“The 19th century saw continuously falling prices…. Read the financial history of the United States, and it is beset with continuous stock market crashes, economic crisis, and liquidity shortages.

The (labor) union movement sprung largely from the need to put a break on falling wages created by perennial labor oversupply and sub-living wages.

Enjoy riding the New York subway? Workers (were) paid 10 cents an hour (and) built it 120 years ago. It couldn’t be constructed today, as other more modern cities have discovered. The cost would be wildly prohibitive.

The causes of 19th century price collapse were easy to discern. A technology boom sparked an industrial revolution that reduced the labor content of end products by ten to hundredfold.

Instead of employing a 100 women for a day to make 100 spools of thread, a single (person) operating a machine could do the job in an hour.

The dramatic productivity gains swept through then developing economies like a hurricane. The jump from steam to electric power during the last quarter of the century took manufacturing gains a quantum leap forward.

If any of this sounds familiar, it is because we are now seeing a repeat of the exact same impact of accelerating technology. Machines and software are replacing human workers faster than their ability to retrain for new professions.

This is why there has been no net gain in middle class wages for the past 30 years. It is the cause of the structural high U-6 “discouraged workers” employment rate, as well as the millions of millennials still living in parents’ basements.

Instead of steam and electric power, it is now the internet, cheap computing power, global broadband, and software that is swelling the ranks of the jobless.

What’s more, technology gains are now going hyperbolic to a degree never seen before in civilization.

To the above add the huge advances now being made in healthcare, biotechnology, genetic engineering, DNA based computing, and big data solutions to problems.”*1
One last point; (while) “the US lost a third of its manufacturing jobs since 1997, …US now produces more manufactured goods than ever. Steel offers a good example. In 1980, nearly 400,000 US workers produced 83.9 million tons of steel. In 2014, 91,400 workers produced 98.2 million tons.”*2

*1 Mad Hedge Fund Trader, Welcome to the Deflationary Century – 5/23/16
*2 Barron’s, Crossing Borders & Barriers – 7/4/16