The World That Was Stolen

For over a hundred years after America's founding—roughly 1774 to 1900—prices did not steadily rise. Net cumulative inflation over that entire century was close to zero. Prices often fell, not because of poverty or collapse, but because of human ingenuity: more efficient factories, labor-saving machines, railroads slashing transportation costs, etc. Each new invention meant goods cost less to make and less to buy. Economists call this "good deflation"—the natural, healthy fruit of a productive economy.

Your great-grandfather's dollar actually gained purchasing power as the decades passed. Imagine working hard and watching the cost of food, clothing, and tools gradually fall—so the same paycheck stretched further every year without a raise. That was the American reality for over a century. Then it was taken. As argued by George Selgin in Less Than Zero, a falling price level in a growing economy is not dangerous, it is the expected and desirable result of increased productivity.

The Great Excuse

The Great Depression gave those in power the justification they needed. We now know—what Federal Reserve Chairs have effectively admitted—that the Depression was not an inevitable market catastrophe. It was caused, deepened, and extended by catastrophically-bad government decisions: destructive monetary policy, trade wars, and tax hikes in the middle of an economic collapse. Without those failures, economists widely believe it would have been a painful but short recession—remembered the way we remember the recession of 1920, which ended quickly because the government largely stayed out of the way.

Instead, the Depression became the defining economic trauma of the 20th century. And that trauma became a political tool. Policymakers saw the Depression's "bad deflation"—caused by their own failures—and used it to declare that all deflation, forever, was the enemy. They lumped a century of prosperity-driven falling prices together with their self-made disaster, called it all dangerous, and declared that responsible policy meant prices must always rise. The Federal Reserve's own statements from this era make this policy rationale explicit.

The Crime by the Numbers

American workers are 5–6 times more productive per hour than in 1913. That explosion in productivity should have dramatically increased your dollar's purchasing power—goods should cost a fraction of what they do now. Instead, the exact opposite happened: You work harder, produce more, and your money buys less every single year. That gap—between what your productivity should have delivered and what inflation actually let you keep—is the precise measure of what was taken.