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Price Controls: Bad Economics and Fuel for Instability

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By Roman Mikhailiuk @ Shutterstock.com

Basic economics dispels the idea that price controls are useful. Nevertheless governments (including America’s) regularly try to control prices. Whether via direct price caps and floors, or quota systems, or through inflation or deflation of the money supply, government attempts to control prices are distortive to markets, and eventually lead to some kind of backlash. Sometimes the response is a black market, as is thriving in Venezuela today. Other times, hoarding takes place. Other times it’s more violent.

Sometimes, the hardest thing about price controls is removing them. People get used to paying a certain amount, and when the government attempts a market based reform, it’s not pretty. That’s happening now in Haiti, where the government has attempted to raise fuel prices to more rational levels. In response, citizens rioted, and at least four have died in the chaos. The government backed off its attempt to raise prices, but the fury it unleashed hasn’t subsided. Amelie Baron reports for AFP:

Many Haitians are now demanding the immediate departure of President Jovenel Moise.

“If the president stays one more day, the game will take on a new appearance: we will cut off the roads and burn everything, because we have nothing else to lose,” said one masked protestor.

Groups of young men trying to extort money from motorists as well as pedestrians controlled various intersections and roads in Port-au-Prince on Sunday.

Local radio reported that groups of armed people in civilian clothes had been seen in some downtown districts.

In the heart of the capital, AFP journalists saw shops ransacked as protestors demanded Moise’s exit.

Some aggressive young men carried knives, and special police crowd control units fired their guns into the air and detonated tear gas.

Unstable policies can lead to chaotic turmoil. While such an event seems unlikely in the United States, things can change rapidly. How would you and your family fare in a moment of political upheaval? Could you ride it out, safely at home? Or would you need to evacuate your area and seek safer ground?

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Consider also where you’re headed on vacation. If you were vacationing in Port-au-Prince this week, it’s unlikely you were prepared for what happened. Think it can’t happen to you? Watch the video below about Americans trapped in a hotel in Haiti.

Americans trapped in Haiti hotel amid rioting

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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