Drain of purchasing power

More must be paid for goods procured from abroad – especially for crude oil – which reduces purchasing power at home and thus, by definition, leads to inflation. – Monetary policy cannot be used to counteract a transfer of purchasing power abroad. In other words, it is not up to the central bank but to economic policy to halt the price increase triggered in this way. The only way to reduce the outflow of purchasing power that is effective in the long term (noncurrent) is to import less. This presupposes a decrease in domestic demand for the good by – shifting demand to substitutes – in the case of petroleum, to other, domestically produced energy sources such as nuclear power, coal, biogas, water, solar or wind – and – using the good more sparingly, in this case above all: lower consumption of petroleum products in engines; building thermal insulation. – See petroleum inflation, inflation compensation, wage, indexed, oil price compensation, real cash effect, second-round effects.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/