The Marcro Moment: The Solution For Higher Prices Is Higher Prices

This is a concept that is well known in the commodity world. It is something that, over time, proves true and is one of the reasons why hyperinflations always get it wrong.

In this video I discuss how consumers reject higher prices when they cannot afford them. It is simple mathematics. When a household budget is getting hit with higher prices in one area, unless it is also increasing, spending in other areas needs to be cut. This affects the demand part of the equation in particular areas, causing economic contraction. This ends up have a multitude of ramifications.