 Our topic is deflation. Deflation is a very important subject in economics, not only from a theoretical point of view, but especially also from a practical point of view. Indeed, deflation, the fight against deflation is one of the main justifications of monetary interventionism and central banking in particular. So maybe you should start off with a little reminder of what the problem allegedly consists in, the problem of deflation. And then we'll walk through the theory of deflation in a bridged manner, certainly, but quite systematically. Still, in several points, we'll first then define deflation, then we'll walk through the causes, the principal causes of deflation, or price deflation. Then we discuss the relationship between price deflation and economic growth, and then analyze under which circumstances price deflation might be problematic from a macroeconomic point of view, and then finally discuss monetary policy relative to deflation. OK, so let's first start off with the Keynesian saga, because the Keynesian saga dominates, unfortunately, both the media and also higher education. This is the saga that all students in economics I'm wiped with in the first university year and the second year at latest. So the saga goes as follows. If there is a tendency for the price level to diminish, and this means that by just holding money, by hoarding money, I will obtain a remuneration for my hoarding in the cost of time. The purchasing power of my money units will be higher in the future than it is now, simply by doing nothing, simply by doing them, by keeping them in my pocket. Therefore, I have an incentive to hoard money, so to withhold spending in the economy. If I withhold spending in the economy, companies will have lower revenue. If companies have lower revenue, then the companies themselves can spend less money. So they have to reduce their payroll. They have to reduce their spending on intermediate products and whatever they buy from their suppliers. And these suppliers, then, and these employees, can themselves spend less money. So we're entering into the next round of reduced spending. And if aggregate spending is reduced, well, then there is a pressure on the price level. So prices will diminish even further. So the very problem, the very reason that is created, the problem in the first place, is reinforced in the second round. So we enter into a price deflationary spiral. And eventually, the economy vanishes into some sort of a black hole. Now, if you might think that I'm exaggerating, but literally, that's about the formulation that you find in Keynes's theory of money, chapter 12. I encourage you, in particular, to find the illustration that Keynes gives is the example of a banana economy. Now, I don't want you to go banana or go nuts. We'll stay calm and now walk through the theory of deflation a little bit more systematically. So we start off with price deflation. What do we mean by price deflation? We're the economists here. Sir? A loss in the purchasing power of money that is caused by a decrease. No, no, no. It's not the loss in the purchasing power of money. A decrease. No. An increase of the purchasing power of money, a decrease of the price level. So most of it will be a durable decrease in the price level. So if the money prices of goods diminishes, well, that means that per unit of money we can buy more stuff. So the purchasing power of money increases. OK, so that's the standard definition. This is fine for us. So deflation has been defined differently in the history of thought, but we can neglect this. We'll focus on this case, which is the standard definition today. So what are the causes of price deflation so understood? There are four major, more or less, immediate causes that come into play. In causal analysis, you can always start with the immediate causes that come into play. And then each cause, of course, is always a cause on its own, or separate causes on its own. In each of those causes, there's a cause. There's a cause of a cause of a cause, and so on. So it's unlimited. It's the opening sentence of Kanmengas principles. There's no such thing that does not have a cause. All things have causes. So what we are doing are analyzing causes. Now, not all of these causes are universal. So in economics, we are focusing on economic science, particularly we are focusing on universal. That is, constant causal relationships that remain the same across time. There are other causal relationships that change in the cause of time. These are the contingent causal relationships. For example, the motivations of monetary policy. The central bank increases the money supply for different reasons. Today is this reason. Tomorrow is another. Yesterday has been another. So these causal relationships change. But what does not change are some of the objective consequences that result from an increase of the money supply, for example, an increase of the price level. So in economics, we are studying these universals. And therefore, we'll focus just on some of the immediate causes, because they will give us universals where some of the more remota causes are not universal. They are just contingent. So what are the causes? What are universal causes of price deflation? The ban is open. An increase of production versus the expansion of the money supply? OK, are both necessary, these two separate things? If both of those things occur, you'll have a. OK, so what if just one of them occurs? If one of them occurs, setter is paribus. Setter is paribus. Thank you, sir. That's very important. So of course, in scientific analysis, we always analyze setter is paribus. All we do in science, human understanding, is always analyze partial causal relationships. And then if we want to understand a whole, a situation that we observe in reality, that is, of course, always a complex phenomenon. It's the result of a multitude of factors that come into play. Now we are not God, therefore, we cannot understand all things simultaneously. So with human minds, we need to focus on individual causal strains and analyze them separately. Therefore, we need the setter is paribus clause. All other things being equal, if this and that happens, then this consequence will follow. So you said? So if you have an increase in the general output, overall output in the nation, or in economy, and the monetary supply remains constant, then your price level would fall. OK, so can we say if aggregate output increases, then the price level will fall. Can we say this? Setter is paribus? Sure. OK. So we have a first cause. If aggregate output increases, that is, if the quantity of those things that can be exchanged against money increases, then there is a tendency for the price level to diminish. It's a very important cause. Why is this so? Which basic economic law comes here into play? Something even more fundamental. Thank you, sir. Diminishing marginal value, OK? Diminishing marginal utility. What does the law of diminishing marginal utility tell us? Hey, you were here yesterday. I've seen you on screen. So as the quantity of goods increases, very good. As the stock of the homogeneous good increases, the value of each unit of that stock increases relative to the value of each unit of the smaller stock that existed before. That's the correct formulation. Now clearly, so if aggregate output increases, we consider as homogeneous in so far as it's not money. All things that are not money that are being exchanged against money, if all things are not money increase in quantity, then the value of each unit of those things that are not money relative to money must diminish. So as a consequence, less money will be given in exchange of each unit of those other goods as a tendency. Now how much less? That depends on the individual case. So we have our first call. That's correct. What else? The confidence in the money is increased. The economy will think that the money will have more value in the future. Of course, the value judgment will increase the purchasing power of the money. OK, that's not false, but there is a missing element in the soul. What does this mean? How does the confidence in the money translate? What does it mean? Are you an economic student? OK. So what's the immediate variable? The immediate cost that is affected by this confidence. Confidence, in fact, is a more remote cost. An increased demand for money. Thank you, sir. That's very good. An increase in the demand for money. Now that's more difficult to understand for people who are not economists. So let me put this very simple. What it means, the increased demand of money is that on the part of those who already own money, they cherish money more relative to other goods that they could exchange for money. They haven't increased for money relative to those other goods. They cherish them more. For example, because they have greater confidence that this money will help them through the next business cycle or whatever. So since they cherish this money more relative to other goods, well, they will exchange it for other goods only if they get higher quantities of those other goods in exchange for their money. So the increased appreciation of money entails a tendency for the price level to diminish. Correct. We have number three. That's very good. That's the last factor. We had this. Oh, no, we didn't have this. No, this was factor number two. That's correct. So decrease of the money supply. Correct. And by which law, economic law, is the decrease of money supply. Does it entail a price deflation? That's not the mission. Still there? That's not a lot of mission. Thank you. That's correct. So it's the same thing as in the case of non-monetary good, but only here from the other side round. In the case of non-monetary goods, if their quantity increases, this exercises a pressure on the price level. And in the case of money, say, if its quantity diminishes, then by virtue of the law of diminishing marginal value, each unit of money now has a higher value relative to the other goods that can be exchanged for money. Therefore, we give less money in exchange for those other goods. So we have three causes already. An increase of aggregate output of non-monetary goods, a reduction of the quantity of money, and an increased appreciation of money that is an increased demand for money. It has a fourth factor, a fourth immediate cost that comes into play. No? Now think. Yes? I don't know if this counts. Roth argues the joke that his colleagues claim victory because they redefine deflation as being inflation of less than 10% a year. OK, so which cost does this give us? I don't want to say it. OK, yeah. We have this in Germany, too. Never miss a good opportunity for a good joke. OK, you're right. OK, now by symmetry, we've talked about the quantity of money and the appreciation of money on the one hand. And we talked about the quantity of non-monetary goods. On the other hand, yes? The increase in demand for goods? Yes, sir, that's it. That's correct. So in the case of the other goods, we wouldn't talk of hoarding. We would apply this word only to the case of money. But we can, of course, exactly by analogy, have the same change and appreciation that the current owners of money have vis-a-vis the money that they own can also exist on the side of those who own these non-monetary goods. They, too, might have a changing appreciation of these goods relative to money. So if there is a decreased appreciation of those goods, you're holding them back less for yourself. So then you will increase the supply of those goods to the market. And as a consequence, more of those goods will be proposed in exchange for money. So by virtue of the law of diminishing marginal value, the price level will diminish. So these are indeed the four universal causes that come into play as far as the price level is concerned. And then each of them has more remote causes that prompt them. The money stock is determined by the laws of production of money. So here the profitability of money production comes into play. So there are different contingent factors that affect this profitability. And if you have a fiat money, then profitability plays no role at all. Separate circumstances that come into play. When we talk about the demand for money and various psychological factors coming to play, but also objective factors, that is more universal factors such, for example, the quality of money. If the quality of money increases thanks to a monetary reform, for example, we introduce a gold standard and put it at the place of a fiat standard. So then we put a money of better quality at the place of a money of inferior quality. And as a consequence, we would expect that the demand for money increases. So the introduction of a gold standard through a monetary reform would entail price and inflationary tendencies by virtue of the fact that it stimulates the demand for money. And by the way, fiat monies have, among other reasons, been introduced precisely for this reason, that they tend to reduce the demand for money. Because the Keynesians and the proto Keynesians who made the case for the introduction of fiat monies, they wished people to hoard less money. They wished people to spend more money. OK, so we have these four causes. Now, this little analysis puts us immediately in a position to discuss the relationship between economic growth and price deflation. Indeed, economic growth, by definition, by its very nature, is price deflationary or exercises price deflationary tendencies. And we've seen the reason why. Economic growth is nothing else but the very first cause that we discussed, namely the increase of the stock of non-monetary goods. Economic growth means that's the very meaning of the world, that we have, at the end of the growth phase, we have a higher quantity of non-monetary goods available than we had before. So as a consequence by the logic of the law of the diminishing marginal value, each of those units tends to have a lower value relative to money, so as a consequence, unit prices will diminish. Economic growth, in other words, is at all times in all places entails price deflationary tendencies. It's price deflationary by its very nature. And indeed, if we look at economic history, we look at those periods when there has been not much monetary interventionism or, in any way, not as much as we have it today, the natural outcome in such situations was that when you have economic growth, prices tend to diminish. And that holds true especially for American economic history. You can see it very well in American monetary statistics. If you look at the evolution of the price level in the US in the 19th century, you will see that the overall tendency is a very strong price deflation, very dynamic economy, very strong growth. The price level diminishes quite vigorously. And the only exception are the two wars that were waged during the 19th century. What are these two wars that were being waged on American soil? War of 1812 and Civil War. Exactly, the War of 1812-14 and the Civil War. So each time the government promotes the creation of fiat money, there was a suspension of payments and so on, so as a consequence the money supply increases because the government uses the printing press in order to finance the war effort. And as a consequence, the price level increases. As soon as the hostilities are over, economic growth creates price deflationary tendencies each time. And the last time this happened was after World War I. So he had price deflation between the Civil War and World War I. And then World War I, same thing. Price level increases quite dramatically under the impact of the war inflation. And then after the hostilities end, after the end of the hostilities, well, prices diminish again. This was the last time it happened because after World War II, for the very first time in our economic history, in Western economic history, we had a constant increase of the money supply and a constant increase of the price level. And that is because for the very first time in our civilization, we have continued during peace times monetary policies that before had been applied only during war times. So we are living in the true sense in the age of inflation. Such times have never existed. And I need to teach you this because, well, you couldn't know otherwise by your personal experience and your parents probably the same. Unless you know something about economic history, you could never have the idea that this is somehow a very unusual situation. But it is. This has never existed. So you get economic growth at a stable price level only if the price deflationary tendencies resulting naturally from a growing economy are overcompensated, neutralized by a simultaneous monetary interventions that increase the money supply. And that is why, for example, in the British case in the 19th century, the price deflation was not as strong as in the case of the US because there was stronger monetary interventionism. So the price deflation was much more moderate. You might even say that as from the mid 1800s, price level remained flat for the rest of the century. It was a very slight price deflationary tendency. And only then with World War I did the price level in Britain increase as in the US. OK. Now, that's the theory on the media level. Now the question is, of course, why is this so? I mean, so let me emphasize this point, right? Empirically, that is what we observe. We observe vigorously growing economies, such as in the US all throughout the 19th century, but also in Europe at the end of the 19th century. Strong economic growth in Germany, the highest growth rate, with Chinese growth rates in the 1880s and 1890s, OK, in a price deflationary context. So that's a fact, right? You don't discuss facts. It's just what it is. The question is, of course, how is it possible? How is it, I mean, so clearly this fact alone is a refutation of the Keynesian saga, right? If the Keynesians were right, this could not be possible. This could never happen. But it did, right? We might say like Galileo, right? Look through the glass, right? It's there. Don't deny. It's there. Now, why is it so? So that's then the theoretical question. How is it possible that the mechanism described by the Keynesians does not kick in? Here we might first start off with two introductory considerations. A price deflationary spiral does exist as well. But it does exist only under very special circumstances. It does not exist in general. It is not the case that any decrease of the price level, even if it lasts for a month or a year, entails a price deflationary spiral. Why is this so? There are two immediate considerations that come here into play. First of all, it is not possible for human beings to reduce their spending indefinitely. It's not possible for us to do this. People who are living in civilization operating within the context of a division of labor, because few of us plant our own tomatoes, make our own clothes, milk our own milk, and so on. We are dependent on the cooperation of other people who provide us with those goods. We are operating under the constraint of the stomach. In order to live the happy day tomorrow, next week, next month, when prices will be lower than today, well, we first of all need to get there. To get there, we need to eat. And be protected in our sleep, and so on and so on. So we need to spend. So it's impossible from the outset that the price deflationary mechanism would reduce the level of spending to ground zero. It's absolutely impossible, because we are operating under the constraint of the stomach. Now, the second reason comes into play, and it has something to do with what Professor Hermann discussed this afternoon under the heading of time preference. Even if we know that goods will be less expensive next year, it does not mean that we therefore renounce to buying those things now. There are very few ladies who, knowing that, well, next year, necklaces will be less expensive than this year, or this nice summer dress will be less expensive next year, will wait for a year until they get it. Very few families make no vacation, because they expect, well, in two years and three years, the beach will be less expensive than it is today. So it's because we have a time preference that this also slows down this price inflationary spiral. There's always a minimum level, a rock bottom, of spending that, therefore, exists. It cannot be changed simply by the expectation of further diminishing prices. So then let us hit the main question. How is it possible for firms to operate in a price-deflationary environment? How can firms be successful if their revenue diminishes? Thank you, sir. They can reduce the cost. And here we have a big difference between Keynesian economics and all other economics. It's not just Austrian economics, it's all other economics. In the Keynesian saga, costs are given. Costs are somehow written in stone. Costs fall from the skies. They're just there. OK? But of course, that's not true. Costs are nothing but the prices of factors of production. If you have a firm and your revenue diminishes, the only way for you to stay in business is to reduce costs. That is, you will go to your employees and you will go to your suppliers and tell them, look, at these prices, I cannot operate. Either you diminish your requirements. You sell for less. Or, well, we shake hands for the last time. We had a good time together. And that will be it, OK? Now, it's clear that this doesn't work as far as an individual firm is concerned. If only one firm is concerned by this, let's say because the demand for its products has diminished, while the demand for all other products has remained the same. Because in that case, the employees will not say, no, I'm not going to work for half for you. Because I can go just next door and work for about the same as I have now, a little less. And the suppliers will tell them the same. If there is an alternative to which I can go, well, I would not reduce the price at which I sell. So then indeed, well, you take the hand, you shake it and say, bye-bye. And that's what happens if a company can no longer sell its product at the price that it needs, OK? But in the case of price deflation, we're talking about a different animal. In the case of price deflation, by definition, all companies are concerned by precisely that problem. All revenues diminish. Therefore, there is no alternative labor market. And there is no alternative market for the suppliers of all the intermediate goods, the raw materials that are sold to the companies that are being concerned. It's not just one entrepreneur who tells all companies and who tells the labor unions, well, guys, my revenue is down. You need to reduce your prices as well. It's all of them. And if all of them do it, well, guess what? Prices will diminish. That's exactly what happens. And that's also exactly what we observe empirically in such cases. Now, that doesn't mean that such an adjustment takes place immediately, costlessly, painlessly, et cetera. So there is no perfection in that sense in the market. It's not just we are not just led by some angelic spirits and so on. We find immediately the solution. It's a painful solution, painful process, especially if it's sudden and brutal. But in principle, that's exactly what happens. Aggregate spending diminishes. So people renegotiate contracts. And they find their rock bottom. And they find a cost level that is low enough to make companies worthwhile. Now, this process, again, this renegotiation of contracts as a rule takes some time. As a rule, there's first a reduction in revenue, and then you start renegotiating costs. So this introduces a complication that is relevant for our next consideration. So we have seen in principle how the problem is being solved, how economic growth in a price deflationary context is mastered by entrepreneurs by firms. Price deflation does not create more formidable problems for entrepreneurs than any other price level environment. Entrepreneurs can operate in a price stable environment. They can operate in a price inflationary environment. And they can operate in a price deflationary environment. And the reason is that what counts for entrepreneurial success is never the level of prices at which they buy and sell. It's only at always the difference between buying prices and selling prices. If the spread is positive, companies work. If the spread is not positive, they have to close. Now, we need to complicate things a little bit by introducing the following distinction. We all analyze the same process. We have a price deflationary shock. Prices diminish for whatever reason now for the moment. And we need to compare two scenarios. In the first one, all companies are financed by equity capital. That is, there is no debt. All capital that is invested belongs to the entrepreneur, belongs to the shareholders. And in the second scenario, a more or less big part of the capital invested, the line part, comes from debt. Let's take all of it, except for 1%, comes from debt. So I have a company. I produce shoes. I sell all my shoes that I produce. I've sold so many pairs, let's say, 5.5 million pair of shoes. And I sell them for, let's say, $110 million. And my cost of production is $100 million. So payroll and all my supplies, I pay them $100 million. So I have a 10% rate of return on my investment annually. Now, my customers spend less money on everything they reduce spending. I cannot sit on my shoes. I've come to the conclusion, well, this decrease in spending will be permanent. If I do not come to this conclusion, I might simply hold back my stock. I don't sell now. I wait until prices will rise again. But I come to the conclusion this reduction in spending is permanent. So I can only sell all my shoes for $60 million. I've bought for $100 million in factors of production. Now I'm selling for $60 million. That's a very bad deal, very bad for me. It's good for my customers. They're happy. It's also good for my employees. They're happy as well. Everybody's happy, but myself. The problem is, if I'm not happy as an entrepreneur, well, this thing will close down. So then the others won't be happy either. So we need to renegotiate. Now, if all the money belongs just to myself, the renegotiation, if successful, will mean the following. I have had a one-time loss. And after renegotiation, I'm profitable again. I renegotiate all my factor prices from $100 million to $50 million. So before I was operating to $55 million or whatever. So before I was buying at $100 million and sold for $110 million. Now I'm buying at $55 million. I'm selling for $60 million. I'm profitable again. So I had a one-time loss in the period of time after the deflation or price deflation or reshock and until the renegotiation. And that's it. This is really what happens in such a situation. Now, if you're very smart, and not many of those people around, I don't hold this up as a model. And sometimes people are simply lucky. But it can happen that for some reason you anticipated this event. You saw it coming. You saw it coming that there would be a price deflation. In that case, well, you start renegotiation earlier. The problem is, if the price deflation is not yet there, nobody will listen to you. So in that case, you only have one solution while you close down shop. It's not easy to do this either, because you might lose market share in the meantime. So sometimes you simply have to bite the dust, take the one-time loss, and then go on producing. But that's how it happens in a market economy. Now, things are very different if there is a high level of debt. If all companies are highly indebted, then we have the following problem. I might very well be able to renegotiate my contracts. So I reduce my cost level. But I still have to serve that debt. I signed a contract that says I'll pay you back 100 million. But my revenue is only 60. I will never be able to pay back 100. You see my point? So in that case, if a price deflation hits a highly leveraged economy, a highly indebted economy, then more than often this entails massive bankruptcy, because the entrepreneurs are not able to renegotiate very often because their suppliers are not willing to do it. And their creditors are not willing to do it. Very often the creditors sit on the side and say, ha, ha, ha, he goes bust. I will take over the firm. So he will go bankrupt. Now, what's the overall economic significance of this? It's certainly very painful for the entrepreneurs who are concerned. But if you think this through, from the point of view of the economy as a whole, it's really not as dramatic as that, because everything on which depends the real wealth, the real revenue of the people, all the factories and all the machines, all the equipment, all the infrastructure that is needed to churn out shoes and lamps and windows and so on, all of this is still there. The only difference is now it has different owners. It's no longer the guy who went bankrupt. Now it's other people who own it. So a price deflationary shock in a leveraged economy tends to entail massive bankruptcy. And but it does not, in the long run, affect the productive ability of the economy as a whole. That's the first point. That's the second point. The third point is that this massive bankruptcy then typically translates into a price deflationary spiral because of the following mechanism that has been first analyzed by the American businessman and author Charles Holt Carroll in the 1850s. You'll find probably a couple of copies of his book. He never published a book, but his articles have been collected into a book and published by the Van Aschand Company in the early 1960s. So the title of the book is The Organization of Currency into Debt. Or is currency the organization of debt into currency. So he was the first economist who described the price deflationary mechanism. Well, because he witnessed it himself. So what happens is the following. Companies go bankrupt. Means those companies cannot pay back their creditors. Among the creditors are banks. Banks themselves are very highly leveraged. So if the bank no longer sees back its money, it might itself go bust. If the bank goes bust, what happens then? What happens with the money supply? It decreases. It decreases because banks produce money substitutes. They produce money. So if the bankruptcy wave affects the banks, the money supply diminishes and this reinforces the bankruptcy wave. So in a second wave, then you get even more bankruptcies and even more bankruptcies of banks. So the money supply shrinks even further. And this is really what creates this price deflationary spiral. It does not and cannot happen in an economy which is financed by equity capital and which is just exposed to a price deflationary shock. There is no spiral in such a case. It's a one-time shock and that's it. The spiral kicks in only if you have a highly leveraged economy and in which part of the money supply is produced by fractional reserve banks. These are the two conditions that need to be given. So the question is then, what do we think of price deflation from an aggregate point of view, social point of view, from an aggregate from an overall point of view? Is price deflation good or bad? Now there are some economists who argue that price deflation is contrary to what the Keynes, for the Keynesians, price deflation is always bad, as we have already seen. There are some economists, free market economists, who argue that price deflation is OK if it results from economic growth. But it's bad if it results from monetary factors. So it's OK if prices diminish because there is a growing economy where you're churning out ever more goods and services. Fine, but if the price deflation results from increased hoarding, that's bad. Or if the price deflation results from a collapse of the fractional reserve banking system, that's bad. Now, I would even take an exception to this point of view, there is a social function of those monetary factors. Price deflation resulting from increased money hoarding is, in my eyes, completely legitimate because it results from a multitude of individual decisions. Individual market participants would decide to appreciate money more relative to all other goods and therefore reduce the level of spending in the economy. The consequence will be that entrepreneurs have to adjust the structure of the economy to these new wishes. And as typically what happens in such case is that the economy becomes more robust. It becomes less, becomes more resilient to shocks because entrepreneurs are forced to engage in activities that are more profitable than the before. It becomes more resilient. And if the economy enters into a price deflationary spiral because fractional reserve banks collapse, well, this is certainly a very painful price to pay. But let's also see the consequence that finally results from it. The consequence is that these banks vanish. Now, after all, this is a pretty good thing. OK? Now, you might say, OK, this is cynical. It's cynical. If we only adopt the individual point of view in the economy, this is what Keynesians do, typically. They reason from a microeconomic point of view. They don't look at the greater whole. From the point of view of the greater whole, it's beneficial that harmful parasitic institutions, such as fractional reserve banks, vanish. And the market process, the deflationary spiral, is actually a very ruthless and efficient mechanism to bring this about, contrary to political reforms. So if you ever hope that political reforms would change something to the current European monetary constitution or something like this, where monetary arrangements go wrong, well, you place your hope on something that is quite illusory. So the market process is brutal, fast, and efficient. And it brings about a situation that, in the short run, is very painful, monetary or very high unemployment. But in the medium and long run, is very beneficial from the point of view of the economy as a whole. Now, I don't say this is the austral libertarian position on the question. That's not my point. My point is we need to see the options that are on the menu. Either we can say, well, we let the market forces work, then this will be the consequence. Or we do not. We promote monetary interventionism. We ask the central banks to intervene in such a situation to prop up the production of money, to open the floodgates of more feared money, to bail out the fractional reserve banks in order to prevent their collapse. Then we get a different outcome. Now, you probably know that precisely the second option has been the preferred policy of the past 150 years. And we see today very clearly the long run consequences of such a policy. We see the long run consequences of anti-deflation policies of the fight against deflation. And these consequences all result from the fact that the banks, of course, adjust to the presence of a lender of last resort. They adjust to the presence of central banks and of monetary interventionism. So if they know that prices can never really dramatically diminish, and even if prices diminish somewhat, they will still be bailed out by the central banks and by the government. Well, what do they do? Well, they engage in more of the same. They engage in more of the same practices that have entailed the price deflationary risk in the first place. Namely, excessively high levels of debt and reckless investment in risky undertakings that permit higher profits. So as a consequence, we have today as a fruit of 150 years or more of anti-deflation policies and anti-deflation thinking, we have a financial system that is some sort of zombie than the economy. There's no better word for this. Because zombie in the sense, you have companies that have no economic substance, have a lot of bad credits, and that are operating on a higher level of debt. That is, they're very fragile, which are utterly dependent on central powers, central banks and governments, and which entail a tendency for resources to be allocated to users that are not beneficial from an overall point of view, but just benefit a small coterie of powerful people that currently benefit from the system. And this cancer is spreading and has been spreading for many years into the so-called real sector where you also observe that non-financial companies increasingly start behaving like financial companies. So they operate with a very high level of debt. They have increasing share of financial investments rather than investments in payroll and products and so on. So the same problem that started in the financial sector is now spreading throughout the rest of the economy. So I must say by the day, I love price deflation and even price deflationary spirals ever more because I look at what the alternative consequence would be. Thank you very much for your time.