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during filming the Exorcist In the early 1970s, the late William Friedkin’s goal was for the audience to imagine the extreme cold in Regan’s (played by Linda Blair) room. While the film was already over budget, Friedkin secured financing to purchase a $50,000 air conditioner so that clouds of actual breath could be created by Regan’s breathing.
Fast forward to modern times, and it’s worth noting that extraordinarily expensive “breathable clouds” can be made for a tiny fraction of the former’s cost. Such is the genius of digital imagery.
It is also a reminder that economic growth, rather than raising prices, is a sure sign of falling prices. Never forget that growth is the result of investment, and investment is about the pursuit of increasing productivity which pushes down the prices of everything. What was worth so much to Friedkin fifty years ago would be worth much less today.
It’s useful to think about the falling cost of special effects as the post-mortems from the latest central banker bash in Jackson Hole emerge. wall street journal Fed watcher Nick Timiraos was naturally in attendance, and he began his report thusly: “Federal Reserve Chairman Jerome Powell argued for holding interest rates steady for now, but if the economy does not So the door is open to extending them later this year.” It is not slow enough to sustain a decline in inflation.”
It is his job to report in defense of Timiraos. And in reporting on central bankers, they have to state what they broadly believe: that economic growth causes prices to rise. Well, if we ignore the dangers of government planners messing with market prices (and the greater danger of rate price rigging), it cannot be stressed enough that central bankers believe That is completely opposite to reality.
Guess it’s not just digital imagery that’s driven down aspects of filmmaking substantially over the past fifty years: what about that air-conditioning unit whose price surely infuriated Warner Bros. executives? Are there any buyers against my bet that a similar unit would cost less than $1,000 today? What about the cameras used by Friedkin? It’s impossible to suggest that the people inside a typical iPhone of this time would be any more than the more expensive device necessary for Friedkin to play his horror masterpiece.
The important point here is that since 1973, the US economy has grown significantly over that time. On Large scale, On Large scale Leap in terms of productivity. And contrary to what economists and central bankers think, prices of all kinds of expensive (or non-existent) goods have fallen in the past.
Nevertheless, despite the clear link between growth and falling prices, economists still hold to the belief that rising unemployment and business failure are essential ingredients for a “low-inflation” environment. And it’s not ideological. While one estimates that the majority of the Fed is filled with Democrats, the American Enterprise Institute is a major think tank that is largely Republican. Yet Michael Strain, AEI’s chief economist, recently noted that new York Times that “the more good news becomes good news, the greater the likelihood of a recession.” Imagine a growth-focused Republican associating job losses and bankruptcy with “good news,” but where it gets worse is reviving Strain’s embrace of the infamous Phillips Curve.
All of this stands as a call for more comment from economics writers who are not involved in the confusion-ridden economics profession. Since it is accepted wisdom among reputable economists that economic growth has a downside to inflation, it is up to those who are not sufficiently qualified but lack the common sense to correct a weak narrative.
Source: www.forbes.com
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