| | This is absolutely lunacy. Either the commerce secretary doesn't listen to his economic advisors or his advisors are themselves clueless. Not only do price controls enacted to stop inflation create shortages, because they destroy the price signals telling business people what to produce and in what quantity (recall the price controls on gas and oil in the 1970's and the long lines at the pump leaving disgruntled motorists without gas), but as economist George Reisman points out, the imposition of price controls to deal with inflation is as illogical as the attempt to deal with expanding pressure in a boiler by manipulating the needle in the boiler's pressure gauge.
Price controls do nothing to stop monetary inflation (which is the real cause of price inflation); they simply mask its existence and severity. In fact, in the presence of monetary inflation, price controls make the resulting shortages even worse than if there were no monetary inflation at all. The reason is that in preventing prices from rising due to the continued increase in the quantity of money, they exacerbate the shortages which, in the absence of monetary inflation, would be less severe. Because monetary inflation is allowed to continue while prices are not allowed to rise to reflect it, people can now afford to spend more money on goods and services than they could in the absence of monetary inflation, which means that they'll consume them that much faster.
At the same time, there will be less incentive on the part of producers to replenish the goods and services that are in short supply, because they cannot charge a price high enough to ensure a profitable rate of return. As a result, people will find that they have more money to spend but progressively fewer goods and services to spend it on.
Price controls in the face of inflation are equivalent to throwing gasoline on a fire.
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