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The Natural State of the Free Market is Deflationary – Jeff Booth

“Let’s start with first-principles: The natural state of the free market is deflationary.

“Do you use things that give you less value? No. We choose things in our lives that give us more value, and entrepreneurs try to solve those problems. As we use things that give us more value, prices fall.

“And the only reason prices would not fall is if something was stopping prices from falling or entrepreneurs weren’t giving us more value. And if entrepreneurs weren’t attacking industries to give us more value then they would fail.

“So, the natural state of the free market is deflation.

“In economic terms what they call that is: prices fall to the marginal cost of production.

“As an example, the marginal cost of production of the calculator app on your phone is a line of code. It’s zero. And that’s why your calculator app costs zero.”

Jeff Booth, author The Price of Tomorrow

Why Aren’t Prices Falling? with Jeff Booth on the Two Stewards podcast

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