Scott Sumner makes this point using NGDP. I’ll say it in more mainstream terms.

If you think one of the problems with the New Economy, is that it produced a lot of happiness at low cost, then you are basically saying that the problem is that the US economy experienced massive disinflation and potentially deflation. How far you get depends of course on your estimate of the benefits of the internet.

To the extent that’s the case it makes perfect sense that debtors would be major losers in this game. They were expecting a world with steady growing inflation, they got a world where the cash price of happiness collapsed, but whoops they still owed they bank actual cash.

Add to that the point that this deflation is only benefiting infovores and you have the problem that there is widespread deflation and exploding inequality that puts enormous pressure on the working class.

This is a fairly common story. It’s a modern Cross of Gold, with infovores playing the role of the urbanites and the rest of America the farmers.

I am not saying much here, but there is much in this part of the story that interests me.