Why can’t the government just set a concrete price for everything (Rent, groceries, etc) and forbid it from ever changing? That would prevent inflation from ever happening, right?

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Why can’t the government just set a concrete price for everything (Rent, groceries, etc) and forbid it from ever changing? That would prevent inflation from ever happening, right?

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Anonymous 0 Comments

It would (at least in the absence of a black market), but the problem with economics is that things have knock-on effects. For example, what you’re suggesting would remove any way to make money by (say) making better-quality goods, because you wouldn’t be able to charge more for them anyway. And if the fixed price is too low, it might make producing those goods not worth it at all, meaning the supply of those goods would fall to zero.

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