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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Sure, but then it causes shortages. High prices are both a disincentive for consumers to consume things, and an incentive for producers to produce things. For instance, high gas prices can make people choose more fuel efficient cars. They can also make certain costly forms of oil extraction profitable. These are both good for supply.
I buy milk by the quart because I rarely need more than that and it costs $2.00. If it cost $.25 a quart, now I might end up getting a gallon and more milk ends up getting consumed (read: spoiled). Except now you have millions of people doing this…*where’s all the extra milk going to come from*? The answer…nowhere. Milk is going to sell out and you won’t be able to find it.
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