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?

Question

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?

In: 0

Answer 1

Inflation is what happens when people spend more money. Since there’s no new stuff to buy, the shelves get wiped clean. To account for this, businesses raise prices.

So if we fix the price too low, then the economy becomes limited by how fast we can make something, and if we fix the price too high then people complain that the price is too high and corporations walk away with a ton of easy money.