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1/07/2008

Prices, cost of living high?

Wrong, everything is just right. The high salaries, high prices of properties, high prices of rentals, taxi fares, hospital fees etc, everything is fairprice. All the crying, all the kpkbs are just hysterics and based on a few exceptions. As long as the demand is there, as long as people are willing to pay, then the price is right. In a market driven economy, everything is determined by demand and supply. The supply will be there as long as there is demand. Let the prices keep rising until an optimum level, then it will stabilise. This is basic economics. No one shall interfere with the market mechanism. It will ruin efficiency and productivity. Our prices compare to the big cities are still very low and have a lot of rooms to go...up. The complaints are baseless.

7 comments:

Anonymous said...

Singaporeans are rich and can live with any increases. THe lower income group will be helped by the govt generosity. They will NOT be left behind.

Anonymous said...

Let the prices keep rising until an optimum level, then it will stabilise. This is basic economics, no one shall interfere...

Funny, is this applicable to minister's salaries as well. No one can interfere of course because they can take as much as they want, but optimum level, hmmm, I wonder what is the limit or should I ask what are the possibilities. But of course they say they are unique and beyond benchmarks by then.

Matilah_Singapura said...

> In a market driven economy, everything is determined by demand and supply. The supply will be there as long as there is demand. <

Not true. Supply will be there if it is POSSIBLE.

e.g. (1) Suffice it to say that there is a demand for "human immortality". Where is the supply? And don't say "cryogenics". Cryogenics doesn't profess "immortality". Nor has it been proven to work. But that doesn't mean supplies for immortality products and services won't appear on the market. They will appear if it is POSSIBLE.

e.g(2) For centuries human beings have had a burning desire to fly individually but it wasn't until the 20th century that someone invented the Jet Pack (as seen in movies, notably James Bond).

In other words, when it was possible the item actually materialised. Now it's in the "mainstream". You can own your own Jet Pack which will fly you 11 miles for around US200k

Check it out: Jet Pack International

> Let the prices keep rising until an optimum level, then it will stabilise. <

Again, not true. There is no "optimum" level. What is the "optimum level" of the price of oil? Has the price stablised? Yes, in the past. In in recent times it's taken off, sort of "stabilised" around US90/barrel—but can take off again at anytime.

For prices, you also have to consider the flexibility/inflexibility of demand, and also if supplies are possible—again we come to the POSSIBILITY of supply. Observation: When Hurricane Katrina hit the oil-producing region of the USA, oil prices jumped.

As I have indicated on several occasions, the rise in the general price level in S'pore is due to the expansion of the money supply, especially in the area of credit. This is an unavoidable consequence of fractional reserve banking, where the banks lend out your money without your consent (e.g. the money you have in your cheque account). They are legally allowed to do this. i.e. they are legally permitted to defraud you, because they are given permission and protected by The State.

When there is money "sloshing around" humans will use it (naturally) to bid up prices of goods and services.

Link: Singapore Money Supply Growth Also mentioned is the S'pore govt's bullshit explanation that it is "absorb able" because of good economic growth.

Try telling that to the people struggling on their wages to keep up with rising prices.

The real danger to increasing price levels and expanding money supplies, coupled with the hope that an expanding productive economy can "absorb" these changes, is STAGFLATION— where you have rising prices and a collapsing economy, instead of the expected falling-off of the price level as the economy contracts—as it should.

Abao said...

isnt stagflatation slowly happening now?

redbean said...

cannot be lah. immediately after such a huge salary increase and another round coming soon. after the next round maybe.

redbean said...

and professor,

the optimum price is not a stationary one. the optimum price level today will be different as factors changed.

under normal conditions, supply and demand for flats, jobs, hospital wards, cars etc will behave quite expectedly. not sure about ministerial salaries. this one too ethereal for mortals to understand.

Matilah_Singapura said...

redbean:

> under normal conditions, ... <

There is no such thing as "normal" conditions, in the cold hard reality of the present moment.

Likewise, in cold-hard objective reality there is no such thing as a "good price" or "fair price". There is only the market price i.e. the price at which a particular good or service clears in the market.

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abao:

> isnt stagflatation slowly happening now? <

Some people say so, but I tend to disagree because the S'pore economy is still very robust and chugging along quite nicely (despite the complaints about price rises and ministers' salaries) i.e. the S'pore economy is certainly not contracting, and neither is it stagnant.