Runaway inflation, is there a remedy? The proposal
Before the advent of the euro, all nations with their own currency defended themselves frominflation, imported and / or internal, with interventions of various kinds. In Italy we have been going on for years with the “escalator”, In other situations by devaluing the Lira and so on. All this is no longer possible today because it is entrusted to the European Central Banksole charge of monetary policy for the EU, and must not ask anyone’s permission in relation to the “management” of our currency.
It is in this period of strong international tensions, even for mere speculation, that Europe, like other nations, finds itself in difficulty in dealing with a inflation which is galloping. The question is: is there a remedy? Are the policies to be adopted always those written in the books of a hundred years ago? Nothing new? Now inflation seems to run between 6 and 9% (these are trend estimates) for an amount calculated up to € 2,354.98 per year for each family in Italy (Federconsumatori National Observatory).
Here then is a proposal:
• tax exemption for one year on the first 10,000 euros, knowing that the taxation is 23% theoretically we have inflation coverage and, even better, if reserved only for income up to 15,000 euros. Taxpayers in this bracket are 18,622,308 equal to 45.19% and the total amount would be around 42,831,308,400 euros. Now try to make a calculation of how much the return for the Italian State would be in financial terms. I would like to suggest a multiplication made with the propensity to save (100: 11.3 = 8.8496) the total is equal to € 379,039,946,816, interesting? Can the GDP and the state coffers benefit from it (direct and indirect tax laws)? If, on the other hand, you are more sophisticated, we can use the formula of the marginal propensity to consume, i.e. the variation in consumer spending in relation to the variation in income ΔC / ΔI.
Even for families in absolute poverty (7.5%) there is inflation which must also be managed with other direct forms of incentives. Now, try to think of a simple increase of two percentage points on the public debt rate and here is the account: debt 2,680.5 billion x 2% = 53.510 billion euros, about 11 billion more than the above calculation. Does that seem little to you?
Think we are always paying! Having made the necessary considerations regarding the above amount, I can say that it is a monetary problem dealt with extensively by Richard Cantillon (1680-1734 father of political economy): “To judge the quantity of money in circulation, it is therefore necessary to always consider the speed of this circulation” (Essay on the nature of commerce in general – Giulio Einaudi Editore pag. 80). In my opinion it would be counterproductive to put forward theories that seem obsolete to me and if we do not intervene directly on who produces and consumes income, then no monetary theory and approach makes sense anymore. Creating money to meet other money is illogical, economic and monetary history has taught us this. Do we want to do something new or is it always easier to “not think” and implement obsolete monetary policies with the famous copy-paste?
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