Re:German banks are hoarding so many euros they need more va...
by erichocean on Monday February 03, 2020 @11:37PM
(#22232455)
They don't find it hard, because it's trivial: just restrict imports (i.e. available inventory). If there are less things to buy, inflation will rise as people "compete" to buy whatever is available. When you hit your target inflation number, relax the restriction on imports to reduce the inflation. Season to taste.
This policy likely has 2nd and 3rd order effects, as it will hurt other countries, but that's a simple strategy to artificially create inflation in CPI items that's fail-proof in execution. Prices will go up.
Restricting imports is much better than just giving people money, because they can use the extra money you give them on things like paying down their debt, or just put it in the bank and save it. Instead, you want to target the things they already buy and make those things scarce, so their price goes up (the definition of "inflation"). Food, fuel, and electricity are the easiest to monkey with because people are always buying them, and don't have much of a choice.
(If you can't restrict imports (or don't want to), you can simply print money to buy up the local inventory yourself and trash it/warehouse it/export it out of the country/set it on fire. The effect is the same: less inventory for the general population is available, causing the price of whatever is left to go up.)
This policy likely has 2nd and 3rd order effects, as it will hurt other countries, but that's a simple strategy to artificially create inflation in CPI items that's fail-proof in execution. Prices will go up.
Restricting imports is much better than just giving people money, because they can use the extra money you give them on things like paying down their debt, or just put it in the bank and save it. Instead, you want to target the things they already buy and make those things scarce, so their price goes up (the definition of "inflation"). Food, fuel, and electricity are the easiest to monkey with because people are always buying them, and don't have much of a choice.
(If you can't restrict imports (or don't want to), you can simply print money to buy up the local inventory yourself and trash it/warehouse it/export it out of the country/set it on fire. The effect is the same: less inventory for the general population is available, causing the price of whatever is left to go up.)