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The Federal Reserve controls the country's money.
They created this inflation over the past 2 years by flooding the economy with tens of trillions of "created" money.
And it's up to them to reign it back in. That's $15 trillion they poured in the economy that we don't have.
And they have not made a single move to raise rates to decrease the flow.
Inflation is in whole or in part a result of increasing the money supply in a given population/market/area. In other words, the money supply is always a factor with inflation.
Another factor is simple supply and demand. If supply decreases, prices increase until demand decreases as well. If demand increases, prices increase until supply increases. Supply and demand is an immutable law of the universe, and there is literally no getting around immutable laws of the universe.
Final factor is market speculation. Gas prices are a reflection of the 6 month out global speculative price of a barrel of oil, which itself is pretty supply/demand related. When market speculation gets really volatile, prices generally spike up. There are other goods and services that are affected by market speculation, I just use gasoline as a familiar example.
You cannot price control your way out of inflation because prices are not a cause of inflation, they are an effect. Controlling an effect does not change a cause. Does putting a jacket on when it is cold outside change the atmospheric temperature at your location? No. The outside temperature is the cause, and you feeling cold/warm is the effect of that cause. Wearing protective clothing mitigates an effect, but does not change the temperature cause.
Same thing here. You can slap a price ceiling on Good X or Service Y, but you have not and cannot change the causes that created the price for Good X or Service Y. What you do instead is amplify/exacerbate a cause - namely, supply and demand. With an increased money supply and an artificial dampener on price, you increase demand without increasing supply. Guess where prices go until supply catches up? But can supply catch up on its own? How many upstream inputs to the actual suppliers of Good X and Service Y are also being artificially meddled with and thus showing their own inflationary effects, thus lowering the supplier ability to actually increase supply profitably?
There's a reason price controls always fail and only make things worse.
Here's how you reduce inflation.
1) Contract the money supply.
2) Remove government from private markets of any kind.
3) Have government be more stable and less intrusive with regards to both domestic and global economic interests.
Just look at the Nixon years. Expect work arounds like novel cuts of meat , or "new products which avoid classifications. Then there will be "shortages".
I am not fully understanding how this works effectively in achieving the outcomes we want
Of course we want to keep prices lower and raise wages,
But let’s see how this works:
A peanut grower small or largely owned , doesn’t matter sells crops to a wholesaler … the manufacturer’s overhead far more consists of supplies , land acquisitions , not a lot of wage but if those raw materials and utilities all come from America which they probably don’t, their costs are fixed and the price they charge to wholesale isn’t likely to have room to go down . Real estate price controls wouid be needed to fight inflation here but doing that would stifle home ownership as no seller would be able to make money in real estate . That wouid hurt American farmers reducing the number of crop growers and price controls would render wholesalers to not buy American …. With weakening dollar this won’t fight inflation at the source
Next , wholesaler needs to make money selling peanut and buy machines to make peanut butter and package peanuts
They sell to retail, small businesses, restaurants …
If that price isn’t lower and it won’t be , and then wages are not capped,
customers will not see a cap on price levels and if Biden mandates that then you lose retailers from the marketplace
FDR pulled this garbage and the result was the longest and worst Depression in Americas history. Boobus doesn't think, boobus just does.
FDR's admin has the distinction of being the only administration in US history to create a depression within an already existing depression. Price/wage controls, gold seizure, 91% tax rates and government control of private employment have that effect, dontcha know.
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