Deflation and Free Markets

Lew Rockwell reminds us of how important deflation is in a free society:

Imagine if these prices were fixed by a central committee. The response would be slow in coming if it happened at all. The committee would likely stick by some cost-plus pricing rule that wedded present realities to past expense. But in the free market, there is only one reality and that is the present problem of balancing consumer demand with economic viability.

The price mechanism provides a means of coordinating consumer demands with producer realities. Retailers are wildly overstocked with goods now, having made their purchases for Christmas back in the spring or summer. (We should never forget that sellers have to buy goods before they sell them, and that this is always a speculative enterprise.)

You'll want to read this one.