How to Overcome Inflation

Efforts to overcome inflation should start from the causes of inflation in order to find a way out. Theoretically to cope with inflation is relatively easy, in particular by overcoming the main base, reducing the amount of money in circulation.
 

The following policies are expected to tackle inflation:

1. Monetary policy, all government policies in the monetary field with the aim of maintaining monetary stability to improve the welfare of the people.

These policies include:
a. Politics discounts, by reducing the money supply by raising interest rates, it is expected the demand for credit will be reduced.
b. Open market operations, reducing the money supply by selling SBI
c. Increase cash reserves, so the money is distributed by commercial banks to be reduced
d. Selective credit, central bank policy to reduce the amount of money in circulation by means of granting credit
e. Politics sanering, this is done when it happened hyper inflation, Bank Indonesian was never done on December 13, 1965

2. Fiscal Policy, can be done by:
a. raise tax rates, expected by society to deposit some more money to the government as tax payments, thus reducing the amount of money in circulation.
b. Organize government revenues and expenditures
c. Conducting government loans, such as cutting government civil servant salaries 10% for savings, this happened during the old order.

3. Non-Monetary Policy, can be done through:
a. Increase production, the Government provides subsidies to the industry to be more productive and produce more output, so the price will be down.
b. Wage policy, the government appealed to unions not to ask for a raise while being inflation.
c. Supervision prices, government policies to determine the maximum price for the goods

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