When a Deflationary Environment Undermines Government Regulations Fiat Prices Get Out of Whack: German economy on brink of disaster as inflation highest in 28 years – October 29, 2021,
Current German inflation shouldn’t be confused with hyperinflation, but it can become problematic because Germany has very regulated economy, you need a permit for almost everything in Germany, which becomes problematic if there are SHORTAGES. Government regulations create instances in which certain products or services won’t even exist.
If as an example uber gets banned in Germany, well that’s an entire segment of the market that could drive down prices for the consumer that won’t exist. I use Uber intentionally because it was banned in Germany I think way back in 2015, so an entire market ceases to exist in Germany to drive down prices, now imagine you multiplied that multiple industries in Germany, and one day the global economy slowed down? all of the sudden all of these fantastic regulations are used against you.
This is the stupidity of Left-Wing politics, some Left-Wingers like to boil the frog slow, others Left-Wing nations like Cuba and Venezuela turn up the temperature quickly. What Germany does have correct is they do a better job keeping politics out of the classroom, which is why Germany is the best performer in the European Union.
The German education system is often a reflection of the demands of the market, so I don’t think this inflation problem in Germany will turn into hyperinflation, but it could prove problematic if global shortages remain an issue. Furthermore, the foolish German ban on Nuclear energy is a head-scratcher, because Germany is heavily dependent on importing energy which of course, leads to more fiat price inflation.
I do to know if Germany still has that silly feed-in tariff corporate welfare model for solar and wind but that will drive up energy prices also. Being that the German economy is energy-intensive, this could be a lingering issue. Now, most of these regulations that exist in Germany probably wouldn’t exist if they had a Gold Standard, because when money isn’t fiat money, governments and people see in real-time the real-world effects of socialistic policies.
In a fiat monetary system, it might take years for people notice the damning effects of government interference in the marketplace. Worse still is if you’re anti-capitalism, when socialism fails, you’re obviously not going to blame the government for the disaster, you’re likely going to blame capitalism, so this has been the reason why Europe created the Euro-Zone to begin with, because why blame socialism when you can create an entirely new fiat currency that “unites” the bad socialistic ideals of Europe.
If Germany is experiencing inflation problems, one can only imagine what awaits for other EU countries. Just a quick reminder for people who may not understand DEFLATION because they value their wealth in Fiat currencies. Rule by decree money is used to HIDE DEFLATION, most Left-Wing idealogues believe in the “Wealth Effect” meaning that when people “FEEL” richer, they’ll spend differently.
being that public schools often omit Austrian economics from their curriculum, people and businesses who don’t imagine Money merely as a medium of exchange, will MAL-INVEST when you reward them for their bad behavior and this mal-investment can stimulate the economy, adding fuel to the fire are dumbass Left-Wing regulations, there are regulations society needs like I don’t want toxic waste being dumped into my local lake, but then you have regulations that stunt economic growth.
Uber as an example was banned in Germany because of lobbyists, that’s a regulation that exists primarily because of fiat money, if the government couldn’t control the money supply and market INNOVATIONS were driving down prices, financially savvy individuals would most likely push back against silly big government ideas.
Fiat money allows a medium of exchange to be DEBASED, which sounds ridiculous when you understand that money is merely a convenient form of bartering. ow, there’s nothing wrong with accrual accounting, or even fractional reserve banking as long as all the parties involved understand the potential risks. But when a government comes up with a dumbass regulation and forces all of its citizens to abide by that dumbass regulation, sure for a time things will be fine, but eventually the economy contracts, and all of sudden that regulation becomes a BARRIER to entry, that might be hard to achieve based on the market conditions the Left-Wing government created.
Anyway, for the same of the Euro-Zone let’s hope this problem is that big of a deal!
Interesting times ahead
