This monograph narrated by Floy Lilley addresses a critically important issue: the prevailing view that deflation (falling prices and/or falling money stock) is a catastrophe that must be stopped. Jörg Guido Hülsmann shows that deflation is nothing to fear. The government should permit it to happen as a path to economic recovery and even as a tool to reform. Institutions that are liquidated in deflation need to be liquidated, and that includes banks and other financial institutions as well.
The essay covers a surprisingly vast theoretical territory in a short space, including the nature of money and interest, the boom and bust, the impossibility of stabilization measures, and the economic trends of the recession. Hülsmann goes further than any previous writer in arguing that no measures of any kind should be undertaken to cure the bust through money creation, even under conditions of falling prices and falling money stock. His rationale is both economic and political.
Even for those who reject his conclusions, Hülsmann's logic helps the reader break free from prevailing biases in policy culture and conventional economic thinking.