2022 is the year that put the word inflation in everyone's mouth, and for the first time in generations, the Dutch are now confronted with a drastic decrease in buying power, and little by little, of their usual lifestyle. Obviously, it's not only the Netherlands experimenting these crazy consequences of reckless money printing from the central banks; the whole world and Europe is through this situation.
In the European Union however, the effects are amplified also by a completely failed forced push to use green energy (instead of a more conventional ones - see case Germany) and also by stupid decision from the top of European Commission to stop importing cheap gas from Russia, in order to punish them for the war in Ukraine. This is not quite working, and some economies like the German one, are feeling the full pain. The future will also look different now; Germany is even restarting coal based power plants in order to maintain the energy consumption, especially during the winter time. Everything looks like a big clusterfuck, but don't you ever think that you'll hear any European officials acknowledging this.
Anyway, back closer to home, Dutch inflation is raging in July at some 11.6%, but that's the official number and it doesn't show at all the reality on the ground. Once the cold weather will settle in, more pain will be felt. Also the autumn is the period of the year when the farmers will have to do their math, and pay attention not to go bankrupt by the soaring costs.
And what the Dutch government is proposing?
Employers need to raise wages to protect Netherlands residents’ purchasing power, several Ministers said to NOS after a meeting on Tuesday.
“These are exceptional times and call for exceptional measures,” said Minister Karien van Gennip of Social Affairs. “We can only solve this together, so also with the employers. There is room to increase the salaries.” She met with her Finance and Economic Affairs colleagues on Tuesday to discuss purchasing power.
What a centralized economy government thinking, isn't it? Almost like back in the U.R.S.S.
Well, in a normal market based economy, the wages of the employees will not raise because the government is suggesting so. They will raise based on the performance of the employee, the financial situation of the company itself, the conditions on the work market and so forth. There is no ideal world, so other factors will chime in to decide if an employee gets a raise or not, but you get the gist of it. It's definitely not up to the government to say that.
The Dutch government should pay more attention though to their own problems:
Employees of Dutch railway company NS will strike next week and the week after...An ultimatum the unions gave NS expired last week. They rejected the public transport company's final offer because it did not come close enough to their demands. NS said in a response it is disappointed that it has come to strikes.
But the main take on this story is not that the government has some strong opinion about who needs to fight inflation. The main take is that the government created this situation in the first place.
- Inflation is the consequence of the reckless money printing of the European Central Bank (ECB).
- this fresh money was used to buy government bonds all over Europe, basically monetizing the debt of the states and distorting the financial markets
- the Dutch government (among others) said nothing and had no opposition to the whole situation
ECB is creating money out of thin air, and is buying public debt from Spain, Italy, Greece but also Germany and the Netherlands. All these governments were happy when things ran like that. Now when the shit hits the fan, they start to blame everyone and everything else (pandemic, Ukraine war, etc).
Italy seems to be kept alive for now. But in the process, more inflation will be pushed in Europe. They will do "anything it takes", since Italy fall will mean the end of the Eurozone.
