How to stop inflation
The market, and the humans who handle it, it is often very capricious, and bad data it takes well, a good, evil, one that hardly takes into account all of a sudden it is very important and one was a reference goes unnoticed. In any case, I do not think this a little more on pedagogy and indicating whether each data is positive or negative increases in the current situation. Today we deal with those from the U.S., of which I have 10 computers in the order in which they usually occur every month, leaving for the final quarterly GDP is: ISM: Different methods have been suggested to stop inflation. The central banks can significantly influence this effect by setting the higher interest rate and controlling the money supply. The high interest rates, which reduce the growth in money supply, are a traditional form of combat inflation. The downside of this policy is that it may stall economic growth and promote unemployment, which currently can be seen in some European countries.
The propeller of the theory of “supply side” was bent on fixing the exchange rate of the currency or reduction of tax rates under a floating exchange rate to promote the creation of capital and reduction in consumption .
Another method is to establish control over wages and prices. This was introduced by the Nixon administration at the beginning of the 1970s, with negative results. In general, most economists agree that price controls are counterproductive since it distorts the functioning of an economy, given the scarcity of promoting products and services and diminish their quality, among others.
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