https://web.archive.org/web/20211230175649/https://www.theguardian.com/business/commentisfree/2021/dec/29/inflation-price-controls-time-we-use-it
BAHAHAHHAHAHAHAHAHAHAHAHAHAHHA
The mad lads!
It's like they say the dumbest thing you've ever seen and you're like "they can't top this" AND THEN THEY DO
every tiem
BAHAHAHHAHAHAHAHAHAHAHAHAHAHHA
The mad lads!
It's like they say the dumbest thing you've ever seen and you're like "they can't top this" AND THEN THEY DO
every tiem
@cy They will absolutely hurt. They are the worst possible solution to the problem.
You pump the economy full of money and cut production by fiat. Prices rise because of course they rise, a larger number of dollars are chasing a smaller amount of goods and services. Then you implement price controls. Then companies can't keep shelves remotely stocked. People suffer horribly, there will be starvation, black markets will be the only way to get basic goods, and those goods will be at an astronomical mark-up because not only is inflation worse and worse, but now your normal goods need to be sold on a black market.
It only happens every single time. In some countries it's happening right now. I have several framed currencies on my wall from the horrible times it occurred.
Then morons will come out of the woodwork and say "Nobody could have predicted this!" despite it being totally predicted years in advance by anyone who knows anything about economics.
You pump the economy full of money and cut production by fiat. Prices rise because of course they rise, a larger number of dollars are chasing a smaller amount of goods and services. Then you implement price controls. Then companies can't keep shelves remotely stocked. People suffer horribly, there will be starvation, black markets will be the only way to get basic goods, and those goods will be at an astronomical mark-up because not only is inflation worse and worse, but now your normal goods need to be sold on a black market.
It only happens every single time. In some countries it's happening right now. I have several framed currencies on my wall from the horrible times it occurred.
Then morons will come out of the woodwork and say "Nobody could have predicted this!" despite it being totally predicted years in advance by anyone who knows anything about economics.
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@cy The exact scenario I described is occurring in several South American countries right now. I've got Venezuelan bolivars on my wall, and since I put them up there several years ago the currency has only gone up a million percent -- and that isn't hyperbole. They keep dropping more 0s off the notes so it isn't as obvious that there's more money in circulation. I'm a Zimbabwean multi-trillionaire, I've got every denomination from one dollar to 100 trillion dollars on the wall as well. They were just more honest about it and didn't bother dropping the extra zeroes.
Venezuela got price controls as well, but the problem is the same: Too many bolivars chasing too few things. And people starve despite having full wallets.
Central planning doesn't work. Politicians want to promise you everything you've ever dreamed of to get into power and stay in power, but the reality is there's a limited amount of stuff and a limited ability to produce stuff, and you can't magic that away by printing more money. All you can do is make everything more expensive. There is no magic wand, and every time they promise a magic wand, suffering follows.
The problem right now is there's too much money and not enough stuff. Companies would be happy to have more stuff to sell, but it just doesn't exist. Central planners shut down most of the economy in the name of protecting us from COVID, then handed everyone giant wads of cash to buy what remained.
Price is the distributed feedback mechanism to make sure there's enough stuff for the amount of money out there. If more stuff is produced and the money supply stays the same, then the prices of the stuff will generally drop because there's more stuff for the amount of money available. If less stuff is produced and the money supply stays the same, then the price of each thing will go up, because there's less stuff for the amount of money available.
If you don't like that the prices are going up as you have more money chasing a smaller amount of stuff and try to stop that mechanism by implementing price controls, then the shelves will always be empty whether you nationalize industry or not, because there will be too many dollars for the stuff available. There are plenty of socialist countries that nationalized and still weren't able to keep food on people's tables.
There are two solutions that both need to take place: First, the money supply needs to shrink. this will mean increasing interest rates and taking money out of the economy. It will hurt a lot, but it's the only way that's been proven to work. Second, let prices go where they need to. If prices go up and there's a reason to make money, then individuals and companies will invest in new productive capacity to ensure they can get that money. In this way, it is said that "the solution to high prices is high prices". Once the new productive capacity is in place, prices fall because there's more stuff chasing the money.
The current solution we're discussing is the opposite of effective policy: Increasing the money supply further to make sure there's lots of dollars to buy stuff, and price controls to make sure there's no reason to bother investing in productive capacity to make more stuff.
You end up with a full wallet and an empty belly.
Venezuela got price controls as well, but the problem is the same: Too many bolivars chasing too few things. And people starve despite having full wallets.
Central planning doesn't work. Politicians want to promise you everything you've ever dreamed of to get into power and stay in power, but the reality is there's a limited amount of stuff and a limited ability to produce stuff, and you can't magic that away by printing more money. All you can do is make everything more expensive. There is no magic wand, and every time they promise a magic wand, suffering follows.
The problem right now is there's too much money and not enough stuff. Companies would be happy to have more stuff to sell, but it just doesn't exist. Central planners shut down most of the economy in the name of protecting us from COVID, then handed everyone giant wads of cash to buy what remained.
Price is the distributed feedback mechanism to make sure there's enough stuff for the amount of money out there. If more stuff is produced and the money supply stays the same, then the prices of the stuff will generally drop because there's more stuff for the amount of money available. If less stuff is produced and the money supply stays the same, then the price of each thing will go up, because there's less stuff for the amount of money available.
If you don't like that the prices are going up as you have more money chasing a smaller amount of stuff and try to stop that mechanism by implementing price controls, then the shelves will always be empty whether you nationalize industry or not, because there will be too many dollars for the stuff available. There are plenty of socialist countries that nationalized and still weren't able to keep food on people's tables.
There are two solutions that both need to take place: First, the money supply needs to shrink. this will mean increasing interest rates and taking money out of the economy. It will hurt a lot, but it's the only way that's been proven to work. Second, let prices go where they need to. If prices go up and there's a reason to make money, then individuals and companies will invest in new productive capacity to ensure they can get that money. In this way, it is said that "the solution to high prices is high prices". Once the new productive capacity is in place, prices fall because there's more stuff chasing the money.
The current solution we're discussing is the opposite of effective policy: Increasing the money supply further to make sure there's lots of dollars to buy stuff, and price controls to make sure there's no reason to bother investing in productive capacity to make more stuff.
You end up with a full wallet and an empty belly.