Try the Australian method. Raise interest rates with the hope that a lot of the population will have less money now and this will lead to spending habit changes that force prices down. That is bound to work especially when it comes to essentials like groceries. Actual outcome
That’s how literally every central bank works. If there’s too much money chasing not enough goods, you get inflation. The only way to solve it is to either make more things or reduce the amount of money. Central banks can’t do anything about the former, so they concentrate on the latter by raising interest rates.
You’re not wrong about interest banks, but in regards to inflation you actually have it backwards. Inflation is the expansion of currency, not the rise of prices. Definitions get entangled because inflation causes a rise in prices, and people don’t know better. Expanding the currency increases the market availability of said currency, thus making it less valuable relative to other goods.
Think about the word inflation. If you inflate something, are you raising it, or making it bigger? Inflating a balloon with helium is not the act of raising the balloon, but rather expanding the balloon. That expansion triggers a rise when it’s helium. Likewise, inflating the currency is to expand the amount of currency.
Inflating the currency too much causes there to be too much money chasing not enough goods, as you describe
Italian method is even better. Explicitly write on the annual budget law that a priority of all measures is to avoid any increase of salaries. Because it would “add inflation”. Italy has the lowest salaries in EU after Greece…
Inflation doesn’t come from employee salaries or wages. Inflation is an expansion of the currency, and the only thing that can increase the amount of currency is the central bank that generates it.
Try the Australian method. Raise interest rates with the hope that a lot of the population will have less money now and this will lead to spending habit changes that force prices down. That is bound to work especially when it comes to essentials like groceries. Actual outcome
https://www.sbs.com.au/news/article/how-are-big-banks-making-profits-in-a-cost-of-living-crisis/2kdw48sml
https://www.theguardian.com/australia-news/2023/dec/03/coles-and-woolworths-to-face-senate-scrutiny-amid-claims-of-profiteering
But yes it does mean that people have less money now.
Edit: fixed links
That’s how literally every central bank works. If there’s too much money chasing not enough goods, you get inflation. The only way to solve it is to either make more things or reduce the amount of money. Central banks can’t do anything about the former, so they concentrate on the latter by raising interest rates.
You’re not wrong about interest banks, but in regards to inflation you actually have it backwards. Inflation is the expansion of currency, not the rise of prices. Definitions get entangled because inflation causes a rise in prices, and people don’t know better. Expanding the currency increases the market availability of said currency, thus making it less valuable relative to other goods.
Think about the word inflation. If you inflate something, are you raising it, or making it bigger? Inflating a balloon with helium is not the act of raising the balloon, but rather expanding the balloon. That expansion triggers a rise when it’s helium. Likewise, inflating the currency is to expand the amount of currency.
Inflating the currency too much causes there to be too much money chasing not enough goods, as you describe
We can debate semantics, but the practical reality is that it is how it’s measured and for inflation that’s CPI, which is a measure of prices.
Italian method is even better. Explicitly write on the annual budget law that a priority of all measures is to avoid any increase of salaries. Because it would “add inflation”. Italy has the lowest salaries in EU after Greece…
Suppressing salaries as a response to unsustainable market dynamics is like eating rocks to help you swim upstream
Write it to Giancarlo Giorgetti, but I don’t think he would understand
Inflation doesn’t come from employee salaries or wages. Inflation is an expansion of the currency, and the only thing that can increase the amount of currency is the central bank that generates it.
Your hyperlinks point to “url” unless my app is busted.
Fixed.