President Biden has begun to accuse stores of overcharging shoppers, as food costs remain a burden for consumers and a political problem for the president.
Price fixing works if you’re coming at it from two directions. Set the price for consumers and subsidize the producers. Setting the price for consumers ensures middle men aren’t taking absurd and unearned profits. Subsidizing will increase supply sufficiently that the artificially lowered price is not relevant. This ensures black markets don’t arise selling those goods at a markup.
Tying inflation to monetary policy is not useful. The primary lever of monetary policy is debt lent by the federal reserve to banks. Cheap debt causes an inflation in the prices of housing, socks, and other investments. It does not have a large effect on the consumption of eggs or milk. There’s no reason people’s consumption, and thus the supply of groceries, should be impacted by cheap debt.
The initial burst of inflation was caused by supply shocks due our fragile global shipping infrastructure, fuel prices, productivity decrease due to COVID-19, and other related issues. Subsequent inflation was companies raising prices because consumers would know inflation was happening and be less likely to shop around, greedflation in other words.
Price fixing works if you’re coming at it from two directions. Set the price for consumers and subsidize the producers. Setting the price for consumers ensures middle men aren’t taking absurd and unearned profits. Subsidizing will increase supply sufficiently that the artificially lowered price is not relevant. This ensures black markets don’t arise selling those goods at a markup.
Tying inflation to monetary policy is not useful. The primary lever of monetary policy is debt lent by the federal reserve to banks. Cheap debt causes an inflation in the prices of housing, socks, and other investments. It does not have a large effect on the consumption of eggs or milk. There’s no reason people’s consumption, and thus the supply of groceries, should be impacted by cheap debt.
The initial burst of inflation was caused by supply shocks due our fragile global shipping infrastructure, fuel prices, productivity decrease due to COVID-19, and other related issues. Subsequent inflation was companies raising prices because consumers would know inflation was happening and be less likely to shop around, greedflation in other words.