Many agree that something needs to be done about the high inflation, but not about the means to do so. Traditionally, rate hikes are supposed to help, but they have unwanted side effects – they cool down the economy and hurt those who have already suffered most from the rise in energy and food prices, namely the low-wage earners.
In her book The Ghost of Inflation, economics professor Isabella Weber proposes a different approach, namely targeted measures such as price controls in those sectors that cause inflation. Unlike previous inflations, the current inflation is not due to excessive demand or an excessive amount of money, but has arisen from external circumstances that have made it possible for individual actors to raise prices disproportionately, for example due to the traffic jams on ships in many ports or just the war in Ukraine.
Instead of states reacting hectically at the last moment, as happened in the case of the gas price brake, they should, Weber’s advice, set up a kind of “disaster protection” for economic policy. In other words, procedures and mechanisms that make it possible to intervene in markets when they threaten to get completely out of control due to unforeseen events. Because there will always be reasons and occasions in the future.
A very readable interview.