Central banks are among the most influential organizations in any nation, and most central bankers subscribe to the notion that deflation, the decrease in prices and increase in the purchasing power of money, is bad in every and any circumstance. They try to avoid it at all costs. The cost of living always goes up as purchasing power continually declines.

To a certain extent, it is understandable why they think this way. Episodes of severe depression are typically accompanied by significant deflation. There also are scary textbook stories of deflationary spirals, where, once deflation sets in, everyone holds off on buying, so more deflation kicks in, reinforcing each cycle down to the point of economic collapse. From an overall perspective, however, it is not understandable, given the real, historical results. It is Chicken Little yelling “The sky is falling!”

Economists have long recognized that severe price inflation has negative consequences, but argue that a slow and steady inflation can be factored in to the buying habits of consumers and business-owners. For some reason, they cannot fathom the possibility of people being able to factor in a slow and steady deflation into their habits. They say that, when prices are expected to be cheaper next year under deflation, people will keep putting off buying, reducing current demand, but if inflation is expected, they will buy future goods now. That might actually help current results, but in doing so, it hurts future periods and is part of the pain experienced when the inflationary bubble pops.

It turns out that the deflationary death spiral is a bogey man, existing only in the imaginations of Keynesian economists. It can’t happen in market societies absent massive manipulation of money and interest. On an industry level, computer and technology prices have been dropping for decades, to a fraction of the prior prices, while the number of units sold is several thousand percent higher. People and companies buy computers when the current price lets them solve their problems now at a price that is cost-effective now. No death spiral occurs in computers.

From a macro perspective, since the 1980s, Japan has been dealing with episodes of deflation, the most severe after the huge bubble market of the 1980s. The period from 2000 to 2013 was marked by a slow, relatively-steady deflation. With the exception of the 2008 global recession, however, it was also accompanied, not by a economic death spiral, but by a sustained reduction in unemployment and improvement in the lives of the people.

The episodes of severe deflation that accompanied recession/depression were also accompanied by other severe economic phenomena and policy mistakes, and preceded by a disastrous inflationary bubble. In other words, the deflation was not the cause of the problems, but rather a symptom of prior and concurrent problems and mistakes.

Severe deflation is the logical and necessary readjustments toward sustainable conditions after an unsustainable inflationary bubble, as witnessed with the last recession. Nobody can factor that into decision-making. A rise in productivity, on the other hand, results in a slow, steady increase in real goods in the economy, which can be factored into decisions. With a non-inflating money-supply, that should translate into lower prices and a falling cost of living, making it easier for people, including the poor, to improve their standards of living.

Real growth in an economy occurs when people have more goods at their disposal, i.e. more wealth. That should be the goal for any policy-maker, but the irrational fear of deflation means that the gains in productivity are, instead, inflated away from the producers, to the benefit of government and international bankers, making it harder for most to get ahead.

Dan McLaughlin is the author of “Compassion and Truth-Why Good Intentions Don’t Equal Good Results.” Follow him at daniel-mclaughlin.com.