Combating Inflation

All the talk these days is about inflation. After all, it is inflation that is causing interest rates to be increased. But is raising interest rates the only way to lower inflationary pressures? Haven’t heard much spoken about that. It’s as if the govt is very content to use the RBA as a scapegoat. They are independent from the govt, it beats being critical of something you are yourself doing.

So what else can the govt be doing? I’ve heard of a few suggestions, but somehow I don’t think either of them will see the light of day

• Increase GST to 12.5% - this would be effective as people start to tighten their budgets and spend a lot less. However a govt that does this will be committing political suicide and will probably be voted out in the following election, no matter how much they they try and convince the public that the increase is necessary for the long-term stability of the nation
• Restrict Trading – this is mainly a mode of bringing back some good old family values. With restricted trading such as no Sundays people have to spend time with their families. In effect this means that people aren’t shopping and spending money because they aren’t open. Most big retailers I’m sure wouldn’t like this though. Would also affect those people who rely on a Sunday job for a bit of extra income.