Lionel Robbins writes concerning deflation (”Consumption and the Trade Cycle,” Economica, Volume 12, [35-38], November 1932, pp. 418):”the belief that there is nothing detrimental to the smooth working of the economic machinery in the changes which result in a consumers’ goods price index falling with increased productivity, is not the esoteric creed of a handful of ’sadistic deflationists’—as is sometimes suggested nowadays. It is the view which has been held by the majority of the men who have made modern monetary theory in English-speaking countries what it is—Marshall, Edgeworth, Taussig, Hawtrey, Robertson, Pigou. That a belief that prices cannot fall without causing depression should be able to co-exist with the overwhelmingly convincing demonstration of the contrary proposition in nearly all the standard works on the subject is a most disquieting revelation of the gulf which still exists between scientific knowledge and popular opinion.”
