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Inflation skyrockets

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clickmeok
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Post: #1
Inflation skyrockets

Help! I tried to control inflation by cutting welfare and pensions and raised interest rates to slow the inflation. But it only got worse my popularity went down and influence to. Any help?
Plus I raised taxes but the economy is starting to show signs of stagnation after growing for 3 years straight.

14.04.2011 03:01
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Dale
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Post: #2
RE: Inflation skyrockets

Well, don't cut welfare and pensions too much. A healthy economy tends to starve off hyper inflation. Cutting those PE's too much will make your conditions worse. You are right to raise interest rates but you should also be lowering the money supply as well as excise taxes while raising taxes on capital. Other than that, I would tell you to raise subsidies and cut defense spending. There's way too much going in there and you don't need it. But overall, your economy doesn't seem to be suffering. It's growing rather steadily. Take it gentle and try to keep economic growth steady while taming your inflation.

This post was last modified: 14.04.2011 04:05 by Dale.

14.04.2011 04:02
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DRLHyper
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Post: #3
RE: Inflation skyrockets

clickmeok Wrote:
Help! I tried to control inflation by cutting welfare and pensions and raised interest rates to slow the inflation. But it only got worse my popularity went down and influence to. Any help?
Plus I raised taxes but the economy is starting to show signs of stagnation after growing for 3 years straight.


As of now you only have 4.00% inflation, that is not much to be honest. As long as manage to keep inflation in a 1%~5% rate you will do fine.

I would also follow Dale's recomendations save for two issues: Interest rate and money supply.

As as postcommunistic state (GDR = German Democratic Republic) your people are too dependant on the public sector and your private sector is struggling. Lower capital taxes to attract investors, while slowly cutting on subsidies. Cut as much as you can the military.

Increasing your money supply makes your exports more attractive and also attracks investment. A high interest rate counters this, however, so keep it at 5% or below if you can. You need people to start spend after all.

If you need money, raise adquisicion, or preferibly excise taxes.

To save money on welfare you can later do Negative Income Tax.

|EDIT|:

Also, it is kinda realistic that you may be getting some above-average inflationary rates. After all your as a post communistic state your are moving from a central-planning state to a market-oriented one.

14.04.2011 05:29
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Helsworth
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Post: #4
RE: Inflation skyrockets

https://www.patreon.com/SerbanVCEnache
14.04.2011 07:07
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xaoc
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Post: #5
RE: Inflation skyrockets

DRLHyper Wrote:

clickmeok Wrote:
Help! I tried to control inflation by cutting welfare and pensions and raised interest rates to slow the inflation. But it only got worse my popularity went down and influence to. Any help?
Plus I raised taxes but the economy is starting to show signs of stagnation after growing for 3 years straight.


As of now you only have 4.00% inflation, that is not much to be honest. As long as manage to keep inflation in a 1%~5% rate you will do fine.


in my eyes everything above 2% per anno is too much.


den klugen kann man überzeugen, den dummen muß man überreden

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This post was last modified: 14.04.2011 08:08 by xaoc.

14.04.2011 08:07
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DRLHyper
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Post: #6
RE: Inflation skyrockets

xaoc Wrote:

DRLHyper Wrote:
As of now you only have 4.00% inflation, that is not much to be honest. As long as manage to keep inflation in a 1%~5% rate you will do fine.


in my eyes everything above 2% per anno is too much.


Well, I live RL in a state with inflation per-year of +10%.
I think it is a matter of getting accostumed to it or not.

14.04.2011 17:56
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xaoc
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Post: #7
RE: Inflation skyrockets

right. i lived in the hyperinflation times in russia and i know where high inflation leads^^ but for stability there should be no high inflation rates


den klugen kann man überzeugen, den dummen muß man überreden

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14.04.2011 18:26
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mrh112
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Post: #8
RE: Inflation skyrockets

Ha, with my old state at one point it had 12% inflation!, the economy varies in your country on a yearly basis, my advice is to in most cases do as little as possible and it will ride itself out, usually after a large spike in inflation it lowers again as its usually just an economic "bubble" which eventually goes down.

21.04.2011 19:40
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Dale
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Post: #9
RE: Inflation skyrockets

mrh112 Wrote:
Ha, with my old state at one point it had 12% inflation!, the economy varies in your country on a yearly basis, my advice is to in most cases do as little as possible and it will ride itself out, usually after a large spike in inflation it lowers again as its usually just an economic "bubble" which eventually goes down.


From my experiences, I've never had inflation self contain itself. It could make some sense of it being a bubble, but thus far, inflation remains inflation without the right course. But that is interesting to hear. Maybe I'll play around and see if I can create those conditions.

22.04.2011 00:12
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OVERSIER
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Post: #10
RE: Inflation skyrockets

Dale Wrote:

mrh112 Wrote:
Ha, with my old state at one point it had 12% inflation!, the economy varies in your country on a yearly basis, my advice is to in most cases do as little as possible and it will ride itself out, usually after a large spike in inflation it lowers again as its usually just an economic "bubble" which eventually goes down.


From my experiences, I've never had inflation self contain itself. It could make some sense of it being a bubble, but thus far, inflation remains inflation without the right course. But that is interesting to hear. Maybe I'll play around and see if I can create those conditions.

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22.04.2011 01:41
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