The idea is that we need price stability. By doing so we ignore the power of the market. When the market works properly it is the supply and demand that sets the price. By increasing or declining the demand businesses can meet customer demand.
It is said that inflation is measured and calculated so you can predict the increase in the costs of living. But inflation is just an attack upon your wealth. Or a subsidy for those who are in debt.
When inflation comes unexpectedly it is more difficult for consumers to predict the price of goods or services.
If we look at the beginning of the price control policies, then we that a structural error is in the system. The error is that they assume there is no effect on the paper economy and the real economy.
Let’s say that you exchange 2 peers for 1 potato. Then it is safe to state that the price of 1 potato is the same as 2 peers. But when inflation makes it worth half a potatoes the inflation stuck.
When the amount of money is doubled in the economy, you lost half of your purchasing power.
So how could the amount of money be doubled? Are we, at once, having more money? Yes, we have. To understand this we need to look at how money is created and enters into the economy.
When money is created in benefits the first person who received it. They have more purchasing power and can purchase assets or consumer goods. The advantage is unfair.
Slowly on the money is being distributed among other parties in the economy. The effect is nothing more and nothing less than a redistribution of wealth.
One of the major problems is that we can’t look at the purchasing power as a whole society. We can see it for the expenditure of 1 person. But as a complete society?
Unfortunately, we are not going to see any change in the method they put the statistics together.