Money rules the world right now, and whether we want it to or not, there’s always a big chance to experience some losses as a business owner making a living in society nowadays.

Now imagine what would’ve happened if instead of a business owner you are the President of a country, and your business – the country – is experiencing big losses and high inflation rates.

What would you do? Which methods would you use to control the sudden situation and appease the people before it’s too late? We’ll share with you 3 of the methods a Government could apply to control inflation.

Cash Reserve

One of the best measures to take when facing inflation is taking control of the cash reserve ratio the banks allowed to take loans and withdrawals will have. It’s like this, if the bank has less freedom to take in new businesses, people would ask for fewer loans and this will stop them from spending that much money.

Lowering Money Stock

By generating a monetary policy lowering the cash supply and having the way to stop the platforms and banks from taking in withdrawals controlling the cash flow moving around in the market. This way, the people will spend less money and will be forced to maintain the prices on the low side of the spectrum, theoretically speaking.

Raise the Interests

The moment a government applies a monetary policy like this one, it’s impossible to avoid lowering the spending rate from people, as having a low cash flow among people becomes a by-product. And even those who do have cash will prefer to hold on it and save it for later.

The most logical solution to this problem is for the Federal Reserve to raise the interests of banks when borrowing money from them, and for the banks in turn to raise their interests. By doing this, the prices will decrease and the inflation rate will be on halt for a while.

Governments play an important role in a country’s development, so it’s important to know the different strategies to address the issue the right way. Now you know these 3, which one would you apply if you were the President?