Fed journals talking about this, the Federal Reserve Bank of St. Louis. Their economists refer to prices that fall as they had in China because more and more goods are being produced is a good deflation. And of course it's good because it makes, even for our incomes, our salaries and wages don't change in nominal terms, each dollar buys more. So to give you an example, in the period that was the period of greatest economic growth in U.S. history from 1880 to 1896, prices fell by 30%. Every year that meant on average, prices were almost 2% lower than they were the year before. I mean, can you imagine the price of automobiles going down today? We'll get to other goods where prices do fall. But yet did that stifle economic growth, did that choke it off? No, because real GDP during that period grew by 85% or 5% per year. Today we struggle to have a rate of growth that can reach 3% per year. Let's take a little bit longer period. From 1870 to 1898, wholesale prices dropped by 34%. Consumer prices fell by 47%. Consumer prices were almost cut in half during that period. They fell at a rate of 2.5% per year. Real gross national product grew during that period at 4.5%. And everybody consumed more. Not only did they save more, but they consumed more. So consumption jumped by 2.3% per year. So let's take a look at the price level. If you'll note, in 1800, prices began to rise, fell for a while, then it began to rise, and then we had the War of 1812, government pump money into the economy. We had a credit expansion. We had a boom and then a recession. And then gold was reinstated because the banks were permitted to continue to operate and issue their notes and deposits without paying people their gold, without redeeming their notes and gold. But once gold redeemability was restored, we see the gold standard operating. And what happened, prices fell from an index of 200 down to an index of 100. So prices fell during that period. And they fell by 53% from, you know, 1819 to around the Civil War. At which time, oh, there's a little blip there, if you notice, right here, the price began to rise. And that was as a result of the bank, the second bank of the United States, which in 1832 was vetoed, its charter was vetoed so it wasn't renewed by President Jackson. And then after that, we had an influx of silver into fractional reserve banks and an influx from China and from other countries, Mexico. And that caused more notes to be produced. And we had another inflationary boom and then a recession. But outside of the periods where we had these paper money inflations and then up to the Civil War where the Civil War was financed by a huge paper money inflation, prices had fallen. And then when we restored the gold standard in 1879, prices then began to fall again under the classical gold standard. And once again, they were cut in half. They went from 200 to an index number of 100. And the American economy grew between the end of the Civil War to World War I to become the greatest industrial, went from an agricultural economy to the greatest industrial power in the United States, sorry, in the world. So let's look at some instances of what we might call good deflation. We all love HDTVs. Many of us have taken advantage of laser eye surgery. And of course we're all wedded to our PCs and tablet computers and so on. Well, let's look at how these different industries have fared in terms of prices and in terms of growth. So a mainframe computer, which would probably fill this room, back in 1970, an IBM computer, and would take a number of people to operate, was $4.7 million. And today, PCs are 20 times faster and have more memory than these huge mainframes. Yet they sell for less than $500 with their accessories. So what happened? You would expect if prices fell from $4.7 million to $500, wouldn't that scare a neoclassical economist? Wouldn't we be afraid the whole industry would collapse? But of course for Austrians, the importance isn't what prices of the output does, but the margin between prices and the cost of production. So obviously there was tremendous technological improvement, tremendous capital investment in this industry which lowered costs and made it more and more profitable. So prices fell by 90% between 1980 and 1999. And in 1980 it was only half a million PCs shipped by 1999, 43 million were shipped. We've had further declines of prices since 1999. And by 2013 you had 315 million shipped. So from 1999 to 2013, the industry increased sixfold. PC memory prices used to be $0.6048 per megabyte in 1980, and they declined to less than one cent per megabyte by 2014. So costs fell as prices fell. The fallen costs made it more profitable to produce PCs, and you had people rushing in, new entrepreneurs rushing in to produce PCs, new companies starting, older companies increasing the amount that they're producing. And all of that caused the supply of PCs to increase and prices to fall naturally. This is natural. And who benefited? The companies benefited from higher profits, and we all benefited as consumers. Here's hard drive prices. In 1980 they were near a million dollars for a gigabyte of hard drive. By 2009 they had fallen to less than 10 cents. So that was due to capital investment and technological improvements. There in 1980 you have a huge, that weighs over 4,000 pounds. It's a disk drive system, and it's 20 gigabytes, 20 gigabytes. And it costs between 700,000 dollars and a little over a million dollars. And then you can see by 2010 a 32 gigabyte chip had an estimated value of between $100 and $150 compared to a million, and weighed one thousandth of a pound. And you can see how small they are now. These chips. What about HDTVs? 32 million television sets were sold in North America for an average price of $400. And they had an average size of 27 inches, diagonal inches. And then by 2015 44 million sets were sold. That is the industry increased. The price increased for a set, but per inch, per diagonal inch, the price fell from 14.81 to 12,010 cents. It was a long-term fall on prices. The first HDTV sold in Japan for $36,000 back in 1990, and prices have come down until today. You can get one for $500 of much greater quality. So why should we be afraid? If deflation is good in particular industries, all the economy is made up of different industries and different firms in those industries. Why shouldn't it be good for the economy as a whole? Well, it is. It is good. There's nothing wrong with it. The deflation phobia has no basis, in fact, whatsoever. And then a laser eye surgery and cosmetic surgery, laser eye surgery, it started in 1992, but 1998 was 4,000 per eye. That's a mistake in 2013. I updated the figures here for 2018. It was $2,000 per eye. That should have been 3,000. So the price of laser eye surgery was cut in half. Botox treatments went from $365 for treatment that was sort of backward and so on until today. You can find it on discount websites for $149 and so on, though the average price today is probably still around $375. Lipo suction also went down in price, but they do more complicated procedures today, so the price is higher. But for the quality that you get, it is per unit of quality, the price has fallen. Okay, so that's growth deflation. And I defy any economist, any mainstream economist, to explain why that should be bad. And what they do is, well, you know, if price is full, if we have deflation, then at some point the interest rate will reach zero and can't go below zero to take into account a big deflation. But the point is, why would people just speculate on interest rates? If people really expected prices to fall in the future and therefore took that into account when they were taking out loans, that each doll they paid back would be worth more and therefore that they want to pay a lower interest rate. Well, then if that were true, why don't the same people take into account the fact that the prices will fall in the future and therefore hold back their expenditures and not purchase? Which means that prices would fall instead of interest rates. Okay, that's the point that Murray Rothbard makes in his book, Man economy and state. And I recommend that you look at that. I mean, it's a little more technical. I don't want to get into it here. Okay, so let's talk about the second myth, which is deflation prolongs and intensifies recessions because we tend to have a lot of falling prices or greatly falling prices during a recession. Okay, so the claim is made that it turns recession into a deep depression of the kind that we had during the Great Depression. But in fact, as Austrian economists have shown deflation is exactly the cure for the recession and it speeds up the recovery from the recession. Okay, in fact, it prevents recessions from degenerating into full blown recessions. So what is speculative deflation? Well, that's a situation where after an inflationary boom, at the top of an inflationary boom, the wages and costs of production have been bid very high and the central bank cuts back on its increase in the money supply. So suddenly now costs are too high for prices. So under a gold standard, prices would immediately fall because entrepreneurs would stop buying inputs, they would stop buying labor and because they didn't want to pay the high wages and so on, it wasn't profitable. And you would have an adjustment of costs to prices and a reestablishment of profits. But in modern times with labor unions, minimum wages and so on, other government interventions, it takes a while for wages to fall. But in any case, the deflation of wages is a good thing. Wages need to fall and other costs need to fall so that you reestablish the profit margin. It's not high prices, as I said before, that spurs investment. What spurs investment is the prospect that whatever the price of the product is going to be is higher than the cost so that there's a profit to be made. Or at least there's an interest return to be made that return on the money invested. So bottom line is that entrepreneurs would rather hold cash and refrain from purchasing labor and investing in capital goods and so on until costs have come down in relation to prices. So it's not, we don't need a deflation of all prices and adoring a recession or a depression. What we need is a deflation of those prices that have been bid artificially high. So deflation is a good way of reestablishing profit margins. And also from the point of view of households. Households are now worried about not getting their bonuses at work or actually having their wages cut and salaries cut or even getting laid off. So they're very uncertain about the future, the future prospects of their income. So as a result, what they'll do is they'll hold money rather than spend it on consumer goods. They also expect prices to fall because they see falling prices around them. They expect them to fall more. And so they'll hold money until prices fall and it's only when the prices fall to expect what people expect them to be both businesses and households that they'll begin spending money again. So the best thing that can happen is that price can fall very rapidly. The best thing that can happen from the point of view of recovering from a recession or depression. To try to hold them up through government programs, through monetary policy, just prolongs the recovery from the recession. And that's exactly what has happened as a result of government policies in the recession of 2007 through 2009, which we really have just recovered from a year or two ago. That is, we've just reached the point that we were at before 2007, before the financial meltdown. So let's talk a little. Let me give you a case study here, the forgotten depression of 1921. That used to be called the Great Depression. That was called the Great Depression because people hadn't seen anything like it, okay, anything as deep as that depression before. Of course, it was caused by Fed monetary policy. Remember, the Federal Reserve system had been established in 1914 by an act of Congress and was signed by President Woodrow Wilson. And by 19th, they began to cut the reserve ratio, which allowed banks to lend out a greater proportion of their deposits. They began to inject reserves into the system. They began to centralize the reserves. That is, all the gold mandated that all the gold banks were holding should be held at their local Federal Reserve banks and that they would hold Federal Reserve notes as backing. In any case, this allowed the Fed, these policies allowed the Fed to increase the money supply by over 15% per year, which is extremely high. Under the gold standard, if prices went up by 1% a year for a number of years, that was considered a large inflation, okay? There was a situation from 1896 to 1913 in which prices rose from 18, I think it was, well, prices rose during, yeah, from 1896 to 1940, prices rose by a total of 13%. That is less than 1% per year. And everyone thought that was a great inflation, okay? 13% over like 15 or 16 years. Because under gold standard, prices tended to fall every year. People weren't used to prices going up at all. In any case, the U.S. product prices rose, GDP deflator, okay, that is products produced here in the U.S., both consumer goods and capital goods, they rose by about 15% per year for about four years, five years. And then consumer prices rose by about 14% per year. And then when the Fed tightened up on the money supply, stopped increasing it as rapidly, and in fact actually deflated it, there was a depression. It was deep. So total spending in the economy, which is nominal GNP, total spending, it kind of fell by 24%, okay? That's one fourth of spending just disappeared from 1920 to 1921, okay? So spending went from $91 billion all the way down to $69 billion. And real GNP, the real output of goods and services shrunk by nearly 10% during that time. That's a very deep recession or depression, okay? And unemployment shot up to 15%. And we had a steep deflation in the monetary sense too. The money supply grew by about 2.9%, which was very low compared to what remember was growing at 15% before that in 1920. And that actually shrunk. The Fed actually allowed the money supply to decrease in 1921 by 7%. General prices fell very steeply, 16.6% in 21, and 8.1% in 1922. Our consumer prices fell, okay, you can see there. And wholesale prices were cut in half. They fell very rapidly and very steeply, okay, from mid-1920 to mid-1921. And wages fell a little bit more slowly over those two years, okay? The fact that wages fell by only 11% means that people's real wages were actually going up during that period of time, at least those people who were successful in maintaining their jobs. And that comes from James Grant's book, which I recommend to everyone. It's written, he's a very good writer. It's written for the layperson, The Forgotten Depression, okay? So the, despite its depth, okay, and the depth of, or how steeply prices fell and how steeply the GNP, it was then called GNP, declined. It was over after only 18 months. In fact, there was debates in Congress going on that maybe we should pass laws to implement public works, have people, you know, build dams and build new highways and so on. But by the time, I mean, by the time they arrived at any kind of conclusion, they had not yet arrived at any kind of conclusion or introduced any bill, the recession was over, okay? But yet contrast that with the Great Depression, which lasted until 1940. That is, we didn't recover from that recession until 1940, okay? And what was the reason for that? Well, unlike the 2021 episode, the 1929 Depression was confronted by government wanted to do something, an activist government. So both Herbert Hoover, then later Franklin D. Roosevelt, interfered in the labor market, minimum wages, forced collective bargaining, getting businesses together and making them pledge not to cut their wages. So product prices couldn't fall. In product markets, the price supports to keep the prices of agricultural products up while people were going hungry, they were destroying different crops and so on to reduce supply and keep prices up. The money during the 1930s, we went off the gold standard in 1933 and we had a monetary standard that was decided by how Franklin Roosevelt felt each day when he got up and set the price of gold at a different price, okay? Which we devalued the dollar, that is, we inflated, trying to keep prices up. And then we had higher taxes and more and more regulations and so on. So all of those things interfered with the adjustment process. And now some mainstream economists very heroically have begun to say that the monetarists are wrong. It wasn't a failure of monetary policy. So the monetarists who tend to be free market economists claim the Great Depression resulted from government allowing the money supply to shrink, which it did for only a few quarters, okay, in the early 1930s. Whereas these other mainstream economists, one of whom is named Lee Ohanian, a famous macroeconomist from UCLA, have pointed out that it's not monetary policy failure, it was labor market policy failure. The unions implementing a minimum wage for the first time and other interferences by the Hoover administration, which got businesses together and pledged to not to cut wages, okay? So people are starting to come around somewhat, the mainstream, or at least some of them, to the Misesian and Rothbardian view of depressions. But it was very interesting, back, this is from 1974. What did the Keynesians say about 1921? Well, they pretty much didn't say anything about it. But I did find something by an expert on business cycle theory, Keynesian expert back in 1974. Here's what he wrote when he talked about this. He said, the down swing was severe, but relatively short. Its outstanding feature was the extreme decline in prices, so admit prices collapsed. Government policy to moderate the depression and speed recovery was minimal. The government didn't do anything, didn't run deficits, the central bank didn't increase the money supply. In fact, they decreased the money supplies we saw. The Federal Reserve authorities were largely passive, nor was any use made of fiscal policy. The Federal budget was deflationary while the down swing was in progress. That is, it was balanced, you had a balanced budget. And then he concludes, despite the absence of a stimulative government policy, however, recovery was not long delayed. But if you go on and continue to read, he doesn't explain why. He doesn't explain how that could happen given the Keynesian framework. That depressions are caused by a lack of aggregate demand, as Professor Newman 1, who is Jonathan Newman, had told us. The good Newman. Not anyway. Then let me finish up with the myths in reality 3. The empirical evidence, supposedly, this is the myth, shows a strong link between deflation and depression. When you get deflation, a depression will follow. It's not long before you get a depression. What's the reality? Well, there's been two or three really good studies now by mainstream economists, well, one by an Austrian and two by mainstream economists, that point out that aside from the Great Depression in the years 1929 to 1934, there is absolutely no empirical evidence or link between deflation and depression. The Great Depression is, as they say, econometrics and outlier. So let me just show you this graph and just a couple of other graphs beforehand. If you notice, the solid line is the total output in the US economy. And notice that it increases from 1800 pretty steadily with a few dips all the way through 2000. But notice what happens to prices. Prices are shown indicated by the dotted line. So prices fall from about 1819 to about 1860, and then they fall again from after the Civil War. But notice that no matter what prices are doing, which way they're going, there is no correlation between the two. Output just keeps growing, except, I don't know if you can see it here, except right here where we have the Great Depression and you have deflation here. But otherwise, prices and output are not correlated. So there was an empirical study by two economists, and that was used 16 countries over 100 years. And these episodes were broken into five-year periods, and it covered 73 episodes of deflation and 29 depression episodes. And they found that excluding the Great Depression, 65 of the 73 deflation episodes involved absolutely no depression, while 21 of the 29 depression episodes were not associated with deflation. So in other words, 90% of deflation episodes did not result in depression. That was in the American Economic Review, the Papers and Proceedings, which is in the top 10. The American Economic Review the top-ranked journal, but its Proceedings is sort of still in top 10. That is the papers that are given at conferences. The authors' conclusion, the data suggests that deflation is not closely related to depressions. A broad historical outlook finds more periods of deflation with reasonable growth than with depression. And many more periods of depression with deflation than with deflation. Overall, the data show virtually no link between deflation and depression. But law students could have told you that. You didn't have to go through all of this. And then there was a great article, and I'm going to really pump up this article because it was published in our journal, the quarterly journal of Austrian Economics that I edit, by a young Czech economist, which was even more comprehensive than the article by Akasin and Kio. Riska, Pawel Riska, Riska studied 20 countries from 1804 to 2015. He used annual data, not average of five-year data. So he had over 3,200 observations. He had to throw out 1,000 observations for various reasons. So he had over 2,000 observations. And I just want to get to what he found. He basically found the average annual output growth for inflationary years was 2.85%. For deflationary years, 2.73%. It's slightly smaller, but it's statistically insignificant. There's really no difference between the two. So there's no difference in performance of the economy with deflation or inflation. There's one other point I wanted to make here. And once you throw out the Great Depression, which is an outlier, which is unlike all the other episodes in which we know involves heavy government intervention, once you throw that out, you get Riska's conclusion. The Great Depression stands out as the only episode in the sample with a statistically and economically significant relationship between output and prices. When one leaves out the Great Depression, which represents only 90 out of the 2,000 observations, the correlations between inflation and output growth and the rest of the sample lose their significance entirely. And that means that there's almost no correlation. It's almost a zero correlation between falls in output and the fall in prices, deflation and depression. And then when you do have a positive correlation between deflation and depression, but only during the Great Depression. So I'll end there. And we have a minute for a question. If someone has a question, I'll answer one. Yes? Yeah. Well, what they did was they, what were the notes? I actually had a, I didn't really want to do this, but let's see. So they got rid of the 501,000 rupee note, right? Yeah. So what they did was that they made people, force people to go to banks, turn in the notes, and they gave the money in their accounts that they could withdraw different money. But again, they limited how much you could take out. So that's deflation. That's a forced deflation. And it interferes with people's property rights, and it distorts the economy. Trade slowed down because of these lack of small notes. So I mean, that's an argument to get, just get rid of, separate government from money. Just like we say we separate religion in the United States from government, we have to separate money from government completely. And so these types of things wouldn't happen. And stop collecting government statistics. So no one will ever know if we have a deflation, which I tell my students about, people worried about the balance of trade deficit in the United States. So I said, well, what state do you live in in the United States? I live in New York. I said, okay, what's the balance of trade deficit? I don't know. Because they don't collect the statistics. So many states have balance of trade deficits with other states and so on. Okay, get rid of these government statistics. I mean, allow businesses to collect statistics that are germane to their economic activity. Okay, last question real quick. They're scared of deflation because it would, well, depends on what kind of exchange rate they have. That's another story. But if they had a fixed exchange rate, lower prices in their country would spur their exports. It would be cheaper if it was a fixed exchange rate. All right, I'll stop there. Thank you very much for your attention.