Post by naeem10 on Feb 15, 2024 10:45:24 GMT
The European Central Bank has just announced the largest interest rate increase in its history. The Federal Reserve has been raising them for quite some time and so have other central banks such as England. At the same time, governments are announcing and implementing multimillion-dollar public spending plans: the new British Prime Minister has announced a billion plan. The German government announced a few days ago aid worth 95 billion (which would join many other billions already approved) and the United States House of Representatives gave its approval last August to a new spending plan, now 433 billion dollars, at the request of President Biden. In summary.
On the one hand, central banks try to curb demand (that is, consumption or investment spending in the economy) by raising the cost of financing. And, on the other hand, governments promote it, spending billions to give money to households and companies so that they continue consuming or investing. Something so contradictory constitutes, in my opinion, one of the greatest economic blunders in history and it is very easy to understand why. Once again they will make the banks and the big oligopolies win. Although now, as they France Email List say in my neighborhood, they are passing three towns and they are going to make a mess Inflation is a phenomenon that, whatever the cause that causes it, has an unequivocal manifestation: a mismatch between the supply and demand of goods and services that makes the latter greater than the former.
And that is when it is not consciously caused by companies that have enough market power to arbitrarily raise prices without losing income. Therefore, to stop it, it is absolutely essential to either ensure that supply and demand balance, or prevent companies with too much power from imposing their will on the markets. This can be achieved in three ways: increasing supply, restricting demand or putting controls on prices in those markets where there are companies that raise prices at will. All three solutions have problems. Normally, the supply cannot be increased overnight and in large quantities, since companies need time to produce and do not always (as now) have the resources or raw materials necessary to do so. On the other hand, if demand is restricted too much, a paralysis of the economy can occur (killing the sick person to reduce their fever).
On the one hand, central banks try to curb demand (that is, consumption or investment spending in the economy) by raising the cost of financing. And, on the other hand, governments promote it, spending billions to give money to households and companies so that they continue consuming or investing. Something so contradictory constitutes, in my opinion, one of the greatest economic blunders in history and it is very easy to understand why. Once again they will make the banks and the big oligopolies win. Although now, as they France Email List say in my neighborhood, they are passing three towns and they are going to make a mess Inflation is a phenomenon that, whatever the cause that causes it, has an unequivocal manifestation: a mismatch between the supply and demand of goods and services that makes the latter greater than the former.
And that is when it is not consciously caused by companies that have enough market power to arbitrarily raise prices without losing income. Therefore, to stop it, it is absolutely essential to either ensure that supply and demand balance, or prevent companies with too much power from imposing their will on the markets. This can be achieved in three ways: increasing supply, restricting demand or putting controls on prices in those markets where there are companies that raise prices at will. All three solutions have problems. Normally, the supply cannot be increased overnight and in large quantities, since companies need time to produce and do not always (as now) have the resources or raw materials necessary to do so. On the other hand, if demand is restricted too much, a paralysis of the economy can occur (killing the sick person to reduce their fever).
