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About Inflation

Inflation occurs when there is more money to purchase goods and services than there are the quantity of goods and services available. When the price of a product goes up, business will generate more of the product. So, some inflation is good. But, the rate of inflation needs to be managed to prevent destroying wealth.

One way to control inflation is to tax the sale of the product which is in limited supply to reduce the demand. A national sales tax provides a mechanism to rapidly change the tax on any given product class to keep inflation for that product under control.

Using the interest rate to control inflation fuels the business cycle and destroys jobs.

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