Can inflation actually be fixed? Is there any hope? Or will prices just gradually keep increasing?


Can inflation actually be fixed? Is there any hope? Or will prices just gradually keep increasing?

In: 45

Prices will never stop rising, and that’s by design. Governments never aim for 0% inflation, because economists agree that *some* amount of inflation is always needed. Most governments instead try to have 2% YOY inflation to incentivize spending and disincentivize hoarding. Governments are usually pretty good at keeping inflation in the 0-2% range, so in that sense inflation is already fixed.

Prices gradually increasing is ideal for a healthy economy, which is why most central banks have a target of something like 2% inflation on an annual basis, deflation or shrinking prices damages an economy.

As other kind redditors have already illustrated that some little inflation is actually beneficial and preferable than 0% inflation, I will touch on your other point and hopefully explain.

Yes, inflation can be fixed but what we need is a monumental shift away from corporate greed and several global situations to resolve themselves. Prices are not high because wages are high, prices are high because there are factors such as opportunities in the market driving them high. Corporate profits are higher than ever because there are supply issues globally due to the after effects of Covid, the war in the Ukraine etc and also the instability of markets such as real estate in China and the gradual collapse of the Russian economy due to epic sanctions.

Europe has had to invest a lot of money recently in divesting in their energy security, away from Russia, which *was* driving prices up but they have relatively sensible governments and are taking appropriate measures to reduce inflation steadily. Their supply chains are becoming more secure and reliable post Covid.

Except the UK. That shit is just insane right now. Supply chains are broken, everything costs loads because of Brexit and bewilderingly low productivity in the economy and a housing crisis that is at real risk of blowing up into a full scale real estate meltdown.

The capital class who owns this modern economy want this type of economy to continue. And *deflation* risks destroying it — if prices gradually decreased year over year, the theory is people would hold onto their money longer, waiting for a better deal. Meaning reduced demand, meaning lower prices, around and around until this type of economy failed.

Many disagree this would be a bad thing.

The flow of new money into the economy can be slowed by increasing federal reserve interest rates, from which all money originates.

The surplus supply of money already in the economy can only be soaked up with the sponge of taxes.