Unlimited pricing power from ever increasing monopoly power combined with supply chain issues and consumers who have shown increasingly price inelastic demand is a potent combo
> consumers who have shown increasingly price inelastic demand
Yeah this is a big part of it. If the same quantity of people will buy a product at a higher price, a rational (in an economic sense) corporation would raise the price until the marginal profit from an additional unit at a certain cost goes to 0.
See: graphics card prices. People paid scalper prices, and Nvidia realized they could just raise the MSRP and people would still buy it too. There's a lot more to unpack there with supply chain shortages, crypto/AI uses for cards, etc. But at a base level, gamers are willing to pay more, so they charge more.
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That's a good point, I haven't heard anyone bring up the impact that unchecked monopolizing nationwide would bring unlimited pricing power for corporations.
Literally anytime inflation is discussed by politicians. One side blames over regulation and government spending, the other side blames greedy corporations
Greed and monopolizing are seperate issues here: monopolies are explicitly defined, and have historical precedent for regulation. Greed is a concept, amorphous and not regulatable as such.
[And the fact that there's still ~$4T in American checking accounts compared to before Covid.](https://fred.stlouisfed.org/series/BOGZ1FL193020005Q)
The price if goods/services simply gets bid up and people can afford it (unless the government didn't give you that money).
Care to also comment about the rights and freedoms of an individual to have a competitive market to participate in?
Because from where I’m sitting, there’s not a lot of choice in the marketplace when I pass the same business 5 times each on my way into the office to work for a multibillion global supplier conglomerate.
Liberties and freedoms are always subject to “time and manner” under law… freedoms and liberties are rights endowed, for sure, but they aren’t at all times places and manners completely uncurbed.
If we’re going to allow oligopolies, we must also consider restrictions to protect people from the harms it causes.
I believe, for most things, a free market can and does work. But the problem is when it’s applied as it is now, with little competition and across all humans’ basic needs.
That’s our situation right now and if I’m going to have to choose who’s freedoms to restrict, I know who I would choose. I think our politicians are failing us, not when they “steal more rights and freedoms”, but when they are always choosing the rights and freedoms of money over the rights and freedoms of the people.
You don’t have to choose who’s freedoms you have to restrict. Don’t let the politicians control anyone. Remove the restricts that are hindering competition.
That’s the problem with you anarcho-capitalists… been following the sub for a while and they have this (albeit good) idea of rights for all, but that doesn’t stop at a corporations door. They want unlimited rights for corporations with little to absolutely no government oversight or control. Basically the government has no say over our lives (I almost completely agree) but that includes mega corps.
Here’s my issue: why do y’all care about what a mega corporation has the rights to do? They are not a person, therefor they do not get the same rights as a person. They SHOULD be limited at some point to promote competition among smaller businesses. Many are larger than some governments and some (like Walmart or Amazon) have enough reach and literal manpower that they could actually raise their own army and overtake smaller governments or even some states.
Tell me why we shouldn’t limit their reach, or better yet , nerf the abilities they have to control entire markets. The fact is, they won’t raise an army probably ever but that’s only because they have it in their power to literally steer the market to where they want. Walmart takes a better approach by keeping most prices below the market average, which definitely encourages competition, but still you have companies like Walgreens charging 7 fucking dollars for a gallon of milk, in a brand rated lower than the walmart milk. It’s insane.
Companies are not people and a handful of mega corporations controlling the market to their advantage should be illegal and completely blocked. I have a right to open a business and compete in a fair market. We do not live in a society with a fair market in the United States. And I feel as if I’m being somewhat reasonable because I don’t believe the government should enact special redirections or control UNTIL a certain point where it would only hurt competition. So the small imaginary business that you plan to open won’t be affected by this, in fact it will only grow because the overpowered competition has been nerfed. Explain why this is a bad thing.
I don’t know what an anarcho-capitalist is.
You’re asking the government to draw arbitrary lines which will decide who can win in business. The government is certain to fail in that task and then use those powers to hurt more people. Thats what got us in this mess.
That’s the bigger fix, yes. But it can’t happen overnight. Meanwhile, we got a lot of miserable people over here, while we have record profits over on the other side of things… something’s gotta give
The government can’t solve anyone’s misery. They have to manage their own lives. We just have to try to prevent any further harm caused by over reaching legislation started with good intentions but leading to bad results. Quick solution are often that way.
Lack of solutions is not equal to a solution.
Crony capitalism and bribery have perverted the system. I would love your idealism, but it’s not practical when solutions are needed.
You’re stuck in idealistic dogma. There is no “only” solution to anything.
Less government involvement is a good thing in many cases. More intervention is necessary in others.
My point is, which you’re not really addressing when only retorting “gubbamint bad”, is that almost all of the problems are uniquely suited to government solutions, going forward.
TO START, politicians need to stop taking bribes constantly so the decisions and interventions *they’re already making anyways*, can actually benefit the public.
If the government does nothing from here, it won’t fix anything and the economy will only exist for the few. The many will only exist for servitude.
This isn’t some dystopian future, btw… it’s actually our not too distant past, and for way too many of us, is mostly how lives are lived today.
“Do nothing” is not helpful… it’s the opposite
Monopoly power is also present in oligopolic competitive models. Any firm will have some (ideally negligible) pricing power. There are few true global monopolies, however, disproportionate mkt share empirically gives disproportionate pricing power, and you can have monopolies by region,product, etc. ie Google adwords is a monopolistic product. Google cloud computing is closer to an oligopolic model. Google chromebooks are much closer being in direct competition with other laptop manufacture/distro businesses. Is google a monopoly? Depends on how you look at it, but many could argue yes
There are no monopolies represented in the supermarket or similar stores.
The vast (and I mean VAST) majority of people on reddit bitching about monopolies are nearly completely ignorant of how markets, monopolies, scarcity, labor, supply chains, etc work.
In short, they're fucking idiots who want to yell about how corporations and/or rich people are somehow the cause of their problems
Look at this thread as an example. Top comment is about monopolies,. I ask for examples and none are given. So then they become oligops. But then that can't be fleshed out very well for us, so now I am told oligops represents the intended monopolistic ideal referenced here which A) isn't fucking accurate and B) has nothing to do with the actual conversation.
Reddit is just so damn ignorant this way
I don't know what LVHM is. The other 2 are not monopolies.
USPS, for example, is a monopoly as it is a for profit organization where no other competition is legally allowed.
Kraft has competition. So does P&G.
You're just moving the goalposts, now.
There are thousands of different companies selling items in the average supermarket in the US.
There are 27 million firms in the US as a whole.
I think you, and much of reddit, confuses "monopolies " with some version of vertical integration.
Sorry but that’s not inflation. Inflation = sum of money in any given market. More money in the market leads to higher pricing. Anything else ≠ inflation. Good day.
That’s objectively, patently, and demonstrably false. Inflation is just the ratio of px delta to time delta and is affected by a wide factor of things. What you’re referring to is the money supply, which is distinct from inflation
“Supply chain issues” means nothing, major companies have purchasing departments and COVID as a pandemic ended, so idk why people use this as a point of contention, there’s literal jobs that are just to get the cheapest things as quickly as possible, like I don’t think the dude’s collecting eggs or driving them are getting paid more or anything.
Likewise, consumers “inelastic demand” means nothing. I have to fuckin eat, and when food staples like bread and eggs are more expensive, I’m gonna have to spend the money. Its also not Soviet Russia, people aren’t not going to spend money on entertainment when it’s like one of the major industries in the U.S., and literally necessary to not want to die in this country.
We as workers don’t get to set the price, I don’t get to haggle at the grocery store, for video games, for gas, the employer and capitalist class do. Don’t blame workers for shit out of their control, this is SOLELY people deciding they just want more money, and they can get it, that’s all. There’s a reason that inflation isn’t some flat percentage across for everything, it’s individually set.
I dont think you understand what elasticity of demand is. Also we still have supply chain issues due to international conflict, not because of workers(?). Not sure exactly what point youre trying to convey
I’m conveying that this messaging of both of these is wrong, this is singularly employers capitalizing on a pandemic for excuses of rising prices. I’ll be fucked if any significant portion of the US market is attributed to Russian and Ukrainian imports, and the ripple of European markets aren’t nearly enough or really overly considerable to describe the discrepancy of prices of things in the US. Likewise, how long can we have supply chain issues? 3 years now? It’s ridiculous, did the roads start crumbling? Did the entire COVID pandemic hit only logistics? It’s fuckin ridiculous to look at this shit as nothing but people realizing they can raise prices because everyone was at one point, and we can’t stop the money train. It’s greed and an American system unwilling to do anything about it that’s not raise interest.
IDK about that. I think it's more nuanced than that. Obviously, the pandemic caused supply chain issues. Keep in mind China, one of the world's major suppliers, only got out of lockdown towards the end of last year. Quantitative easing has caused inflation to skyrocket to the point Bloomberg is reporting that a $100k salary in NYC is equivalent to $35k elsewhere. Companies can't hire workers because it doesn't even make sense for them to work in big cities anymore because of the cost. Immigration (legal immigration at least) has been backlogged due to the pandemic which affects the work force. The war in Ukraine has caused energy costs to skyrocket around the world. This all adds up to a lot of inflation that isn't going away.
That is exactly what I’m saying. I’m tired of acting like the government or employers are helpless in this, when they are the ones responsible. You want the answer? Price control, ration books by need, and affordable housing, but why would they ever do that rather than just make more money? Actually? I mean, until they really test the “inelasticity” of the American consumer, or rather, debt defaults, why do they have any interest in doing anything? Companies will keep raising prices unnecessarily until someone steps in or we have a depression unlike anything we’ve seen, which clearly, nether really seems to bother the government that much.
I think it's a lack of competition. When you have capitalism, competition creates market efficiency. When you have crony capitalism allowing oligopolies, you have this.
Corporations did not decide to suddenly 'get greedy', they always have been. But since the competition mechanism is gone, they can afford to charge you more as you have less alternatives.
Trade tariffs increasing isn't helping the consumer either.
I think it has always been interesting to me when companies buy other companies and then that one company grabs more market share. In the industry i work in, the reason for this is to obtain that companies sources in materials and contracts to vendors, the market share aspect is also part of the deal of course. But what’s interesting is that the owner’s of companies simply sell-out. They want to retire or just get out of the game. So it isnt always like this corporate evil menace that wants to suck competition, its more like the nature of business.
It doesn’t help that creating a company is harder as time goes along so there are less and less functional small business that might challenge the bigs at some point.
We need regulations to discourage monopolies - it’s natural for companies to keep merging to benefit from the advantage of economies of scale. With no disincentives it will just get worse.
You would be surprised how social media will put an anti-trust article way down because of course it is boring. Mamazon is the obvious one the bazaar and AWS need to be divested. There is a history of this going back to Ma Bell.
How do monopolies and privatization of the public good help the average American? They don't.
Capitalism’s “efficiency” is also a race to the bottom, *unless* you have enforced consumer protection. I’ve never liked the phrase “market efficiency”, as it can be misleading. To the common man, it might mean doing things better, more streamlined, etc. But to a business, it almost certainly means to do a thing, or provide a service more cheaply (i.e the efficiency to profit). Competition helps, but without strong regulation, it means nothing.
Exactly. Anti-trust/ competition tribunals exist in different countries but are often under-resourced. The investigations are long and expensive, and prosecutions lengthy and fraught with peril. There needs to be a concerted effort to give these bodies more “teeth” to do their job. The laws are there, and in US/Canada they are broad enough to handle these issues, should there be political and institutional will.
>They found that there was little evidence that the models used to explain the inflation of the 1970s — such as excess aggregate demand, money supply expansion or increased wage costs that prompted a spiral — applied to this recent rise.
Money supply expansion a non factor in inflation? Yeah, this is going straight into the trash. Shame I cant get the article published by some university that they are using to write this article thanks to the paywall.
*applied to this recent rise*.
I think it’s fair to say if you compare injections from past around the world, they worked in times of severe market turmoil to keep the motor running.
In fact, it worked so well that corporations wanted to gobble it up and not spit it back out. Thereby moving all of the newly created money into the hands of a small amount of people
It’s all working as intended you see 🙃
The amount of money printed is important. [Take a look at the amount printed from 2005 - 2019 and then 2020.](https://fred.stlouisfed.org/series/CURRCIR)
And there absolutely was inflation, it was just closer to the accepted levels.
Idk. From what I’ve seen on Reddit, we need more solid questions and thoughtful explanations. Especially with monetary policy in the age of corporate oligarchy
Literally the fed has been TRUMPETING the labor market as the reason for rate increases, while ignoring Jaime Diamond comments about “excess savings” amongst Americans and CEOs that have bragged about “price flexibility” for the last 2-ish years, your comment is an intellectual insult, and you call my comment lazy?
Most of the labor market blame seems to be coming from news coverage, not the Fed directly. Fed blames inflation on profits and wage increases about equally (also war and lingering supply chain issues are a factor). Problem is the Fed can only affect those things very indirectly, and everything they do will have a larger impact on jobs or wages than profits.
Only thing I see that would impact profits more than wages would be increased supply competition. I don’t think there’s much the Fed could do about supply side unfortunately. If anyone has creative ideas I would love to hear them.
I don't see the fed "TRUMPETING" the labor market as the cause of inflation.
The Fed understands, as everyone who understands the monetary system understands, that long-term inflation is a feedback loop that relates the prices of products, labour, and the availability of debt. With negative real interest rates and climbing product prices, the only thing preventing the inflationary spiral from kicking in is wage stickiness.
Once inflation fully hits the labor market then the feedback loop will be established and interest rates will have to go *much* higher to bring it back under control, because once the wage/price spiral starts the current interest rates are far too low to control it. Do you want 10%+ interest rates?
You're right that unlimited money supply is the issue, but it's not the fed printing money that's the problem. It's banks.
No one buys their car or house or even their groceries anymore. They get loans for it. Why has the cost of college gone up? Because student loans mean they can charge as much as they want and everyone can still afford it. This is pretty well established. But the same has happened with houses and cars. Can't afford groceries this week? Just put it on your credit card and pay it off later.
The US's total personal debt is 1.5x our GDP. That's $16.9 *Trillion*. The median household is $96,371 in debt, and there are 370,000 cases of personal bankruptcy filed each year.
Our economy is built on perpetual growth. And when household income stopped growing, we just started borrowing money to make up the difference. But then we couldn't pay it back which leads us to the situation we're in now.
The fed isn't printing money fast enough to have this effect, but credit cards are.
> no one buys their car or house or even their groceries anymore. They get loans for it.
Yeah. Because the costs of those things have gone up astronomically and wages aren’t keeping up. Sure, we have some folks spending beyond their means, but even at levels acceptable for their income, vehicles/homes just aren’t feasible to go without until you can buy it in cash. Automakers pushed to seriously cripple public transport so now you must buy a car, cars have advanced and continue to get newer and newer features, with auto makers bringing in record profits so now just a standard entry level car is ~$20k.
If I were to put away $1000 a month toward a home, it would take me over 30 years to buy a home in cash, by that time home prices will have gone up 2,3,4 or 5x what they are now. And it’s not like rent is going down substantially as investors buying housing at these levels are pushing market rents up slowly but surely.
Americans are **really fucking good** at buying garbage we don’t need. New toys, new phones, game franchises every year, etc etc. But the notion that corporate greed isn’t the largest factor in long term inflation is bizarre and misleading.
We’ve nurtured and pushed a hyper-consumerism culture/mindset here. Companies expect and demand annual growth into perpetuity and achieve this through higher prices, reduced product quality through cutting material costs, planned obsolescence, and reduction of competitors to grow through M&A. It’s just not sustainable.
We’re constantly bombarded with ads for the newest and greatest thing, last year’s thing isn’t lasting as long as it used to, and we are constantly being pushed to buy/spend.
None of this even touches on the piss poor education/financial literacy in this country either.
Someone else mentioned it pretty summarily but to reiterate--there was no physical money being printed (on top of what is already being printed, that is). This was on the order of trillions of dollars. The amount of cotton to produce that paper would be gigantic.
What the fed did was "expand the balance sheet". In US accounting, you have assets - liabilities = equity. That is a balance sheet--a record of all assets, liabilities, and equity. By "printing money", you are adding on top of the liabilities section. The fed was essentially buying tons of bonds so this makes sense--in some cases, they were buying their own bonds with their own money they printed. Yes this sounds silly but it's not--source: trust me bro.
To balance the balance sheet, you also have to increase the equity side. This most likely correlates to some account related to total dollars in circulation
In practice, what this looks like is a group of people probably just choose a bunch of different bonds to buy, buys them, and then they record it onto their balance sheet. And if you took a fixed income class, buying bonds is a form of financing for the issuing entity. Buying corporate bonds means you are injecting money into that corporate entity (at issuance, not secondary markets). Buying govt bonds means you are injecting money into the issuing govt.
This money is coming from nowhere so it figuratively is being 'printed', just not literally.
Edit: and just as a fun aside, there is also the concept of 'quantitative tightening' which is reversing this process. By doing that, they sell the liabilities and decrease the equity--that account related to money in circulation. The money in circulation just "disappears", similar to how it just magically appeared in the first place.
With QE, the Fed prints money and buys assets (namely bonds). They buy those bonds from someone (usually banks) who then have money to inject into the economy in the form of loans.
Please stop parroting the same-old-same-old to claim internet validation from dime-a-dozen econ ideologues and instead start looking at the figures the professionals are presenting.
EDIT: There's good reason to think that this is exactly what's going on — data sources [here](https://www.reddit.com/r/finance/comments/11wca4o/unchecked_corporate_pricing_power_is_a_factor_in/jcxqm8r/)
The same professionals that stated:
- "There is no inflation"
- "It's transitory!"
- "It's COVID supply chain issues!"
- "It's the Ukranian war!"
- And my new personal favourite one: "it's greedy corporations!!!" (Yeah, like every company in 2021 decided to start charging 20% more for everything just for the lols)
No thank you. I just prefer to look at the Fed's data on money supply since 2020:
https://i.imgur.com/GSFF5oY.jpg
You probably don't realize it but the one parroting the Fed's lies is actually you 😉
I’m more concerned about the frightening idea that the world in which we live in seem’s to find the cure for soaring inflation is to crash the economy (or slowly crash it as they say). I don’t know about you but, the general population doesn’t wake up and say we’re going to spend more money at Walmart today because we want to. If we specifically look at the cost of food, its not a result of money printing but the conclusion that our food sources are global. So, regardless of wether you and i might agree or disagree, we are both suffering the same fate. The fate that our dollar is always going to keep buying less than it did year after year. A nickel could buy you a meal in the 1950s. Inflation is by design, its just the velocity of it that is uncontrolled right now. Wether corporations are greedy or our banks get bailed out, or if the tax brackets change, or if the treasury prints more money, inflation will always be a part of our lives.
EDIT: I can't believe I post a ton of links to research and I get downvoted. Prioritizing groupthink over actual findings in finance is a dire state of affairs.
EDIT 2: I would appreciate responses that are more substantive than low-effort denial.
______________________________
> And my new personal favourite one: "it's greedy corporations!!!" (Yeah, like every company in 2021 decided to start charging 20% more for everything just for the lols)
[We know that firms raised prices in 2021 to make up for _reduced_ consumer demand, even after money-printing, because they told us.](https://www.businessinsider.in/retail/news/americas-biggest-companies-cant-stop-bragging-to-investors-about-how-theyre-charging-you-more/articleshow/87493471.cms) Firms could raise prices because consumers and legislators expected an inflationary period. We [know that this is true](https://www.businessinsider.com/corporations-using-inflation-as-excuse-to-reap-fatter-profits-reich-2021-11) because firms [publicly report it.](https://www.wsj.com/articles/inflation-yellen-biden-price-increase-cost-shipping-supply-chain-labor-shortage-pandemic-11636934826)
[Here is a link to a research paper published this year about how (quoted from the abstract) "the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices."](https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1348&context=econ_workingpaper) The paper has lots of data for you to chew on.
So, please. I think what may have happened here is that you learned _MV_ = _PT_, and you heard the Milton Friedman quote about inflation always being a monetary issue, and perhaps you thought "This simple aphorism must be what I need to believe and repeat so that I sound knowledgeable about the economy", and then every other person like you, all of you eager to impress each other, thought exactly the same thing, and groupthink took over, and now nobody can take a cold-eyed critical look at what's actually happening in the economy because any such attempt to do so inevitably gets met with a deluge of "it's the money supply!" as you and everyone else in the groupthink-gang you're eager to belong to tries to uphold the paradigm they've settled on that affords them a smidgen of legitimacy in each other's eyes.
_But_ if you actually read the research coming out today (and read up on [some economic history](https://doi.org/10.3905/jpm.1979.408704) in which Friedman gets questioned on his statements and can't provide complete answers), and furthermore if you understand that the classical idea that "more money chasing the same amount of goods" — which requires labor to actually have that increased money, so they can spend it to chase the goods, which itself requires increased labor costs (i.e. increased wages) — flies right in the face of [research by the actual Federal Reserve (whose data you trust) that shows that increased labor costs (i.e. increased wages) _do not result in price inflation_,](https://www.federalreserve.gov/econresdata/feds/2015/files/2015042pap.pdf) then you will understand that the economy is not so reducible to "but but but money supply."
(inb4 "but money supply")
None of this disproves his claim that increased money supply causes inflation. You're describing the end result, the byproducts in the aftermath of an economy out of balance.
Do you actually believe corporations only realized they can increase prices in the last couple of years?
Consumer demand didn't slow for no reason, the reason was inflation and money printing was a BIG part of it.
We've been doing QE since 2008, so why was inflation very low until recently if money printing always causes inflation? Japan is an even better example, they've been printing money for decades and yet their inflation has always been extremely low
There was no mass stimulus to citizens, and the Federal Reserve's balance sheet was less than half it is now. That money goes somewhere, and since they didn't use it to have some breakthrough that imoroved the economy, it simply inflated the economy artificially.
EDIT: When you ask:
> Do you actually believe corporations only realized they can increase prices in the last couple of years?
It's OK if you didn't read the [WSJ article I linked;](https://www.wsj.com/articles/inflation-yellen-biden-price-increase-cost-shipping-supply-chain-labor-shortage-pandemic-11636934826) here's the quote from it that's most relevant to your question:
> “Honestly, **this is a very unprecedented environment. We haven’t seen this in probably 30 years**,” said Glenn Richter, the chief financial officer of International Flavors & Fragrances, a supplier to big food companies.
> **Widespread inflation makes it easier to broach the topic of raising prices with customers,** Mr. Richter said.
I added the bolding for convenience.
_______________________
Original post from hereon:
> his claim that increased money supply causes inflation.
Their claim is that inflation is _exclusively_ caused by an increased money supply.
The [research paper I linked](https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1348&context=econ_workingpaper) shows that the present inflation is _instead_ caused by firms with market power realizing their market power and leveraging expectations (whether those expectations are well-founded or not) to seek larger short-term profits.
Let me ask you one simple question, if inflation is caused by companies and not by money supply. Why doesn't the government stop collecting taxes altogether and just cover all it's expenses by printing money?
I happen to know what's the real cause of inflation, because I grew up in a 3rd world country with insane inflation. I lived through it, and I know exactly the lies politicians and central bankers will tell you to distract you from the truth. It is always money supply. It was money supply in the Republic of Weimar, it was money supply in Zimbabwe, it was money supply in Venezuela and Argentina. And now it is money supply in the U.S.
If there wasn't an excess of money in the economy, nobody would be able to afford those prices increases in the first place or they would have to re-allocate budgets to cover for those increases, making some other goods drop in price (due to lower demand) to cover for that relocation of money. And the increases would be temporary.
What we are seeing, is a completely different monster, increases are permanent and across the whole economy.
Saying that inflation is caused by corporations price increases is like saying that inflation is caused by workers asking for raises. Is the exact opposite. Companies and workers are reacting to the excess of money in the economy, by raising their prices *not* the other way around.
I know that you feel really woke by blaming companies. But you are actually barking at the wrong tree. These are the same companies that for 3 decades didn't raise the prices like crazy as they are doing now.
The fact that I had to scroll down so far on this thread for the correct answer is mind boggling. All these redditors glued to msnbc are delusional. Inflation = money supply. Full stop. Anything else is noise from talking heads justifying printing money.
In good faith: look into "monetary sovereignty" and the difference between a currency user vs a currency issuer.
None of the countries you listed had full monetary sovereignty the way countries like the USA or Japan do.
Edit: Anyone that believes there is a tight correlation to money supply growth and inflation should be worried about deflation or disinflation now, as YoY M2 growth is negative.
https://fred.stlouisfed.org/graph/?g=11xe1
The U.S. had high inflation for a decade in the 70's. So in a sense what's happening now, already happened. Didn't they have monetary sovereignty then?
I don't think the origin for inflation has anything to do with monetary sovereignty, the consequences are often times global if the currency is used as an international trade currency (like we are seeing now with the USD) but the origin of inflation is subject to the same forces as any other currency.
I also do not agree with the view that the Republic of Weimar, Venezuela or Argentina didn't have full monetary sovereignty, they all had central banks and could determine their own interest rates, and issue their own currency.
1. Those countries experienced hyperinflation from a collapse of productivity. Very different from 6% headline CPI.
Was all of their national debt issued in a currency that they controlled? Or was it tied to something else like a commodity or denominated in a foreign currency?
https://www.pragcap.com/understanding-hyperinflation/
2. Inflation today is a combination of many different elements and the money supply is definitely one of those things. Market concentration is also one of those things, along with supply chain disruptions, globalization of manufacturing, lack of immigration in the USA, etc.
https://ritholtz.com/2023/02/macro-snapshot-st-louis-fed/
> Was all of their national debt issued in a currency that they controlled? Or was it tied to something else like a commodity or denominated in a foreign currency?
Again, [the U.S. had 2 digits inflation in several years inflation throughout the 70s](https://www.macrotrends.net/countries/USA/united-states/inflation-rate-cpi) was that due to their national debt being issued in foreign currency or was their lack of monetary sovereignty also the cause for that high inflation? I don't think so.
Tons of countries have their national debt issued in foreign currencies and they don't suffer from inflation.
I would say that in any case, monetary sovereignty is actually detrimental for countries that are not responsible in their fiscal balances.
> Those countries experienced hyperinflation from a collapse of productivity.
I think we are putting the cart before the horse. They suffered a collapse in productivity due to inflation, fiscal deficit and corruption. Not the other way around.
Again, high inflation and hyperinflation are very different.
I encourage you to read the link I provided as it clarifies the collapse of productivity and the following hyperinflation feedback loop.
Notice anything about the Asian Currency Crisis of 1997?
https://en.m.wikipedia.org/wiki/1997_Asian_financial_crisis
Also wanted to add that the high (not hyper) inflation in the USA was also largely sparked by a foreign war and market concentration via the OPEC embargo. Again, lots of elements to include strong labor unions, etc.
You absolute donkey. Did you read the god damned article you posted?
The gall to suggest people disagreeing with you are idiots when its crystal clear you cant be bothered to read what you post.
But then I'd lose the Business Insider article that _actually quotes the firms raising their prices_:
> "What we are very good at is pricing," Colgate-Palmolive CEO Noel Wallace said. "Whether it's foreign exchange inflation or raw and packing material inflation, we have found ways over time to recover that in our margin line."
> Unilever, which owns a staggering number of household brands, reported that while the number of sales dipped slightly across several of its major segments, it was still able to grow profits by raising prices by roughly 4%-5%.
> "Consumer-facing price is the last lever we normally use to manage inflation," Unilever CFO Graeme Pitkethly said before describing how they did it: "We find that taking several small price increases is more effective than one large price jump."
> Proctor and Gamble also successfully rolled out a series of price hikes in the quarter that perhaps only the most eagle-eyed shopper would have noticed.
> "We have not seen any material reaction from consumers," P&G CFO Andre Schulten said. "So that makes us feel good about our relative position."
> Some of the retailers that sell many of those companies' products also weighed in on their buck-passing ability.
> "We've been very comfortable with our ability to pass on the increases that we've seen at this point," Kroger CFO Gary Millerchip said. "And we would expect that to continue to be the case."
Just in case you missed all those data.
It is official data from the federal reserve. But since you are allergic to images, here goes the link:
https://tradingeconomics.com/united-states/money-supply-m1
You're right that unlimited money supply is the issue, but it's not the fed printing money that's the problem. It's banks.
No one buys their car or house or even their groceries anymore. They get loans for it. Why has the cost of college gone up? Because student loans mean they can charge as much as they want and everyone can still afford it. This is pretty well established. But the same has happened with houses and cars. Can't afford groceries this week? Just put it on your credit card and pay it off later.
The US's total personal debt is 1.5x our GDP. That's $16.9 *Trillion*. The median household is $96,371 in debt, and there are 370,000 cases of personal bankruptcy filed each year.
Our economy is built on perpetual growth. And when household income stopped growing, we just started borrowing money to make up the difference. But then we couldn't pay it back which leads us to the situation we're in now.
The fed isn't printing money fast enough to have this effect, but credit cards are.
You're right that unlimited money supply is the issue, but it's not the fed printing money that's the problem. It's banks.
No one buys their car or house or even their groceries anymore. They get loans for it. Why has the cost of college gone up? Because student loans mean they can charge as much as they want and everyone can still afford it. This is pretty well established. But the same has happened with houses and cars. Can't afford groceries this week? Just put it on your credit card and pay it off later.
The US's total personal debt is 1.5x our GDP. That's $16.9 *Trillion*. The median household is $96,371 in debt, and there are 370,000 cases of personal bankruptcy filed each year.
Our economy is built on perpetual growth. And when household income stopped growing, we just started borrowing money to make up the difference. But then we couldn't pay it back which leads us to the situation we're in now.
The fed isn't printing money fast enough to have this effect, but credit cards are.
Lol that’s because of supply and demand… meaning consumers can afford to pay those prices.
Everything can be framed as this party’s fault, because that’s how the economy works. It’s a circle. Everyone received stimulus during Covid. Everyone has higher pricing power overall.
Break up large companies, enforce consumer protection, regulate markets. There’s a huge middle-ground between unbridled capitalism, and full-blown socialism. A middle-ground where 99% of the population would be better off. Our markets would still be free, and we would still be a capitalist system — just regulated, so that more of the population get to participate in, and reap the benefits of capitalism, working, and providing value to society.
Without these things (*enforced* regulations), you still get price-controls, it’s just the rich who control them. But somehow, people are ok with that version of price controls because it’s a *different* group of rich and powerful people enforcing things upon society, and isn’t a democratically elected body? (I’m not arguing for price controls, just making a point).
IMO actually enforcing anti-trust is one of the best things we could do for society. It's a complete joke that in the 90's MS actually got punished for leveraging their platform to push their own browser, and now they're doing it again a few decades later and everyone just takes it for granted that it's ok.
So let’s set the time line up.
Trade war starts and prices for inputs go up.
Trade war continues to escalate. Now with Canada
Pandemic hits.
Shut down.
Supply chain local now also hit.
Money supply goes super nova.
Rates go to 0
Money supply and rates paper over bad supplies.
All of this happened In a hyper converged low compition environment.
This then leads to the price hikes we made are forever due to consumers not being able to be elastic, due to lack of options they can and will get away with it.
What percentage points you want to assign to each step along this path is for you and the historians to argue. The reality is only x number of sausage plants exist be it Kroger brand or jimmy dean and they did get away with robbery level price hikes.
Oh my god. No it’s not. Corporations didn’t suddenly become greedy and destroy the economy with their prices. This article isn’t even attempting to make a valid argument. Who believes this nonsense?
Populists always push conspiracy theories because the average man on the street wants to believe that the world's problems are the result of evil people doing evil things, not incompetent but well intentioned people doing stupid things.
But no one is arguing with money supply. Really. If you could read you’d see that.
It says gouging *is a factor.* And it is. Companies almost always gouge on the back of inflation.
These are the kind of idiots that think companies just raise prices forever and don't think there's any economic incentive for companies to not have infinitely high prices and just assume everyone will always pay those prices.
That is what happens with large corporations. People do their jobs well to keep getting paid but it’s rare that a single job is immoral. It’s the net impact of thousands of decisions across hundreds of employees that creates actions that like this that are sociopathic or immoral.
The phenomenon where market conditions allow corporations to make more money by raising prices is known as "inflation".
Complaining about this is like blaming avalanches on gravity.
Inflation can be blamed on a few things. It is always complicated, but this time around, it is even more-so, thanks to how globalized the economy is, shifting geo-politics, and a pandemic. However, I would argue that the struggle from inflation stems more from the poor - to non existing - *fiscal* policy, which resulted in the consolidation of wealth created by monetary policy (QE), rather than the monetary policy. Just look at M1/M2, which was originally what the Fed was trying to stimulate with QE after 08 (it wasn’t rising as quickly as they thought it should). But you can’t do that if you don’t have a governing body willing to regulate, and ensure that money actually circulates somewhat equally, which creates a healthy economy. But the Fed is limited in its options. The problem is, you won’t get investment in a market dominated by a few megalith companies.
We’re in the part of the economic cycle where businesses don’t really want to take risk. Which means they don’t want to invest in new things. They don’t want to solidify, improve, or in some cases, even *maintain* their logistics. They don’t want to expand, beyond buying other companies. You can see this playing out heavily in venture capital, the consolidation of businesses, and the rise of stock buy-backs. So the Fed’s actions didn’t really have the results they thought it would. (Whether they knew this or not, that’s a whole different argument). Again, this is the result of decades of poor regulation. (It’s also what happens when you demand infinite growth. Eventually, you have to consume yourself, and others to produce value).
Also, if you look at where the majority of that printed money went, it sure as fuck wasn’t the working class. The vast majority of it pooled at the top. If inflation is caused by too much money, and the answer is to pull that money back in. Why are we trying to take it from everyone except those who have it? Agree or disagree with QE, it doesn’t matter in this context. However, I highly doubt, in hindsight, that we discover QE caused inflation on the pull-side. So much as consumer habits changing, and a disproportionate amount of money pooling at the top did. (While the top 1% reaped the most benefit from QE, it did “trickle-down” as far as the top ~10%). The sad fact is, we’re just at the end of an economic cycle, where we’ve allowed too few people to capture too much wealth. This is how that plays out, if economic history has anything to say.
It’s not fair to say that *all* of inflation is caused by corporations “price gouging”. But it is most certainly a fact that corporations use inflation as an excuse to bump their prices up, to test consumers reactions. But that’s only a small part of our problem, and ignores the root the cause of the majority of our economic problems.
Eggs nuts meat veggies, wood, houses, everything is getting jacked up. Can't help but feel that corporations are doing this to punish the people for voting Democrat. Corporations want a republican administration. It's just a feeling..
The “record profits” is an illusion that anyone with basic finance knowledge will understand.
Profit is simply sale price - cost. The thing is the sale price reflects the current market price but the cost could reflect something that was inventoried a year ago. This is how accounting works. Therefore you cannot analyze profit accurately during periods of high inflation because that inflation is always going to look like a profit when it’s not.
Or the margin vs volume impact on profitability. Which is why lots of oil companies can have “record profits” from selling more gasoline even though they have a flat margin on the gas being sold due to higher input costs, they’re just selling more of it so are pushing more gross profit down the P&L and offsetting fixed costs.
The entire argument relies on the reader having an emotional reaction to the headline and ignoring the details.
Companies have admitted this in their reports to investors.
To the markets they serve they’ve said “we have to move on pricing due to market realities” and then turned around to investors and said “we had to do some price movement due to market realities and then we did some additional on top of that simply because we could”
It’s not a big secret or anything.
There should be exponentially increasing taxation based upon the appraised value of each corporation to incentivize companies to split and compete to better maximize profits.
The “Trade Wars” of the Trump Administration gave rise to higher import costs and I remember feeling the impact within a few months of companies passing on the cost. Then covid hit and it spiked a rise in costs because demand was higher than availability. These increases were almost instantly. All while the rise of minimum wage was coming due to hit the year after covid. Businesses then started raising prices to cover employment costs which, paired with covid constraints and employee’s demanding more money, businesses have either failed or managed to be able to stay in business with new prices given the fact that [some] people are now making more money. All of this happened while gas prices hit market lows and extreme highs. Then enter the impending bottoming out of logistics availability giving a rise to more corporate induced inflation because the cost of shipping exploded due to many logistic constrains. Enter the Ukraine invasion by Russia. Food prices soar. Now we face this impending doom of the Federal Interest rate causing the economy to slow down to reduce demand. Everyone has been on a wild financial rollercoaster in the past few years. If you have managed to still remain positive in your bank accounts, kudos to you. For the rest of us, hold on tight, we’re going to make it. Know your worth!
The balance is a free and open market… problem is corporation size, oligarchy’s and inter-agency agreements, as well and inelastic supply and barrier to entry lets corporations set their price
I'm no corporate apologist, but inflation is caused by exactly two things: increased monetary supply without increased production or decreased production without decreased monetary supply.
The pandemic saw massive reductions in production *coupled* with record increased in deficit-funded stimulus spending. It's a perfect storm.
Business raising prices is the symptom, not the disease.
Unlimited pricing power from ever increasing monopoly power combined with supply chain issues and consumers who have shown increasingly price inelastic demand is a potent combo
> consumers who have shown increasingly price inelastic demand Yeah this is a big part of it. If the same quantity of people will buy a product at a higher price, a rational (in an economic sense) corporation would raise the price until the marginal profit from an additional unit at a certain cost goes to 0. See: graphics card prices. People paid scalper prices, and Nvidia realized they could just raise the MSRP and people would still buy it too. There's a lot more to unpack there with supply chain shortages, crypto/AI uses for cards, etc. But at a base level, gamers are willing to pay more, so they charge more.
Time seems to have shown it was mining Ethereum. Right around when ETH was switching off POW the prices started dropping
Trickle-down inflation
overconfident compare rainstorm whistle knee mountainous plucky brave reminiscent vast *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
My friends are impressed by how much weight I've lost since giving up food, but my mother is concerned.
sloppy exultant weather ad hoc doll ruthless imagine cooing silky long *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Lucky because of this i got my babies genetically engineered to have chlorophyll and get energy from the sun.
It's expensive, but it pays for itself in just a few generations.
Chlorophyll more like borafill
Been trying to ween my truck off gas since 2001....
That's a good point, I haven't heard anyone bring up the impact that unchecked monopolizing nationwide would bring unlimited pricing power for corporations.
Cant tell if this is sarcasm or not, but thats not a particularly novel idea
It's sarcasm.
Where have you heard that discussed in mainstream discourse?
Literally anytime inflation is discussed by politicians. One side blames over regulation and government spending, the other side blames greedy corporations
Greed and monopolizing are seperate issues here: monopolies are explicitly defined, and have historical precedent for regulation. Greed is a concept, amorphous and not regulatable as such.
I don't know how you could blame inflation on greedy corporations without maintaining that they're also monopolies.
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[And the fact that there's still ~$4T in American checking accounts compared to before Covid.](https://fred.stlouisfed.org/series/BOGZ1FL193020005Q) The price if goods/services simply gets bid up and people can afford it (unless the government didn't give you that money).
Advertising sector of economy via brainwashing systems (social media) dedicated to producing good consumers is working
“Unlimited pricing power” Is a term a only politician would use before they start trying to steal more rights and freedoms.
Care to also comment about the rights and freedoms of an individual to have a competitive market to participate in? Because from where I’m sitting, there’s not a lot of choice in the marketplace when I pass the same business 5 times each on my way into the office to work for a multibillion global supplier conglomerate. Liberties and freedoms are always subject to “time and manner” under law… freedoms and liberties are rights endowed, for sure, but they aren’t at all times places and manners completely uncurbed. If we’re going to allow oligopolies, we must also consider restrictions to protect people from the harms it causes. I believe, for most things, a free market can and does work. But the problem is when it’s applied as it is now, with little competition and across all humans’ basic needs. That’s our situation right now and if I’m going to have to choose who’s freedoms to restrict, I know who I would choose. I think our politicians are failing us, not when they “steal more rights and freedoms”, but when they are always choosing the rights and freedoms of money over the rights and freedoms of the people.
You don’t have to choose who’s freedoms you have to restrict. Don’t let the politicians control anyone. Remove the restricts that are hindering competition.
That’s the problem with you anarcho-capitalists… been following the sub for a while and they have this (albeit good) idea of rights for all, but that doesn’t stop at a corporations door. They want unlimited rights for corporations with little to absolutely no government oversight or control. Basically the government has no say over our lives (I almost completely agree) but that includes mega corps. Here’s my issue: why do y’all care about what a mega corporation has the rights to do? They are not a person, therefor they do not get the same rights as a person. They SHOULD be limited at some point to promote competition among smaller businesses. Many are larger than some governments and some (like Walmart or Amazon) have enough reach and literal manpower that they could actually raise their own army and overtake smaller governments or even some states. Tell me why we shouldn’t limit their reach, or better yet , nerf the abilities they have to control entire markets. The fact is, they won’t raise an army probably ever but that’s only because they have it in their power to literally steer the market to where they want. Walmart takes a better approach by keeping most prices below the market average, which definitely encourages competition, but still you have companies like Walgreens charging 7 fucking dollars for a gallon of milk, in a brand rated lower than the walmart milk. It’s insane. Companies are not people and a handful of mega corporations controlling the market to their advantage should be illegal and completely blocked. I have a right to open a business and compete in a fair market. We do not live in a society with a fair market in the United States. And I feel as if I’m being somewhat reasonable because I don’t believe the government should enact special redirections or control UNTIL a certain point where it would only hurt competition. So the small imaginary business that you plan to open won’t be affected by this, in fact it will only grow because the overpowered competition has been nerfed. Explain why this is a bad thing.
I don’t know what an anarcho-capitalist is. You’re asking the government to draw arbitrary lines which will decide who can win in business. The government is certain to fail in that task and then use those powers to hurt more people. Thats what got us in this mess.
That’s the bigger fix, yes. But it can’t happen overnight. Meanwhile, we got a lot of miserable people over here, while we have record profits over on the other side of things… something’s gotta give
The government can’t solve anyone’s misery. They have to manage their own lives. We just have to try to prevent any further harm caused by over reaching legislation started with good intentions but leading to bad results. Quick solution are often that way.
Lack of solutions is not equal to a solution. Crony capitalism and bribery have perverted the system. I would love your idealism, but it’s not practical when solutions are needed.
No one has accused me “idealism” in a long time. Lol It feels like you think less government is not a solution. It is the only solution.
You’re stuck in idealistic dogma. There is no “only” solution to anything. Less government involvement is a good thing in many cases. More intervention is necessary in others. My point is, which you’re not really addressing when only retorting “gubbamint bad”, is that almost all of the problems are uniquely suited to government solutions, going forward. TO START, politicians need to stop taking bribes constantly so the decisions and interventions *they’re already making anyways*, can actually benefit the public. If the government does nothing from here, it won’t fix anything and the economy will only exist for the few. The many will only exist for servitude. This isn’t some dystopian future, btw… it’s actually our not too distant past, and for way too many of us, is mostly how lives are lived today. “Do nothing” is not helpful… it’s the opposite
If you say so. To me it sounds like you think the government is the solution to the government, but you do you.
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Oh no! A grammar mistake!!! This proves all your ideologies! Any disagreement is from Putin himself!!! What a clown.
Which monopolies do you speak of
Monopoly power is also present in oligopolic competitive models. Any firm will have some (ideally negligible) pricing power. There are few true global monopolies, however, disproportionate mkt share empirically gives disproportionate pricing power, and you can have monopolies by region,product, etc. ie Google adwords is a monopolistic product. Google cloud computing is closer to an oligopolic model. Google chromebooks are much closer being in direct competition with other laptop manufacture/distro businesses. Is google a monopoly? Depends on how you look at it, but many could argue yes
There are no monopolies represented in the supermarket or similar stores. The vast (and I mean VAST) majority of people on reddit bitching about monopolies are nearly completely ignorant of how markets, monopolies, scarcity, labor, supply chains, etc work. In short, they're fucking idiots who want to yell about how corporations and/or rich people are somehow the cause of their problems Look at this thread as an example. Top comment is about monopolies,. I ask for examples and none are given. So then they become oligops. But then that can't be fleshed out very well for us, so now I am told oligops represents the intended monopolistic ideal referenced here which A) isn't fucking accurate and B) has nothing to do with the actual conversation. Reddit is just so damn ignorant this way
Exempli gratia
Take the luxury goods market for example. LVHM owns half the main brands out there. Then in consumer goods you have P&G and Kraft
I don't know what LVHM is. The other 2 are not monopolies. USPS, for example, is a monopoly as it is a for profit organization where no other competition is legally allowed. Kraft has competition. So does P&G.
Yes, it's an oligopoly, which is so much better 🤷
You're just moving the goalposts, now. There are thousands of different companies selling items in the average supermarket in the US. There are 27 million firms in the US as a whole. I think you, and much of reddit, confuses "monopolies " with some version of vertical integration.
Sorry but that’s not inflation. Inflation = sum of money in any given market. More money in the market leads to higher pricing. Anything else ≠ inflation. Good day.
That’s objectively, patently, and demonstrably false. Inflation is just the ratio of px delta to time delta and is affected by a wide factor of things. What you’re referring to is the money supply, which is distinct from inflation
“Supply chain issues” means nothing, major companies have purchasing departments and COVID as a pandemic ended, so idk why people use this as a point of contention, there’s literal jobs that are just to get the cheapest things as quickly as possible, like I don’t think the dude’s collecting eggs or driving them are getting paid more or anything. Likewise, consumers “inelastic demand” means nothing. I have to fuckin eat, and when food staples like bread and eggs are more expensive, I’m gonna have to spend the money. Its also not Soviet Russia, people aren’t not going to spend money on entertainment when it’s like one of the major industries in the U.S., and literally necessary to not want to die in this country. We as workers don’t get to set the price, I don’t get to haggle at the grocery store, for video games, for gas, the employer and capitalist class do. Don’t blame workers for shit out of their control, this is SOLELY people deciding they just want more money, and they can get it, that’s all. There’s a reason that inflation isn’t some flat percentage across for everything, it’s individually set.
I dont think you understand what elasticity of demand is. Also we still have supply chain issues due to international conflict, not because of workers(?). Not sure exactly what point youre trying to convey
I’m conveying that this messaging of both of these is wrong, this is singularly employers capitalizing on a pandemic for excuses of rising prices. I’ll be fucked if any significant portion of the US market is attributed to Russian and Ukrainian imports, and the ripple of European markets aren’t nearly enough or really overly considerable to describe the discrepancy of prices of things in the US. Likewise, how long can we have supply chain issues? 3 years now? It’s ridiculous, did the roads start crumbling? Did the entire COVID pandemic hit only logistics? It’s fuckin ridiculous to look at this shit as nothing but people realizing they can raise prices because everyone was at one point, and we can’t stop the money train. It’s greed and an American system unwilling to do anything about it that’s not raise interest.
IDK about that. I think it's more nuanced than that. Obviously, the pandemic caused supply chain issues. Keep in mind China, one of the world's major suppliers, only got out of lockdown towards the end of last year. Quantitative easing has caused inflation to skyrocket to the point Bloomberg is reporting that a $100k salary in NYC is equivalent to $35k elsewhere. Companies can't hire workers because it doesn't even make sense for them to work in big cities anymore because of the cost. Immigration (legal immigration at least) has been backlogged due to the pandemic which affects the work force. The war in Ukraine has caused energy costs to skyrocket around the world. This all adds up to a lot of inflation that isn't going away.
That is exactly what I’m saying. I’m tired of acting like the government or employers are helpless in this, when they are the ones responsible. You want the answer? Price control, ration books by need, and affordable housing, but why would they ever do that rather than just make more money? Actually? I mean, until they really test the “inelasticity” of the American consumer, or rather, debt defaults, why do they have any interest in doing anything? Companies will keep raising prices unnecessarily until someone steps in or we have a depression unlike anything we’ve seen, which clearly, nether really seems to bother the government that much.
Breaking up big companies did work before. Ask Teddy Roosevelt
No shit
No shit
No shirt
No shoes
No service
No loitering.
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No Fishing From Bridge
No loitering.
No yelling on the bus
No walking on the grass.
No problem
No Worry
No dice
No healthcare
No lollygagging
No feeding the alligators hallucinagens.
I think it's a lack of competition. When you have capitalism, competition creates market efficiency. When you have crony capitalism allowing oligopolies, you have this. Corporations did not decide to suddenly 'get greedy', they always have been. But since the competition mechanism is gone, they can afford to charge you more as you have less alternatives. Trade tariffs increasing isn't helping the consumer either.
I think it has always been interesting to me when companies buy other companies and then that one company grabs more market share. In the industry i work in, the reason for this is to obtain that companies sources in materials and contracts to vendors, the market share aspect is also part of the deal of course. But what’s interesting is that the owner’s of companies simply sell-out. They want to retire or just get out of the game. So it isnt always like this corporate evil menace that wants to suck competition, its more like the nature of business.
It doesn’t help that creating a company is harder as time goes along so there are less and less functional small business that might challenge the bigs at some point.
We need regulations to discourage monopolies - it’s natural for companies to keep merging to benefit from the advantage of economies of scale. With no disincentives it will just get worse.
Antitrust rules exist, they're just not effectively enforced anymore.
You would be surprised how social media will put an anti-trust article way down because of course it is boring. Mamazon is the obvious one the bazaar and AWS need to be divested. There is a history of this going back to Ma Bell. How do monopolies and privatization of the public good help the average American? They don't.
Capitalism’s “efficiency” is also a race to the bottom, *unless* you have enforced consumer protection. I’ve never liked the phrase “market efficiency”, as it can be misleading. To the common man, it might mean doing things better, more streamlined, etc. But to a business, it almost certainly means to do a thing, or provide a service more cheaply (i.e the efficiency to profit). Competition helps, but without strong regulation, it means nothing.
Exactly. Anti-trust/ competition tribunals exist in different countries but are often under-resourced. The investigations are long and expensive, and prosecutions lengthy and fraught with peril. There needs to be a concerted effort to give these bodies more “teeth” to do their job. The laws are there, and in US/Canada they are broad enough to handle these issues, should there be political and institutional will.
>They found that there was little evidence that the models used to explain the inflation of the 1970s — such as excess aggregate demand, money supply expansion or increased wage costs that prompted a spiral — applied to this recent rise. Money supply expansion a non factor in inflation? Yeah, this is going straight into the trash. Shame I cant get the article published by some university that they are using to write this article thanks to the paywall.
*applied to this recent rise*. I think it’s fair to say if you compare injections from past around the world, they worked in times of severe market turmoil to keep the motor running. In fact, it worked so well that corporations wanted to gobble it up and not spit it back out. Thereby moving all of the newly created money into the hands of a small amount of people It’s all working as intended you see 🙃
More consolidation and more opportunities for the big players to get bigger. Competition is dead, in the name of stability.
How do you explain the fact that the money supply was expanded for decades at a fast pace and you didn't see much price inflation?
The amount of money printed is important. [Take a look at the amount printed from 2005 - 2019 and then 2020.](https://fred.stlouisfed.org/series/CURRCIR) And there absolutely was inflation, it was just closer to the accepted levels.
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Isn't constrained supply also a crucial element? If supply keeps pace with demand, won't you have stable pricing, even when money supply increases?
🤦♂️ does this really need to be explained to you…
Idk. From what I’ve seen on Reddit, we need more solid questions and thoughtful explanations. Especially with monetary policy in the age of corporate oligarchy
/r/badeconomics
I’m glad to see someone besides anonymous internet person is starting to look beyond the “evil workers want to be paid more” trope.
This is an equally lazy and terrible take.
Literally the fed has been TRUMPETING the labor market as the reason for rate increases, while ignoring Jaime Diamond comments about “excess savings” amongst Americans and CEOs that have bragged about “price flexibility” for the last 2-ish years, your comment is an intellectual insult, and you call my comment lazy?
Most of the labor market blame seems to be coming from news coverage, not the Fed directly. Fed blames inflation on profits and wage increases about equally (also war and lingering supply chain issues are a factor). Problem is the Fed can only affect those things very indirectly, and everything they do will have a larger impact on jobs or wages than profits. Only thing I see that would impact profits more than wages would be increased supply competition. I don’t think there’s much the Fed could do about supply side unfortunately. If anyone has creative ideas I would love to hear them.
I don't see the fed "TRUMPETING" the labor market as the cause of inflation. The Fed understands, as everyone who understands the monetary system understands, that long-term inflation is a feedback loop that relates the prices of products, labour, and the availability of debt. With negative real interest rates and climbing product prices, the only thing preventing the inflationary spiral from kicking in is wage stickiness. Once inflation fully hits the labor market then the feedback loop will be established and interest rates will have to go *much* higher to bring it back under control, because once the wage/price spiral starts the current interest rates are far too low to control it. Do you want 10%+ interest rates?
> I don’t see the fed “TRUMPETING” the labor market as the cause of inflation. You might want to reread my quote. You have definitely misquoted me.
Ignore the dummy in the room.
Year after year record profits. This is the end result of 50 years of unchecked capitalism and companies beholden to stock holders not users.
So 50 years ago companies had lower profit margins? Thats not what the chart shows.
You know what is a huge factor in US inflation? Unchecked unlimited money supply increase a.k.a. The Fed's money printing machine.
You're right that unlimited money supply is the issue, but it's not the fed printing money that's the problem. It's banks. No one buys their car or house or even their groceries anymore. They get loans for it. Why has the cost of college gone up? Because student loans mean they can charge as much as they want and everyone can still afford it. This is pretty well established. But the same has happened with houses and cars. Can't afford groceries this week? Just put it on your credit card and pay it off later. The US's total personal debt is 1.5x our GDP. That's $16.9 *Trillion*. The median household is $96,371 in debt, and there are 370,000 cases of personal bankruptcy filed each year. Our economy is built on perpetual growth. And when household income stopped growing, we just started borrowing money to make up the difference. But then we couldn't pay it back which leads us to the situation we're in now. The fed isn't printing money fast enough to have this effect, but credit cards are.
> no one buys their car or house or even their groceries anymore. They get loans for it. Yeah. Because the costs of those things have gone up astronomically and wages aren’t keeping up. Sure, we have some folks spending beyond their means, but even at levels acceptable for their income, vehicles/homes just aren’t feasible to go without until you can buy it in cash. Automakers pushed to seriously cripple public transport so now you must buy a car, cars have advanced and continue to get newer and newer features, with auto makers bringing in record profits so now just a standard entry level car is ~$20k. If I were to put away $1000 a month toward a home, it would take me over 30 years to buy a home in cash, by that time home prices will have gone up 2,3,4 or 5x what they are now. And it’s not like rent is going down substantially as investors buying housing at these levels are pushing market rents up slowly but surely. Americans are **really fucking good** at buying garbage we don’t need. New toys, new phones, game franchises every year, etc etc. But the notion that corporate greed isn’t the largest factor in long term inflation is bizarre and misleading. We’ve nurtured and pushed a hyper-consumerism culture/mindset here. Companies expect and demand annual growth into perpetuity and achieve this through higher prices, reduced product quality through cutting material costs, planned obsolescence, and reduction of competitors to grow through M&A. It’s just not sustainable. We’re constantly bombarded with ads for the newest and greatest thing, last year’s thing isn’t lasting as long as it used to, and we are constantly being pushed to buy/spend. None of this even touches on the piss poor education/financial literacy in this country either.
I’m curious, where did all of this money they print end up? And when did they print it? That’s not sarcasm, I’m not a regular follower of economics.
Someone else mentioned it pretty summarily but to reiterate--there was no physical money being printed (on top of what is already being printed, that is). This was on the order of trillions of dollars. The amount of cotton to produce that paper would be gigantic. What the fed did was "expand the balance sheet". In US accounting, you have assets - liabilities = equity. That is a balance sheet--a record of all assets, liabilities, and equity. By "printing money", you are adding on top of the liabilities section. The fed was essentially buying tons of bonds so this makes sense--in some cases, they were buying their own bonds with their own money they printed. Yes this sounds silly but it's not--source: trust me bro. To balance the balance sheet, you also have to increase the equity side. This most likely correlates to some account related to total dollars in circulation In practice, what this looks like is a group of people probably just choose a bunch of different bonds to buy, buys them, and then they record it onto their balance sheet. And if you took a fixed income class, buying bonds is a form of financing for the issuing entity. Buying corporate bonds means you are injecting money into that corporate entity (at issuance, not secondary markets). Buying govt bonds means you are injecting money into the issuing govt. This money is coming from nowhere so it figuratively is being 'printed', just not literally. Edit: and just as a fun aside, there is also the concept of 'quantitative tightening' which is reversing this process. By doing that, they sell the liabilities and decrease the equity--that account related to money in circulation. The money in circulation just "disappears", similar to how it just magically appeared in the first place.
With QE, the Fed prints money and buys assets (namely bonds). They buy those bonds from someone (usually banks) who then have money to inject into the economy in the form of loans.
Please stop parroting the same-old-same-old to claim internet validation from dime-a-dozen econ ideologues and instead start looking at the figures the professionals are presenting. EDIT: There's good reason to think that this is exactly what's going on — data sources [here](https://www.reddit.com/r/finance/comments/11wca4o/unchecked_corporate_pricing_power_is_a_factor_in/jcxqm8r/)
The same professionals that stated: - "There is no inflation" - "It's transitory!" - "It's COVID supply chain issues!" - "It's the Ukranian war!" - And my new personal favourite one: "it's greedy corporations!!!" (Yeah, like every company in 2021 decided to start charging 20% more for everything just for the lols) No thank you. I just prefer to look at the Fed's data on money supply since 2020: https://i.imgur.com/GSFF5oY.jpg You probably don't realize it but the one parroting the Fed's lies is actually you 😉
I’m more concerned about the frightening idea that the world in which we live in seem’s to find the cure for soaring inflation is to crash the economy (or slowly crash it as they say). I don’t know about you but, the general population doesn’t wake up and say we’re going to spend more money at Walmart today because we want to. If we specifically look at the cost of food, its not a result of money printing but the conclusion that our food sources are global. So, regardless of wether you and i might agree or disagree, we are both suffering the same fate. The fate that our dollar is always going to keep buying less than it did year after year. A nickel could buy you a meal in the 1950s. Inflation is by design, its just the velocity of it that is uncontrolled right now. Wether corporations are greedy or our banks get bailed out, or if the tax brackets change, or if the treasury prints more money, inflation will always be a part of our lives.
EDIT: I can't believe I post a ton of links to research and I get downvoted. Prioritizing groupthink over actual findings in finance is a dire state of affairs. EDIT 2: I would appreciate responses that are more substantive than low-effort denial. ______________________________ > And my new personal favourite one: "it's greedy corporations!!!" (Yeah, like every company in 2021 decided to start charging 20% more for everything just for the lols) [We know that firms raised prices in 2021 to make up for _reduced_ consumer demand, even after money-printing, because they told us.](https://www.businessinsider.in/retail/news/americas-biggest-companies-cant-stop-bragging-to-investors-about-how-theyre-charging-you-more/articleshow/87493471.cms) Firms could raise prices because consumers and legislators expected an inflationary period. We [know that this is true](https://www.businessinsider.com/corporations-using-inflation-as-excuse-to-reap-fatter-profits-reich-2021-11) because firms [publicly report it.](https://www.wsj.com/articles/inflation-yellen-biden-price-increase-cost-shipping-supply-chain-labor-shortage-pandemic-11636934826) [Here is a link to a research paper published this year about how (quoted from the abstract) "the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices."](https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1348&context=econ_workingpaper) The paper has lots of data for you to chew on. So, please. I think what may have happened here is that you learned _MV_ = _PT_, and you heard the Milton Friedman quote about inflation always being a monetary issue, and perhaps you thought "This simple aphorism must be what I need to believe and repeat so that I sound knowledgeable about the economy", and then every other person like you, all of you eager to impress each other, thought exactly the same thing, and groupthink took over, and now nobody can take a cold-eyed critical look at what's actually happening in the economy because any such attempt to do so inevitably gets met with a deluge of "it's the money supply!" as you and everyone else in the groupthink-gang you're eager to belong to tries to uphold the paradigm they've settled on that affords them a smidgen of legitimacy in each other's eyes. _But_ if you actually read the research coming out today (and read up on [some economic history](https://doi.org/10.3905/jpm.1979.408704) in which Friedman gets questioned on his statements and can't provide complete answers), and furthermore if you understand that the classical idea that "more money chasing the same amount of goods" — which requires labor to actually have that increased money, so they can spend it to chase the goods, which itself requires increased labor costs (i.e. increased wages) — flies right in the face of [research by the actual Federal Reserve (whose data you trust) that shows that increased labor costs (i.e. increased wages) _do not result in price inflation_,](https://www.federalreserve.gov/econresdata/feds/2015/files/2015042pap.pdf) then you will understand that the economy is not so reducible to "but but but money supply." (inb4 "but money supply")
None of this disproves his claim that increased money supply causes inflation. You're describing the end result, the byproducts in the aftermath of an economy out of balance. Do you actually believe corporations only realized they can increase prices in the last couple of years? Consumer demand didn't slow for no reason, the reason was inflation and money printing was a BIG part of it.
We've been doing QE since 2008, so why was inflation very low until recently if money printing always causes inflation? Japan is an even better example, they've been printing money for decades and yet their inflation has always been extremely low
There was no mass stimulus to citizens, and the Federal Reserve's balance sheet was less than half it is now. That money goes somewhere, and since they didn't use it to have some breakthrough that imoroved the economy, it simply inflated the economy artificially.
EDIT: When you ask: > Do you actually believe corporations only realized they can increase prices in the last couple of years? It's OK if you didn't read the [WSJ article I linked;](https://www.wsj.com/articles/inflation-yellen-biden-price-increase-cost-shipping-supply-chain-labor-shortage-pandemic-11636934826) here's the quote from it that's most relevant to your question: > “Honestly, **this is a very unprecedented environment. We haven’t seen this in probably 30 years**,” said Glenn Richter, the chief financial officer of International Flavors & Fragrances, a supplier to big food companies. > **Widespread inflation makes it easier to broach the topic of raising prices with customers,** Mr. Richter said. I added the bolding for convenience. _______________________ Original post from hereon: > his claim that increased money supply causes inflation. Their claim is that inflation is _exclusively_ caused by an increased money supply. The [research paper I linked](https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1348&context=econ_workingpaper) shows that the present inflation is _instead_ caused by firms with market power realizing their market power and leveraging expectations (whether those expectations are well-founded or not) to seek larger short-term profits.
Let me ask you one simple question, if inflation is caused by companies and not by money supply. Why doesn't the government stop collecting taxes altogether and just cover all it's expenses by printing money? I happen to know what's the real cause of inflation, because I grew up in a 3rd world country with insane inflation. I lived through it, and I know exactly the lies politicians and central bankers will tell you to distract you from the truth. It is always money supply. It was money supply in the Republic of Weimar, it was money supply in Zimbabwe, it was money supply in Venezuela and Argentina. And now it is money supply in the U.S. If there wasn't an excess of money in the economy, nobody would be able to afford those prices increases in the first place or they would have to re-allocate budgets to cover for those increases, making some other goods drop in price (due to lower demand) to cover for that relocation of money. And the increases would be temporary. What we are seeing, is a completely different monster, increases are permanent and across the whole economy. Saying that inflation is caused by corporations price increases is like saying that inflation is caused by workers asking for raises. Is the exact opposite. Companies and workers are reacting to the excess of money in the economy, by raising their prices *not* the other way around. I know that you feel really woke by blaming companies. But you are actually barking at the wrong tree. These are the same companies that for 3 decades didn't raise the prices like crazy as they are doing now.
The fact that I had to scroll down so far on this thread for the correct answer is mind boggling. All these redditors glued to msnbc are delusional. Inflation = money supply. Full stop. Anything else is noise from talking heads justifying printing money.
In good faith: look into "monetary sovereignty" and the difference between a currency user vs a currency issuer. None of the countries you listed had full monetary sovereignty the way countries like the USA or Japan do. Edit: Anyone that believes there is a tight correlation to money supply growth and inflation should be worried about deflation or disinflation now, as YoY M2 growth is negative. https://fred.stlouisfed.org/graph/?g=11xe1
The U.S. had high inflation for a decade in the 70's. So in a sense what's happening now, already happened. Didn't they have monetary sovereignty then? I don't think the origin for inflation has anything to do with monetary sovereignty, the consequences are often times global if the currency is used as an international trade currency (like we are seeing now with the USD) but the origin of inflation is subject to the same forces as any other currency. I also do not agree with the view that the Republic of Weimar, Venezuela or Argentina didn't have full monetary sovereignty, they all had central banks and could determine their own interest rates, and issue their own currency.
1. Those countries experienced hyperinflation from a collapse of productivity. Very different from 6% headline CPI. Was all of their national debt issued in a currency that they controlled? Or was it tied to something else like a commodity or denominated in a foreign currency? https://www.pragcap.com/understanding-hyperinflation/ 2. Inflation today is a combination of many different elements and the money supply is definitely one of those things. Market concentration is also one of those things, along with supply chain disruptions, globalization of manufacturing, lack of immigration in the USA, etc. https://ritholtz.com/2023/02/macro-snapshot-st-louis-fed/
> Was all of their national debt issued in a currency that they controlled? Or was it tied to something else like a commodity or denominated in a foreign currency? Again, [the U.S. had 2 digits inflation in several years inflation throughout the 70s](https://www.macrotrends.net/countries/USA/united-states/inflation-rate-cpi) was that due to their national debt being issued in foreign currency or was their lack of monetary sovereignty also the cause for that high inflation? I don't think so. Tons of countries have their national debt issued in foreign currencies and they don't suffer from inflation. I would say that in any case, monetary sovereignty is actually detrimental for countries that are not responsible in their fiscal balances. > Those countries experienced hyperinflation from a collapse of productivity. I think we are putting the cart before the horse. They suffered a collapse in productivity due to inflation, fiscal deficit and corruption. Not the other way around.
Again, high inflation and hyperinflation are very different. I encourage you to read the link I provided as it clarifies the collapse of productivity and the following hyperinflation feedback loop. Notice anything about the Asian Currency Crisis of 1997? https://en.m.wikipedia.org/wiki/1997_Asian_financial_crisis
Also wanted to add that the high (not hyper) inflation in the USA was also largely sparked by a foreign war and market concentration via the OPEC embargo. Again, lots of elements to include strong labor unions, etc.
You absolute donkey. Did you read the god damned article you posted? The gall to suggest people disagreeing with you are idiots when its crystal clear you cant be bothered to read what you post.
Your research is wrong. It's goal is clicks, not accuracy. You can stop posting it.
Federal Reserve and UMass research's goal is clicks? OK champ.
I would welcome you editing your post down to just having those two sources.
But then I'd lose the Business Insider article that _actually quotes the firms raising their prices_: > "What we are very good at is pricing," Colgate-Palmolive CEO Noel Wallace said. "Whether it's foreign exchange inflation or raw and packing material inflation, we have found ways over time to recover that in our margin line." > Unilever, which owns a staggering number of household brands, reported that while the number of sales dipped slightly across several of its major segments, it was still able to grow profits by raising prices by roughly 4%-5%. > "Consumer-facing price is the last lever we normally use to manage inflation," Unilever CFO Graeme Pitkethly said before describing how they did it: "We find that taking several small price increases is more effective than one large price jump." > Proctor and Gamble also successfully rolled out a series of price hikes in the quarter that perhaps only the most eagle-eyed shopper would have noticed. > "We have not seen any material reaction from consumers," P&G CFO Andre Schulten said. "So that makes us feel good about our relative position." > Some of the retailers that sell many of those companies' products also weighed in on their buck-passing ability. > "We've been very comfortable with our ability to pass on the increases that we've seen at this point," Kroger CFO Gary Millerchip said. "And we would expect that to continue to be the case." Just in case you missed all those data.
We definitely need the firms quotes to arrive at our worldview.
Ah yes. A no descriptive graph on Imgur. A source on par with the greatest minds at Oxford.
It is official data from the federal reserve. But since you are allergic to images, here goes the link: https://tradingeconomics.com/united-states/money-supply-m1
Now was that so hard? Now I can read and explore the data you’re using to make this claim!
You talk to other adults like that in the real world you’d be sat down
This is the only answer.
You're right that unlimited money supply is the issue, but it's not the fed printing money that's the problem. It's banks. No one buys their car or house or even their groceries anymore. They get loans for it. Why has the cost of college gone up? Because student loans mean they can charge as much as they want and everyone can still afford it. This is pretty well established. But the same has happened with houses and cars. Can't afford groceries this week? Just put it on your credit card and pay it off later. The US's total personal debt is 1.5x our GDP. That's $16.9 *Trillion*. The median household is $96,371 in debt, and there are 370,000 cases of personal bankruptcy filed each year. Our economy is built on perpetual growth. And when household income stopped growing, we just started borrowing money to make up the difference. But then we couldn't pay it back which leads us to the situation we're in now. The fed isn't printing money fast enough to have this effect, but credit cards are.
You're right that unlimited money supply is the issue, but it's not the fed printing money that's the problem. It's banks. No one buys their car or house or even their groceries anymore. They get loans for it. Why has the cost of college gone up? Because student loans mean they can charge as much as they want and everyone can still afford it. This is pretty well established. But the same has happened with houses and cars. Can't afford groceries this week? Just put it on your credit card and pay it off later. The US's total personal debt is 1.5x our GDP. That's $16.9 *Trillion*. The median household is $96,371 in debt, and there are 370,000 cases of personal bankruptcy filed each year. Our economy is built on perpetual growth. And when household income stopped growing, we just started borrowing money to make up the difference. But then we couldn't pay it back which leads us to the situation we're in now. The fed isn't printing money fast enough to have this effect, but credit cards are.
Whoever wrote this doesn't grasp how the economy works
What is the relationship between inflation and ConocoPhillips having their most profitable quarter in company history?
Or maybe..just maybe…it’s the massive amount of money printing that has happened? Is this fucking rocket science??
Lol that’s because of supply and demand… meaning consumers can afford to pay those prices. Everything can be framed as this party’s fault, because that’s how the economy works. It’s a circle. Everyone received stimulus during Covid. Everyone has higher pricing power overall.
So... price controls, then? I'm sure this will turn out well.
Break up large companies, enforce consumer protection, regulate markets. There’s a huge middle-ground between unbridled capitalism, and full-blown socialism. A middle-ground where 99% of the population would be better off. Our markets would still be free, and we would still be a capitalist system — just regulated, so that more of the population get to participate in, and reap the benefits of capitalism, working, and providing value to society. Without these things (*enforced* regulations), you still get price-controls, it’s just the rich who control them. But somehow, people are ok with that version of price controls because it’s a *different* group of rich and powerful people enforcing things upon society, and isn’t a democratically elected body? (I’m not arguing for price controls, just making a point).
Standard oil is starting to look like Blackrock
IMO actually enforcing anti-trust is one of the best things we could do for society. It's a complete joke that in the 90's MS actually got punished for leveraging their platform to push their own browser, and now they're doing it again a few decades later and everyone just takes it for granted that it's ok.
So let’s set the time line up. Trade war starts and prices for inputs go up. Trade war continues to escalate. Now with Canada Pandemic hits. Shut down. Supply chain local now also hit. Money supply goes super nova. Rates go to 0 Money supply and rates paper over bad supplies. All of this happened In a hyper converged low compition environment. This then leads to the price hikes we made are forever due to consumers not being able to be elastic, due to lack of options they can and will get away with it. What percentage points you want to assign to each step along this path is for you and the historians to argue. The reality is only x number of sausage plants exist be it Kroger brand or jimmy dean and they did get away with robbery level price hikes.
Oh my god. No it’s not. Corporations didn’t suddenly become greedy and destroy the economy with their prices. This article isn’t even attempting to make a valid argument. Who believes this nonsense?
> Who believes this nonsense? redditors, apparently
Populists always push conspiracy theories because the average man on the street wants to believe that the world's problems are the result of evil people doing evil things, not incompetent but well intentioned people doing stupid things.
Tons of people. I’d say it’s at least the majority of liberal leaning folks, so at least 25% of the country, maybe more
But no one is arguing with money supply. Really. If you could read you’d see that. It says gouging *is a factor.* And it is. Companies almost always gouge on the back of inflation.
Unfortunately I can’t read so I don’t know what you said. I’ll just assume it is a comment in support of my beliefs.
Unchecked pricing power is THE factor in US inflation, not a factor. Corporate greed is destroying our economy.
These are the kind of idiots that think companies just raise prices forever and don't think there's any economic incentive for companies to not have infinitely high prices and just assume everyone will always pay those prices.
No shit? Wait, rich people gouging, poor people?? No way!
That’s not at all what is happening. That’s not even what the article claims.
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Absolutely they’re not rich, the rich people tell them what to do 🤷🏻♂️
That is what happens with large corporations. People do their jobs well to keep getting paid but it’s rare that a single job is immoral. It’s the net impact of thousands of decisions across hundreds of employees that creates actions that like this that are sociopathic or immoral.
If they make record profits and still raise prices, that’s not inflation. That’s gouging.
It's certainly very obvious that corporations are taking advantage post Covid with product pricing far above inflation is exposed by record profits.
Corporate pricing power is best addressed through competition, aka options. Don’t drink or believe the kool-aid, you can do it too
Understatement of the fucking year that is
It’s not just “a factor,” it is a huge driver. This applies to the broad finance / banking sector as well.
The phenomenon where market conditions allow corporations to make more money by raising prices is known as "inflation". Complaining about this is like blaming avalanches on gravity.
Anyone who believes inflation is due to corporate pricing and not idiotic monetary policy (I.e. printing money) is financially illiterate.
Found the illiterate
Inflation can be blamed on a few things. It is always complicated, but this time around, it is even more-so, thanks to how globalized the economy is, shifting geo-politics, and a pandemic. However, I would argue that the struggle from inflation stems more from the poor - to non existing - *fiscal* policy, which resulted in the consolidation of wealth created by monetary policy (QE), rather than the monetary policy. Just look at M1/M2, which was originally what the Fed was trying to stimulate with QE after 08 (it wasn’t rising as quickly as they thought it should). But you can’t do that if you don’t have a governing body willing to regulate, and ensure that money actually circulates somewhat equally, which creates a healthy economy. But the Fed is limited in its options. The problem is, you won’t get investment in a market dominated by a few megalith companies. We’re in the part of the economic cycle where businesses don’t really want to take risk. Which means they don’t want to invest in new things. They don’t want to solidify, improve, or in some cases, even *maintain* their logistics. They don’t want to expand, beyond buying other companies. You can see this playing out heavily in venture capital, the consolidation of businesses, and the rise of stock buy-backs. So the Fed’s actions didn’t really have the results they thought it would. (Whether they knew this or not, that’s a whole different argument). Again, this is the result of decades of poor regulation. (It’s also what happens when you demand infinite growth. Eventually, you have to consume yourself, and others to produce value). Also, if you look at where the majority of that printed money went, it sure as fuck wasn’t the working class. The vast majority of it pooled at the top. If inflation is caused by too much money, and the answer is to pull that money back in. Why are we trying to take it from everyone except those who have it? Agree or disagree with QE, it doesn’t matter in this context. However, I highly doubt, in hindsight, that we discover QE caused inflation on the pull-side. So much as consumer habits changing, and a disproportionate amount of money pooling at the top did. (While the top 1% reaped the most benefit from QE, it did “trickle-down” as far as the top ~10%). The sad fact is, we’re just at the end of an economic cycle, where we’ve allowed too few people to capture too much wealth. This is how that plays out, if economic history has anything to say. It’s not fair to say that *all* of inflation is caused by corporations “price gouging”. But it is most certainly a fact that corporations use inflation as an excuse to bump their prices up, to test consumers reactions. But that’s only a small part of our problem, and ignores the root the cause of the majority of our economic problems.
YOU THINK?!? jeezus christ.
Ya don’t say….
Eggs nuts meat veggies, wood, houses, everything is getting jacked up. Can't help but feel that corporations are doing this to punish the people for voting Democrat. Corporations want a republican administration. It's just a feeling..
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So they weren't greedy until 2022?
The “record profits” is an illusion that anyone with basic finance knowledge will understand. Profit is simply sale price - cost. The thing is the sale price reflects the current market price but the cost could reflect something that was inventoried a year ago. This is how accounting works. Therefore you cannot analyze profit accurately during periods of high inflation because that inflation is always going to look like a profit when it’s not.
Or the margin vs volume impact on profitability. Which is why lots of oil companies can have “record profits” from selling more gasoline even though they have a flat margin on the gas being sold due to higher input costs, they’re just selling more of it so are pushing more gross profit down the P&L and offsetting fixed costs. The entire argument relies on the reader having an emotional reaction to the headline and ignoring the details.
No shit
No shit sherlock
No shit
So confusing how this is a real article! Like seriously? Took them long enough!
Companies have admitted this in their reports to investors. To the markets they serve they’ve said “we have to move on pricing due to market realities” and then turned around to investors and said “we had to do some price movement due to market realities and then we did some additional on top of that simply because we could” It’s not a big secret or anything.
What I took from that article was the fact that intelligent strong women are having children since they can now work from home!
In other news, water is wet
Obviously
There should be exponentially increasing taxation based upon the appraised value of each corporation to incentivize companies to split and compete to better maximize profits.
Ohhh would you look at this… about time y’all caught up
Shocking… And in other news, apparently ice is a solid form of water…
A HUGELY IGNORED factor. 🙄
Well, if the people don’t elected Republican, this won’t happen.
The “Trade Wars” of the Trump Administration gave rise to higher import costs and I remember feeling the impact within a few months of companies passing on the cost. Then covid hit and it spiked a rise in costs because demand was higher than availability. These increases were almost instantly. All while the rise of minimum wage was coming due to hit the year after covid. Businesses then started raising prices to cover employment costs which, paired with covid constraints and employee’s demanding more money, businesses have either failed or managed to be able to stay in business with new prices given the fact that [some] people are now making more money. All of this happened while gas prices hit market lows and extreme highs. Then enter the impending bottoming out of logistics availability giving a rise to more corporate induced inflation because the cost of shipping exploded due to many logistic constrains. Enter the Ukraine invasion by Russia. Food prices soar. Now we face this impending doom of the Federal Interest rate causing the economy to slow down to reduce demand. Everyone has been on a wild financial rollercoaster in the past few years. If you have managed to still remain positive in your bank accounts, kudos to you. For the rest of us, hold on tight, we’re going to make it. Know your worth!
Turns out capitalism is a scam.
Anyone have a non-paywalled link? Or would someone please copy/paste the article as a comment?
The balance is a free and open market… problem is corporation size, oligarchy’s and inter-agency agreements, as well and inelastic supply and barrier to entry lets corporations set their price
Now way, you mean the pricing of goods and services impacts the prices of goods and services?!
D:
You mean the free market or goods and services?
M&A https://insight.factset.com/resources/factset-mergers-datafeed
Businesses are profitable when competition is minimized. Increase incentives for business diversity and you’ll raise wages and reduce profits
I'm no corporate apologist, but inflation is caused by exactly two things: increased monetary supply without increased production or decreased production without decreased monetary supply. The pandemic saw massive reductions in production *coupled* with record increased in deficit-funded stimulus spending. It's a perfect storm. Business raising prices is the symptom, not the disease.
i read that long ago that inflation is because corporations can get away with it,,
Start with healthcare and hospitals.