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Inflation & Price Controls

January 25, 2011

Price controls instituted as a result of inflation (or socialism) seem to be a thing of the future as Russia is now considering them. China is too. From what I have read, here are the consequences, summarized:

  • Those producing with the highest costs go out of the business and employ their production facilities for the production of other commodities, not affected by price ceilings.
  • Production involves a loss for the marginal producers, so they quit
  • Opens the door for product scarcity

Here is more from Mises

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