Inflation - What do you think the Government should do?

Typically when excessive inflation happens then the most powerful thing to do is to increase interest rates. However, since we're in the eurozone, that is the ECB's call.

I'd be wary of the government trying to do anything to intervene - if their interventions in the housing market are anything to go by they are likely only going to exacerbate the problem.

CB governor looking at it being above 2% for the year and likely to go below 2% in 2023 and 2024. Interest rates are traditionally an option but ECB have bigger fish to fry and post-COVID a rate hike would be slightly insane. So in answer to the OP, nothing but definitely look at easing off on that very high spending.

https://www.centralbank.ie/news/article/the-economic-outlook-for-the-year-ahead-remarks-by-governor-makhlouf-to-the-institute-of-directors-24-january-2022

The interest rates from the ECB are already insane, have been for years, a giant financial experiment and a story of significant global importance. Hikes being insane is only in response to the previous madness.

It's become a roundabout that the Eurozone will find hard to get off.

Unfortunately this is not something the likes of Michael Martin of Mary lou (God help us) have the capability or capacity to solve.

The populist cries of scrap the USC or increase the minimum wage/introduce a living wage etc would only fuel inflation.

Easiest way is for individual households to cut back, consume less of whats driving inflation.

That would enable purchasing power which would fuel inflation more. We need the opposite now to stabilise the economy. There are a few approaches. Ireland is a small market, influenced by bigger markets - it's possible to leave things as they are and they will stabilise in time. It's a conservative way, usually, taking longer to see the result but also less risky.

A problem is that Irish culturally are very low in Long Term Orientation and also low in Uncertainty Avoidance, comparing to other European countries. So, a quick result but also uncertain future is ok for Irish. Which is not good for future planning. It doesn't encourage politicians to make some drastic decisions even if a result these days would be negative for a short period of time but in a long term it would bring a positive result.

We can increase VAT to reduce purchasing power (would help to reduce demand which would help for supply and deflate prices a bit) but that's currently too risky as it would also create problems for those businesses which have suffered during the lockdowns.

We have a problem that people have a lot of savings. Preferably, we want this money to circulate in the market to keep the economy going. However, when inflation is high, that's opposite - we want to slow down spendings to stabilise demands and help for supply.

It's a bit like a devils circuit at the moment, until supply will feed a demand and until covid will not make such a big impact for global economies. This may take 1-2 years, depending on the industry and subject to any further lockdowns, disturbances etc. I would predict that overall for economy to settle it could take 3-5 years from the end of the first lockdown.

Leo today called on employers to increase wages. The minimum wage is gone up again this year, an extra bank holiday from now on too for employers also.

It all feeds into making us uncompetitive. Was reading today a coalman in Wexford saying with carbon tax increasing lads will head north and load up vans. If lads will go from Wexford there's no hope for lads near the border

It will but the long term picture is worse for nuclear. Solar energy costs are dropping exponentially and they are already cheap.

There are many experimental Nuclear reactors offering hope for the sector and sound promising but commercial application, if possible, is not going to happen in the next 20 years.

Wouldn't it be Great though, China have a new Thorium reactor, powers 2k houses but it is experimental, who knows.

I agree, great thoughts 👍

Also, regarding 100 Euro, I have just had an argument with my friends recently saying it's one of the most expensive advertisement for the current political parties. Such a waste of money. Unfortunately, lots of with very little analytical or critical thinking thinks the government cares about them. If they reay care, they would provide a continuous financial support to the poor society members, not the whole population, as you said.

Terrible decisions, lots of missed opportunities. And people are ok with that as they don't understand and they don't think of future. Real populists are ruling the country at the moment.

Agree with this. It's what contributed to the economic crisis last time round too.

There's posters here advocating reducing taxes, exactly what was done c1997 to 2007,and then there was no rainy day savings to pump into the economy post 08.

When an economy is growing, you actually want to take money out of it to prevent overheating and save money for a rainy day. Then in times of recession, you pump that money into the economy to stimulate spending and economic activity. Instead of cutting funding and raising taxes further to make up for all the tax cuts in the good times.

We've become used over the past decade to either deflation, or no change. 2-3 percent a year inflation is healthy as long as the economy is growing. Sure, at 5 or 6 it could be lower. But that's where you want to extract money from the economy and put it away, to reduce inflationary pressure due to all the money and demand going about.

It's not popular to say. But pumping even more money into the system leads to further upward pressure. Its a very fine balancing act.

I don't understand how anyone who was annoyed with govt in say.. 2011 (plus or minus 2 years, that whole water charges, emigration period) is calling for the same policies of the early noughties.

That's the first time I have seen someone siding with a millionaire who a government is giving them money and calling out a person by calling them discriminatory. If a millionaire has a house and 2-holiday homes they get e300 from you and me.

Help the less well off all year round forget the people who can afford it. Personally, I'd give everyone tax credits instead of benefits to so many. Here's the thing they already have a system in place to work out tax credits so it wouldn't be too hard. You might reply saying the rich will also benefit but they are taxed more in the higher brackets so the less well off benefit more than the well off.

It's a one off feel good good move for everyone n the audience. It's simple, generally supported across the Dail and done. Not everyone works and tax credits cost money with our latest changes coming in at half a billion in a full year. You'd also be discriminating against welfare recipients of course our growing band of pensioners.

Exactly this.

Unfortunately too many people are not gifted with logic to understand your post.