Underlying all these videos is the idea is that, if only prices and wages were perfectly or near perfectly flexible, then economic problems would be resolved.
The glaring hole in this argument is the inability to consider the macroeconomic effects of debt deflation: if debts are nominally fixed, cutting wages and prices will simply exacerbate the real burden of debt, putting pressures on debtors, and eventually driving up the level of bankruptcies which in turn is liable to cause losses and even bankruptcies to creditors.
Another problem is that the only significant period that Austrians can point to as a time of “good” deflation, the 1873 to 1896 era, turns out to have had serious economic problems related to the price deflation and (most likely) debt deflationary dynamics of that era:
“Alfred Marshall’s Judgement on the “Depression” of 1873–1896,” June 13, 2013.
“The Profit Deflation of the 1890s,” June 13, 2013.
“S. B. Saul on the Profit Deflation of the 1873–1896 Period,” June 14, 2013.
“Rothbard on the US Economy in the 1870s: A Critique,” September 24, 2012.
“US Unemployment in the 1890s,” January 24, 2012.
“US Unemployment, 1869–1899,” January 26, 2012.
“Per Capita GDP Growth Rates During the Gold Standard Era,” September 11, 2012.
