In the early 1920s radios were the pricey, must-have gadgets of the day. And as all transformative market goods are, they started out expensive only for RCA (the Apple of its time) to render common what was once a luxury. One hundred years later, those with internet access can listen to radio stations around the world for free. How things change.
Capitalistic advances like the radio came to mind while thinking about Ben Bernanke being awarded a portion of the Nobel Prize. Bernanke believes economic growth causes prices to rise. As he told Cato Institute co-founder Ed Crane in 2005 during a one-on-one lunch, growth is “inherently inflationary.” Actually, it’s the opposite. Economic growth is a consequence of investment, and investment is all about producing exponentially more at prices that continue to fall. All goods that we covet, from cars, to computers, to radios, start out nosebleed expensive only to decline in price as investment in production efficiencies pushes their prices down. Rest assured that in Bernanke’s lifetime, private flight will become common.
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