The Next Step Towards Economic Suicide: Price Controls

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If the markets are right and inflation really does kick into high gear, it’s going to create a lot of anger and resentment towards the government’s fiscal and monetary strategy.

(Normally people will accept reckless strategies, so long as we don’t feel the symptoms right away).

But it’s unlikely the government will actually do any kind of U-Turn on its policies. Instead, watch for inflation fighting the old fashioned, meatheaded way: price controls. Historically, this has been the government’s stock approach to dealing with rising prices, and no amount of evidence that it doesn’t work (and will end badly) has ever made a difference.

In fact, we’re already seeing it in a soft way with healthcare, as the strategy is to browbeat the industry into cutting costs (you have to figure there will be some unpleasant repercussions for those who don’t play along). You’re also seeing it already in credit card rates (though price controls with interest rates are nothing new).

Other areas it’ll show up in: Energy prices (Obama is already heading to the middle east to “talk” about global oil prices), car prices (watch what happens when the car companies dare to past the new, more expensive technologies onto consumer) and possibly food commodities.

Next step after that… shortages of all of the above.

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