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shakil | 2 years ago
In Capitalism, we scorn at "price controls", and then go through a tortuous and roundabout mechanism by raising interest rates, so that the increased cost of borrowing causes corporations to cut expenditure which then pushes higher unemployment, reducing purchasing power and consequently reduces demand, all in the hopes that reduced demand would then cause prices to drop. But if the price increase wasn't triggered by higher purchasing power, then this whole rigmarole is meaningless, inflation remains "sticky"
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