Cyprus-Forum.com

[Lordo]

I can understand that an overheating economy with too much money causing inflation can be dealt with by increasing Interest rates to dampen down demand and reduce inflation.

However, the inflation is now being caused by many reasons none of which is in the control of the public. So, when the working class is already squeezed to mere existence with fuel bills going up, food bills going up and some people having to choose whether to heat their homes or eat. Some people can now only eat one meal a day. It will not be long before it drops down to every other day. Old age pensioners unable to heat their homes are getting on busses as it is free and staying on them all day for warmth.

There are 10 million people in UK that either are unemployed, or they earn such low wages that they claim Universal Credit to survive as well as visit food banks.

How has one of the world's richest economies reached this low level? Not that we are alone, America is not far behind in every respect. At least we still have the NHS, they do not have even that.
In the meantime, the energy companies and supermarkets are declaring triple profits. Surely the obvious thing to do is to tax their extra profits and distribute them to those in most need. Or even cap their profits so they do not make excess profits which would be cheaper organisational wise.

What other ways are there to reduce inflation without increasing intersect rates.

[Pyrpolizer]

if inflation is "imported' there's nothing you can do.

E.g. during covid we had a disruption in overseas production sources, increase in shipping costs etc.
We had internal inflation too, for the things we produced ourselves, for the exact same reasons.

If the inflation is "domestic" then you need to find the source that's causing it.
E.g.sharp increase on real estate prices and rents.
In Turkey the main cause of inflation is the loss of the purchasing power of TL itself.

Now assuming you won't manipulate the exchgange rates, the best shield against inflation is to backup your currency with tangible assets, like gold, grain, gas, etc like Russia is doing now

[Londonrake]

Now assuming you won't manipulate the exchgange rates, the best shield against inflation is to backup your currency with tangible assets, like gold, grain, gas, etc like Russia is doing now

Russian inflation is currently 20%. It's GDP forecast to fall by at least 10% this year. No matter how much you Russian invading apologist types try to spin it that's pretty eye-watering. Outside of the front page oligarch billionaires and urban elites that's going to hit "normal" Russian people in the day-to-day economic gut.

That, from a country which is 11th on the global GDP table which spends billions on defence, including eye-catching vanity projects.

It will all end in tears. Hopefully not for us all.

[Lordo]

As far as I can tell, there are two causes of inflation in the UK.

1. Energy prices which is external
2. Reduction in supply due to shortages for verity of reasons.

The reduction in supply is caused by several reasons too
1. Reduction of transport facilities as the EU drivers are no longer able to do jobs here once they are here like pre-Brexit.
2. Lack of available cheap seasonal labour also due to Brexit.

However, previously the government was able to cap energy prices to stop energy corporations make a killing. Surely they can do it again controlling them so they make normal profits not excessive profits as well as forcing them to charge whet they have paid for the energy not what ever they feel like. For instance when Energy price goes up they tend to put up the price next day but when energy price goes down they take months before they would reduce the price.
Supermarkets have also made excessive profits during the pandemic and they have got away with it too.

As the inflation is not caused by money in people's pockets surely taxing them via interest rate increase is simply going to do nothing. They cannot stop eating and they cannot stop heating their homes.

BTW this is not a political question it is simply an economic question. Keep Russia and Ukraine out of it please. Unless of course it is contributing to the Inflation problem. For instance most of our vegetable oil comes from Ukraine so first we had the shortages, now the price has gone up and still there is shortages. So clearly price going up has not solved that little problem.

[Londonrake]

You obviously haven't spent much time in the like of Mumbai.

[Maximus]

Surely the obvious thing to do is to tax their extra profits and distribute them to those in most need.

Surely, the obvious thing to do is to steel money from peter to give it to Abdul. Who will pay peter back so he ends up getting free energy and food.

What other ways are there to reduce inflation without increasing intersect rates

Its not by steeling money from Peter to give it to Abdul or restricting how much money someone makes or by raising the minimum wage.

The only way to bring down and control inflation is to restrict or reduce the money supply (stop printing money) and encourage people to reduce demand and consumption (savings).

Interest rates are the lever to dial it in or dial it up.

[Lordo]

You obviously haven't spent much time in the like of Mumbai.

What is Mumbai got to do with it. I am talking about economics and the choices we have when trying to control inflation. The Interest rates cannot be the only answer because there is no money supply to restrict. That only works when there is too much money in the system. In fact far from it, there is no money in 10 million people pockets. So much so that despite having sometimes up to 3 jobs they still depend on Universal Credit and Food banks.

I go back to pre-April, government had a cap on what energy suppliers could charge their customers and yes a few went bust but most survived. Now of course they released them and the prices have doubled.

This goes back to a discussion we had previously as to how corporations charge their customers. If wages increase by a percentage or raw materials go up by a percentage, it is mathematically incorrect to simply increase the price by that percentage. Because the labour charge or the materials are not the only contributing factor in price determination. By all means they should make a reasonable profit in order to stay in business but that is not what they are doing when they are taking advantage of the situation and trebling their profits. Add to that they do not even pay their taxes either, they have a habit of making their profits disappear.

[Londonrake]

For you, Mumbai would be a lesson in just how well off we are. I suspect, regardless of all the food bank angst - perhaps in the top 10% (three properties FFS??).

Despite all the send them to the gas chambers/gulags/killing fields that inevitably result when people who think like yourself or GR actually acquire some sort of meaningful power.

[Lordo]

For you, Mumbai would be a lesson in just how well off we are. I suspect, regardless of all the food bank angst - perhaps in the top 10% (three properties FFS??).

Despite all the send them to the gas chambers/gulags/killing fields that inevitably result when people who think like yourself or GR actually acquire some sort of meaningful power.

Oh I see of course how dare I criticize the assholes.

What the hell are you talking about?
Are you drunk?
Are you actually implying that I am too rich to complain about the plight of the poor in one of the richest nations in the world?

[Lordo]

So it seems capping of profits seems to be the best answer to control inflation and allow the corporation to make some profit but not a killing. After all we do not want them to go bankrupt. Unlike what they to to their farmer suppliers of course.