How Inflation Stole a Century of Falling Prices

With the latest 12 month CPI figure coming in at 3.3%, it’s clear that inflation is alive and well. What’s less clear to the public is the fact that inflation is a policy choice– an intentional political act meant to rob citizens of the benefits of falling prices.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Your dollar has lost 96-97 percent of its purchasing power since 1913. This is not bad luck or mysterious market forces. It is the result of deliberate policy choices that steadily, quietly drained your wealth—and convinced you it was being done for your benefit.

For over a hundred years after America’s founding—roughly 1774 to 1900—prices did not steadily rise. Net cumulative inflation over that entire century was close to zero. Prices often fell, not because of poverty or collapse, but because of human ingenuity: more efficient factories, labor-saving machines, railroads slashing transportation costs, etc. Each new invention meant goods cost less to make and less to buy. Economists call this “good deflation”—the natural, healthy fruit of a productive economy.