Process
Status Items Output None Questions None Claims None Highlights Done See section below
Highlights
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quickly responding to price shocks — such as the growth in crude oil and refinery margins or farm prices during 2021 — is the best way to prevent subsequent inflation. Models for such intervention exist today in Europe. The German government is subsidizing natural gas suppliers the difference between a government-fixed price for consumers (covering the first 80 percent of 2022 consumption levels) and rising market prices. The French government has frozen all utility prices, providing tax relief and subsidies for energy suppliers. Spain has similarly coupled a price ceiling on electricity bills with subsidies for households and energy providers. J. W. Mason has referred to such programs as “targeted price policies” rather than “price controls,” though it is worth noting that the purpose of the subsidy is to offset income lost to government-fixed prices.
✏️ Ways that a government has dealt/prevented inflation thru quick thinking in protecting public (fixing prices) while compensating producers. 🔗 View Highlight
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Such subsidies, however, only stabilize prices in the short run until production expands to meet demand.
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less administratively burdensome option is for governments to build up “buffer stocks” of commodities, which Weber and Wasner propose, allowing a countercyclical supply policy across price cycles. The Biden administration used the Strategic Petroleum Reserve this way, releasing over two hundred million barrels of oil throughout 2022. During the Vietnam War, the White House similarly used defense stockpiles of steel and aluminum to bring down market prices in those industries. An intentional policy of public stockpiles to ensure even demand in slumps and expanding supply in booms would represent a historic reform of capitalist commodity markets.
✏️ Another method is public supply of commodities that can be released when demand is high in order to even out market prices. 🔗 View Highlight