The Great Wave: Price Revolutions and the Rhythm of History
https://ift.tt/esJF5LqZS
Every stupid economist says “deflation bad”. I’ve been looking into the history of money and found this amazing book, “The Great Wave: Price Revolutions and the Rhythm of History” by David Hackett Fischer.
He says the world goes through price cycles.
[https://i.ibb.co/WF6LkfS/Epochs.jpg](https://i.ibb.co/WF6LkfS/Epochs.jpg[/img][/url])
According to this theory, this is what happens when 1. prices are stable (or deflating), 2. when prices are incresing:
1. Prices are stable and reach an equilibrium that persists for several decades. This phase was marked by material progress, cultural confidence, optimism about the future and “enlarged ideas of human dignity, freedom and the rule of law.” The beginnings of the upward price movement emerge due to accelerated population growth and/or rising living standards. Prices of services and manufactured goods tend to lag behind, which “improves the lot of the ordinary people.” The price equilibrium sees real wages rise, but returns on land and capital fall. Inequalities in income and wealth begin to lessen. Families grow stronger, crime rates fall, drug consumption declines, wars become less frequent and less violent, while births outside marriage decline.
2. People begin to see inflation as a long-term trend and an “inexorable condition.” People adapt to expanding money supply and rising velocity of circulation. Price inflation becomes increasingly institutionalised and more systemic. Inflation takes hold with prices rising and becoming highly volatile and unstable. Severe price shocks are experienced in commodity markets accompanied by rapid expansion and contraction in money supply. The financial markets become increasingly shaky. Government debt rises as expenditures exceed revenues. Wages lag behind prices, while returns on land and capital increases. This results in severe wealth and income inequalities. Social distress increases in line with rising hunger, homelessness, crime, homicide, births outside marriage, drug and alcohol abuse, family disruption and so forth. People lose faith in institutions and there is a desperate search for spiritual values. The price revolution peaks and then collapses resulting in demographic declines, economic breakdown, political revolutions, wars and social violence.
I apreciate feedback from historians and also more book suggestions. Thanks!
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