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Roger's avatar

Thanks! Your clearly written perspective on inflation is quite helpful. The various news channels either sensationalize inflation or revert to simplistic sophistry.

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Herb Wiseman's avatar

In Canada, when the first Trudeau govt embarked on fighting inflation with interest rates after wage and price controls, I wrote to them and pointed out that they were trying to use gasoline to put out a fire.

It was my belief then and now that in addition to other unfair impacts, higher interest rates contributed to higher prices at every step of the supply chain as businesses experienced higher credit costs for manufacturing and shipping their products to retailers who also experienced higher credit costs while awaiting the market to clear their “shelves.” Those higher credit costs would find themselves a part of prices forcing another cascade of effects on labour costs and hours of work.

I could see that to reduce the credit charges, retailers will clear their shelves by lowering prices but that will have limits.

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