It doesn’t make sense to me. I used to be all like but then everything increases in price still Yada yada. But recently… why can’t we just lower the prices of petrol artificially. Why can’t we just lower housing prices by law?? Why can’t we erase inflation seeing as it’s completely made up anyway.
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The short answer is because the US Govt doesn’t have the authority to dictate prices of things. We have a semi free market, where the prices of things are determined by a number of factors (cost of production, cost of R&D, transportation costs, etc). This is not a perfect system, what system made by humans ever is, but it’s one that is better than everything else that has been tried. Say the government did say that, for instance, twinkies could only cost 50 cents. That would mean that, no matter what it takes or costs for the company to bring you twinkies, they could only charge 50 cents for it. This might come as a cost for the company, seeing how it actually costs the company 75 cents to bring the twinky to you, and would result in the company going bankrupt. Ergo, no more twinkies. I’m not an economist or anything, but that’s how I understand things.
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