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Reporting from the Netherlands. I'm not an economist, but I just don't understand how the current policy has any chance of lowering inflation. Price increases
by dahwolf 3y ago
Reporting from the Netherlands. I'm not an economist, but I just don't understand how the current policy has any chance of lowering inflation.
Price increases here are in energy and groceries. In plenty of other things of course, but those are the two big ones hitting almost everybody severely. Most have already optimized their energy usage (some to the point of sitting in the cold) and optimized for more cost-effective grocery shopping.
And that's it. Energy and food are not very elastic beyond this. One can hike rates all they want but people need energy and food. The demand will not reduce, hence inflation cannot be lowered this way?
Further, if a rate hike is supposed to be a stimulant to save instead of spend, then why is savings interest at 1%? It's like setting your money on fire.
What you'll see happening is that the lower classes spend for not having a choice whilst middle class and higher keeps spending as they always did. If saving is a losing game, why not?
The normal result of a rate hike, elevated unemployment, isn't happening. We have a labor shortage instead. Hence this too will not curb demand.
It would seem obvious that energy prices are at the core of this. Hence, one way or another they have to be lowered. But then again, doing so would increase demand.
Yes, I'm totally lost.
- ChuckNorris89 3y ago>We have a labor shortage instead. Not from the Netherlands, but the labor shortage I see Austria is mostly companies still trying to pay 2020 wages rather than a lack of people motivated toi switch jobs/immigrate. Labor shortage here is just propaganda for "we can't find people willing to work at the salaries we want to pay". In similar fashion I have a constant Ferrari shortage because I can't seem to find these cars at the prices I'm wiling to pay.
- ricardobeat 3y agoThe minimum wage in the Netherlands rose over 20% since 2020, while in Austria it apparently hasn't moved. Though I have a hard time believing the "people don't want to work" theme, when the alternative is having no income at all?
- csomar 3y ago> when the alternative is having no income at all? There is a breaking point where you'd rather not work than work even if there are no government subsidies (ie: unemployment stipend). The math is, it costs you money to eat, go to the job, a roof, etc... If the job doesn't pay for these necessities, you just stop working.
- ricardobeat 3y agoAnd stop eating? I assume you’re talking about young people who can be supported by their parents, which is not everyone.
- ChuckNorris89 3y agoHow many people work for minimum wage? Austria or Netherlands. If minimum wage goes up 20%, because of government regulation or union negociations, doesn't mean every other wage also goes up 20%. People on minimum wage are usually subsidized in most of Europe.