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Fed should make clear that rising profit margins are spurring inflation

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Re: Fed should make clear that rising profit margins are spurring inflation

#41

Post by staticman2 »

georgeplusplus wrote: post #31

Inflation is always a monetary phenomenon. This was the conclusion following the record inflation from the 70s and 80s. Profits are rising because there is more money floating around due to the fed and government spending 6 trillion dollars within 6 months following the covid pandemic. To give that a perspective this sort of money normally is spent in 6 years.. Saying profifs are causing inflation is the biggest gas…

"Inflation is always a monetary phenomenon."

Your argument is supply has nothing to do with inflation? If the Russians stop supplying europe with gas the energy prices will stay the same?

Re: Fed should make clear that rising profit margins are spurring inflation

#42

Post by jsmcgd »

feet wrote: post #37
sokoloff wrote: post #35

Earlier quoted context omitted.

Talk doesn’t raise the price of anything.

Are you saying the claims of worker shortages are nothing but lies?

No they're real, but so are higher material costs for businesses. Everything has become more expensive and so there is less to pay for everything, including salaries.

Inflation can be caused by economic success where everybody is richer, and businesses have an incentive to increase prices and salaries to compete with other businesses doing the same.

But this isn't what we're dealing with. This inflation hasn't been caused by economic success, it's been caused by quantitative easing - money printing. And lots of it. Prices are going up because there is more money for the same (or less) amount of goods. In my opinion it may be more helpful to think about 'currency devaluation' rather than 'price increases', despite the fact these are two sides of the same coin.

Re: Fed should make clear that rising profit margins are spurring inflation

#43

Post by RC_ITR »

sokoloff wrote: post #36
RC_ITR wrote: post #22

Earlier quoted context omitted.

Well, when the truth is “blame consumers for consuming a record amount of stuff with no price sensitivity after being forced indoors for two years, where they learned life is meant to be lived,” I can see why they don’t want to take the fall for that.

The amount of “forced indoors for two years” that the virus was responsible for was not 100% and the amount that politicians were responsible for was not 0%.

I mean, my fellow citizen, the way to curb inflation is to consume less and have a higher price sensitivity.

I'm glad you're signing up to do so, because it's unclear to me that stimulus checks are still the reason that consumption is at an ATH and inflation is elevated.

And you can't really blame loose money either...

Re: Fed should make clear that rising profit margins are spurring inflation

#44

Post by RC_ITR »

refurb wrote: post #28
mr_toad wrote: post #19

I’m seeing this narrative pushed a lot by politicians who would like to shift the blame to anyone other than themselves.

Pretty much. They don’t want to admit their own spending policies and pressure to expand the money supply is the cause. And the best part is when they tell employers to not raise wages because it makes inflation worse.

So your argument is there is just a really long lag?

Because money is relatively tight again and we are still seeing inflation.

OR are there other factors potentially at play?

Re: Fed should make clear that rising profit margins are spurring inflation

#45

Post by refurb »

RC_ITR wrote: post #44
refurb wrote: post #28

Earlier quoted context omitted.

Pretty much. They don’t want to admit their own spending policies and pressure to expand the money supply is the cause. And the best part is when they tell employers to not raise wages because it makes inflation worse.

So your argument is there is just a really long lag? Because money is relatively tight again and we are still seeing inflation. OR are there other factors potentially at play?

Of course other factors are at play. Money supply is the kindling, but other factors can be be the spark that starts the fire.

In 2008 the massive expansion of the money supply did little to spur inflation because: a) banks were skittish and increased their reserves significantly which tied up extra money and b) consumers worked to pay down debt and increase savings.

I don’t deny that supply shocks can trigger inflation, but without excess money supply the effect is limited.

Re: Fed should make clear that rising profit margins are spurring inflation

#46

Post by sokoloff »

RC_ITR wrote: post #43
sokoloff wrote: post #36

Earlier quoted context omitted.

The amount of “forced indoors for two years” that the virus was responsible for was not 100% and the amount that politicians were responsible for was not 0%.

I mean, my fellow citizen, the way to curb inflation is to consume less and have a higher price sensitivity. I'm glad you're signing up to do so, because it's unclear to me that stimulus checks are still the reason that consumption is at an ATH and inflation is elevated. And you can't really blame loose money either...

Indeed, curbing demand when demand is out of whack with supply is the inherent mechanism by which bouts of inflation eventually stop. I’m doing what I can (naturally via price-sensitivity, not out of any sense of collectivism). Specifically, we’re delaying the replacement of a 225K mile 2005 CR-V for a few more years and making a lot more meals at home rather than eating out.

Re: Fed should make clear that rising profit margins are spurring inflation

#47

Post by georgeplusplus »

staticman2 wrote: post #41
georgeplusplus wrote: post #31

Inflation is always a monetary phenomenon. This was the conclusion following the record inflation from the 70s and 80s. Profits are rising because there is more money floating around due to the fed and government spending 6 trillion dollars within 6 months following the covid pandemic. To give that a perspective this sort of money normally is spent in 6 years.. Saying profifs are causing inflation is the biggest gas…

"Inflation is always a monetary phenomenon." Your argument is supply has nothing to do with inflation? If the Russians stop supplying europe with gas the energy prices will stay the same?

Supply has everything to do with inflation. Money supply.

You're conflating the price of a good that is going up, becoming more valuable against the currency, known as scarcity, to inflation, or expansion of the money supply. Regardless if that scarcity is deliberately manufactured. It's comparing apples and oranges.

You cannot do this because Oil and gas are not a measures of wealth. It's backwards to use them as such. We use money as a measure of wealth.

Re: Fed should make clear that rising profit margins are spurring inflation

#48

Post by staticman2 »

georgeplusplus wrote: post #47
staticman2 wrote: post #41

Earlier quoted context omitted.

"Inflation is always a monetary phenomenon." Your argument is supply has nothing to do with inflation? If the Russians stop supplying europe with gas the energy prices will stay the same?

Supply has everything to do with inflation. Money supply. You're conflating the price of a good that is going up, becoming more valuable against the currency, known as scarcity, to inflation, or expansion of the money supply. Regardless if that scarcity is deliberately manufactured. It's comparing apples and oranges. You cannot do this because Oil and gas are not a measures of wealth. It's backwards to use them as su…

Inflation is not defined as the expansion or contraction of the money supply. I'm sorry but what you wrote makes no sense.

Re: Fed should make clear that rising profit margins are spurring inflation

#49

Post by RC_ITR »

refurb wrote: post #45
RC_ITR wrote: post #44

Earlier quoted context omitted.

So your argument is there is just a really long lag? Because money is relatively tight again and we are still seeing inflation. OR are there other factors potentially at play?

Of course other factors are at play. Money supply is the kindling, but other factors can be be the spark that starts the fire. In 2008 the massive expansion of the money supply did little to spur inflation because: a) banks were skittish and increased their reserves significantly which tied up extra money and b) consumers worked to pay down debt and increase savings. I don’t deny that supply shocks can trigger inflat…

> I don’t deny that supply shocks can trigger inflation, but without excess money supply the effect is limited.

Since 1970, only supply shocks have caused inflation so idk why you’re so confident that it wasn’t the case this time.

Volker doing what he did while oil prices tanked really fucked with the economic understanding of a whole generation of people.

Like, you’re literally saying “hey, the occurrence of X in 2008 doesn't count, and when we did X again in 2020 with Y that’s when X really mattered, but yeah Y is marginal. Also ignore that when Y happened without X in the 70s it happened too.”

Re: Fed should make clear that rising profit margins are spurring inflation

#50

Post by georgeplusplus »

staticman2 wrote: post #48
georgeplusplus wrote: post #47

Earlier quoted context omitted.

Supply has everything to do with inflation. Money supply. You're conflating the price of a good that is going up, becoming more valuable against the currency, known as scarcity, to inflation, or expansion of the money supply. Regardless if that scarcity is deliberately manufactured. It's comparing apples and oranges. You cannot do this because Oil and gas are not a measures of wealth. It's backwards to use them as su…

Inflation is not defined as the expansion or contraction of the money supply. I'm sorry but what you wrote makes no sense.

Sorry I can't explain it any better. Try reading Milton Freedmans work.

Inflation was going up well before the Russian invasion and sanctions. So I believe the covid stimulus, i.e literally money printing to be the main driver of it, and exacerbated further by supply shocks. Otherwise I would expect to see Core CPI come down.

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