How to figth inflation ? “Let’s raise incomes !”

It’s a pitty -albeit not surprising from a human behavior point of view- to see intelligent people launching stupid ideas when confronted to a crisis…

The fight against inflation, that’s the new motto (CPI exploded in may at +7,6 per cent, y-o-y, read here).

The prices capped policy, the postponement policy have failed… Therefore, here is the new ultimate weapon

Chairman and Chief Executive Officer of Charoen Pokphand or CP Group advised the government to support an increase in farm product prices as well as workers’ salaries because the measures can boost the domestic economy. Furthermore, they will not harm the country’s inflation rate. He said inflation means that an individual can not afford products because their selling prices are too high. (TOC)

And…

Dr Surapong [Finance Minister] said the current situation differed from past oil shocks.

”In the past, once prices reached a certain level, they stabilised. But prices now are rising steadily, preventing us from finding a level for the economy to adjust,” he said.

What we can do is take steps to raise incomes to cope with rising inflation.

The finance and energy ministers tomorrow would propose a new package of measures aimed at helping ease the burden of fuel prices on the public. (Bangkok Post)

So, for them, it’s easy. Inflation curbs purchasing power, therefore we just have to increase incomes to solve the problem. 😉

This is what they did in Zimbabwe. And in the Weimar Republic in the 20s… Wages were increased on a hourly basis at that time… to follow inflation…

So are they stupid ? I don’t think so.

The chairman of CP (one  of the biggest thai company) is just cynical : he wants the people to have money to buy his products… As for the Finances Minister… he’s cynical too… As a politician, he has short term interests…

We need to stop lying to people : to increase wages, to give “money” away won’t solve the problem.

It will make it worst.

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