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Originally Posted by westopher
Turkeys inflation is at 55% and I don't think they are printing money and giving it to the poors there.
Switzerland has a lower inflation rate than Japan and their social safety net is huge. Your causation isn't real.
Seems like inflation correlates pretty heavily with inequality and high percentages of property and wealth owned by a shrinking portion of an economic area, combined with reliance on importation of goods. Supply control mixed with demand.
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You need to dive deeper. Turkey might not have handout money to their people directly, they handed out money to its economy like it's free in order to bring many of the productions domestic instead of continuing to import stuff.
The problem is that, they are not very good at doing that. And when the central bank pump so much money into businesses to produce things ineffectively. That money goes into the economy one way or the other.
And when you pump so much lira into the market, while still relying on imports for many many life necessities, what do you get? Life necessities that are still being imported becomes extremely expensive, and businesses that import them need to be forward looking with their pricing. They need to make sure that if they sell one banana for 10 lira today, they need to at least be able to import another banana. And if they need 12 lira to import another banana, they will price the banana today at 12 or higher because otherwise they can't sustain the business.
Either way, the source of inflation is simple. Central bank printing too much money. They are the only one who can legally do it. And when a dollar is worth less today than it was yesterday, price gets adjusted and you get inflation.
The only true way to get inflation under control is to cut spending (or handout from government to whoever). But our government (or even the US/EU counterparts) aren't willing to do that. And what can the Fed of BoC do? They can't dictate gov't expenditure. So the only thing they can do is to raise interest rate in order to crash the economy. When people have no demand because everything is too expensive, price will have to either go down or cease to exist as a product being offered for sale.
What happens when economy goes kaput? People who are used to handouts... ask for more. Hey... the handout you are giving is no longer enough to buy all the bananas I need? You need to come up with more so I can still buy all that bananas. This is the fucked up problem with government handouts. When you give money to the people... say for them to be able to have bananas... very few actually go planning around what they can do with that money in order for them to get more bananas without problem in the future. They just go buy bananas.