How can inflation be so high right now when average incomes have stagnated for so long? People don’t have more money to spend. Why is inflation so high?
In: Economics
Inflation is caused by an increase in aggregate demand. Printing money, or salaries going up can, but don’t necessarily, cause an increase in aggregate demand. If the government wants to control inflation, they just need to decrease aggregate demand, the most effective way being increasing taxes on the wealthy, which effectively takes that money out of the economy.
You can read more about this by googling “modern monetary policy” or mmt for short.
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