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Corporations raise prices until demand starts to reduce. If you had a store that was constantly selling out of goods, you’d raise the prices until you stopped c
by qeternity 4y ago
Corporations raise prices until demand starts to reduce. If you had a store that was constantly selling out of goods, you’d raise the prices until you stopped constantly selling out, no matter what your input costs are.
This is what the Fed is attempting: demand destruction.
- PaulDavisThe1st 4y agoThis is not a law of nature. It's a function of the idea that you should always seek the highest price you think you can get. That's a very specific political and moral idea, and some people, in some circumstances, would call that "price gouging". Nobody is demanding that a store raises prices in response to being out of stock - the store does it because it believes people will pay more, and if their costs are constant, they will make more money by charging more. There are other conceptions of how this could/should work that do not bestow god-like status on "the highest price that doesn't shrink demand is the right price".