... tricky little devil ... February 15, 2018
Economics can be tricky. At first blush, for example, it seems a good thing for lots of money to be in circulation, so that everyone stands a better chance of getting their hands on some of it to spend in the marketpace and buying and selling is what the marketplace is all about.
At the very beginning it may turn out exactly like that. But the retailers, keenly aware that everyone has more money, get the idea (quite understandably) that it is a perfect time to raise prices in an effort to get their hands on even more of it.
This backfires of course, and with goods lying idle on the shelves it naturally follows that production will suffer, with the complementary rise in unemployment not far behind.
It is good that the money is available, but not excessively. The best way to ensure a balance lies in the enforcement of a respectable tax code, which is a graduated one. Taxes should always rise with income. Millionaires should be paying taxes in the 70% range; billionaires in the 90%.
The most stable markets are those that are the least restricted (the most free), while at the same time well regulated (as contradictory as that may sound). There should be no laws, for example, opposing the selling of drugs or sex. There should as well be laws designed to inhibit the acquisition of excessive wealth.