If the economy is having inflation in prices what can the government do about it?

Question

If the economy is having inflation in prices what can the government do about it?

Answer 1

In NZ our government does nothing. ;(

Answer 2

Inflation is the government's fault. There is legitimately some inflation that can happen in a free market that is out of the government's control (demand-pull inflation, where a very high demand for something pulls up the price, and cost-push inflation, where supply shocks push up the prices- like the oil shocks of the 70's).

But the sustained inflation we're seeing is almost purely the result of the government printing too much money. If you study basic macroeconomics, you learn how this cures a lot of their economic woes, but this is only temporary and it screws us over. Inflation=taxation; instead of taking away three dollars out of ten, for example, through taxes because we'd complain, they devalue it so that the new ten is only equal to seven of the old dollars; but since it's invisible no one complains. Blame the Fed for your problems, they've been printing dollars like crazy. (And don't trust their inflation statistics, they don't count food and energy.) Look at how the dollar has devalued since the creation of the Fed in 1913, and the gold standard's abolishment in 1975, there's no way that's normal free-market inflation...

http://goldnews.bullionvault.com/inflati...

(look at the graph of the US dollar)

But hey, it could be worse. Over the course of WWII Hungarian prices rose 8 octillion times. By 1946 the *monthly* rate was 41.9 quintillion percent. Maybe we have it easy... :)

Answer 3

The congress need do only one thing.

Stop the Fed from increasing the money supply.  

A quite simple change in the law.

it's too late for that now.  The dollar will collapse before the congress will admit it's been sitting on it's butt for way too many years.

Answer 4

Contractionary monetary and fiscal policies: raise the interest rate, raise the reserve requirement, raise taxes, decrease government spending