It is hard to fathom what life would be like without a monopolistic central bank and fiat money. We live in a world of inflation. This started in 1913 with the start of the Federal Reserve. It sped up quite a bit in 1971 when Nixon closed the gold window and broke the last links that the U.S. dollar had to gold. Since then, it has been a world of total inflation. Of course, some years have been worse than others.
If there was no monetary inflation, or perhaps minimal monetary inflation with a gold coin standard, then things would work much differently now. You would not see massive swings in stocks. The price of the general stock market would not go up significantly over time. This doesn't mean it would be a bad investment.
Housing prices would not continually go up. The prices might actually decline very gradually (not like a housing bust). Houses are like cars in that they depreciate. They just don't depreciate as fast and the land that they sit on doesn't depreciate. The reason that housing prices go up over time is because of monetary inflation.
For politicians who say that we need to grow our way out of the debt, they only understand a portion of their own argument. If the GDP grows and the additional tax "revenue" is used to pay down the debt or even if the debt remains the same while the economy grows, then the debt situation improves. But we can also credit monetary inflation for this happening. The only way that the national income can increase in nominal terms is through monetary inflation.
If we lived in a world without inflation (or with minimal inflation), then salaries would not rise by much, if at all. Certain individuals would make more from one year to the next, but the average would stay about the same.
So why is inflation a bad thing then?
Inflation really plays tricks on you. For even the best Austrian school economist, inflation will distort things.
If you get a raise for your current job for 2%, but price inflation is currently at 3%, then you are actually taking about a 1% loss. Your income is going down by 1% in real terms, even though it is going up in nominal terms.
In a world with minimal inflation, your income wouldn't rise, but neither would consumer prices. In fact, in a free market economy, we would see something similar to what we see now with electronics like computers, televisions, and cell phones. The quality would get better or the prices would go down or perhaps both. In a relatively free market environment with minimal monetary inflation, you would see prices go down for education, healthcare, cars, vacations, food, etc., while your income would likely remain the same (in the same job).
In a world without inflation, stock investors would buy stocks for dividends. It would certainly be possible to have capital gains for individual stocks, but the overall stock market would be unlikely to fluctuate too much.
Again, this is all hard to imagine because we live in an inflationary world.
The way to grow the economy isn't through more monetary inflation that results in higher prices. This is just a distortion. The way to grow the economy is through a stable free market monetary system and minimal government interference.
The 19th century in America was a time of relative peace and prosperity (not counting the war time of the 1860's). Prices actually went down slightly over this time. It was really the most prosperous time in history (unless you want to argue for England during that time). The technology and capital investment that was built up in the 19th century really laid the groundwork for all of the new great things that came out of the 20th century.
It really is hard to imagine a world without monetary inflation. Most people think that the world we live in today is the way things are supposed to be. They don't understand that prices are not supposed to go up continually, year after year. They don't understand how much they are being robbed from the debasing of their money. They don't understand how much better their standard of living could be.