Technology is the ultimate deflation machine, constantly revolutionizing our lives by giving us more for less. Yet instead of embracing this progress, misguided policymakers attempt economic surgery with rusty tools, amputating our ability to innovate and prosper.

Mainstream Keynesian economists sound alarms about deflation, but they’ve got it backwards. Imagine a world where prices fall as productivity soars — your paycheck stretching further every year, rewarding savers and punishing reckless spending. This would be the case if we had more true free markets.

The chart below reveals an undeniable truth: sectors left to market forces see prices naturally decline, while heavily-regulated industries balloon out of control. This isn’t coincidence — it’s the stark contrast between free market efficiency and government intervention’s unintended consequences.

Consider higher education, a prime example of market distortion through government intervention. The introduction of government-subsidized student loans has predictably inflated college costs. Universities, assured of easy student borrowing, have little incentive to control expenses, casually raising tuition year after year. The result? A system where 18-year-olds can effortlessly secure hundreds of thousands in student debt, while facing skepticism for a modest business loan. This perverse incentive structure not only distorts the education market but leaves graduates burdened with debt for skills that may quickly become obsolete in our rapidly evolving economy.

To be clear, education remains critically important. However, the current system’s incentives have been corrupted by third-party intervention. Universities are more concerned with obtaining government subsidies than concentrating on enhancing educational quality and accessibility through innovation. The rise of large language models and AI tutors suggests we’re on the cusp of an educational revolution. These innovations have the potential to revolutionize the way we learn, making knowledge more accessible and tailored to individual needs. Yet, the free market’s ability to drive down costs and spur true innovation is hindered by unnecessary government meddling.

This misalignment of incentives extends beyond education, infecting our very understanding of economic health. For example we have been measuring inflation fundamentally incorrectly. Consider this: if the economy grows by 5%, shouldn’t we logically expect prices to fall by a similar amount? Starting CPI measurement from 0% tacitly assumes that all economic growth should be siphoned away by those with the power to create money from thin air — primarily the Federal Reserve and government spending backed by monetized debt. This flawed baseline obscures the true cost of interventionist policies.

It makes sense to recalibrate our economic expectations and recognize the insidious effects of inflation as a hidden tax on productivity. By allowing natural deflation, we could witness an unprecedented era of abundance and innovation, where everyone’s purchasing power increases year over year. Instead, we’re trapped in a system that silently erodes wealth through currency debasement, all while claiming to promote growth and stability.

For genuine human flourishing, embracing deflation might be the secret ingredient we’ve overlooked in our misguided attempts to centrally plan prosperity. We stand on the precipice of a new era in human progress, with so many amazing technological advancements happening. Let us not be deceived by the siren song of inflationism. The choice is ours: embrace the efficiencies and freedoms inherent in true markets or continue down the path of statist interventions that stifle innovation and erode our purchasing power.

The natural tendency toward deflation is a boon to human flourishing. As we move forward, let us strive for a world where prices fall as productivity soars, where savings are rewarded, and where reckless spending is punished. With deflation our paychecks will stretch further each year, and our children will inherit a brighter future, built upon the pillars of true free markets and human ingenuity. It’s time to reject the failed policies of the past and embrace the promise of an inflation-free tomorrow.