Jul

31

It occurred to me lately that a key to reviving a depressed economy, contrary to many theories, is actually to raise prices of most essential goods. This could be done by fixing the prices through an authoritative government or monopolizing institutions, or by raising taxes on these goods. This way, the amount of such goods sold will no doubt be lower (but not too much as these are mostly essential goods), but sales numbers will go up, and moreover, profits/taxes will go substantially up. Then re-distribute the profits/taxes to the most associated parties, who then will make large spending, thus giving boosts to the economy. Clearly, inflation will go up, but this will stimulate members of the society to work much harder, in order to survive as a first motive obviously. Then as the economy wakes up, ensure always to keep prices of many things high, so continued stimulation continues.

So the secret here is to jack up prices! Lowering prices won't work because it's more like welfare, which contributes little back to the economy, as the receivers only consume it.

Obviously, in order for this to work, a pre-condition is that the country stays fairly closed up from the rest of the world.

So haven't we seen proof of this through the past 40 years?

So the question is when and how this will all end? Any comments?


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