Demand Regulation Policy

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= policy proposal: Stable prices could be guarantied by the creation of a Demand Regulation Policy (DRP). [1]


Description

A 'good world' movement proposal:


"What is inflation? Inflation occurs when the same amount of money buys less today than it did yesterday. It is usually the result of an increase in demand for goods without a corresponding rise in their supply. To expand supply requires increased investment. This goes into building new factories and buying new plant and machinery. Wages are paid to those building the factory, and manufacturers are also paid. Their money goes straight into the economy, and results in an immediate increase in demand before the new goods have been made. The extra demand, without a corresponding increase in supply, produces a rise in prices.

How is inflation controlled? Inflation is usually controlled by raising interest rates, which makes it more expensive to borrow money. The result is a serious discouragement to investment, fewer new businesses are created and old ones cannot expand. The economy then becomes stagnant and unemployment increases.

Is inflation inevitable? A stable economy could be achieved through a Demand Regulation Policy. At times of inflationary pressure the National Investment Fund would be empowered to hold back payment of the interest on its investments. This money would be put in savings bonds for each citizen and would be made gradually available to them as inflationary pressures in the economy eased.


What would be the benefits of DRP?

  • It would create an inflation-free economy, maintaining the value of purchasing power
  • Income would not be reduced through taxation but part of it would be converted into temporary savings.
  • Consumer power would be deferred but not permanently reduced
  • The DRP would maintain the availability of investment capital
  • Investors would be able to plan for the long-term future with the assurance that prices would remain stable "

(http://goodworld.lightnet.co.uk/econpack.htm)