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Analysis finds Australia’s inflation being driven by company profits, not wages

theguardian.com

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Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#71

Post by mdorazio »

zmmmmm wrote: post #21

It's yet another example of the gap that always exists between economic theory and economic practice. In this case, what we have is that every player in the food chain has taken advantage of supply shortage to eke out additional margin along the way. And why not? Your products are in demand and there are buyers who are willing to pay more than the theoretical market price. The actual situation is that even if competi…

> When inflation is actually driven by consumers having too much money, fine, go for it. But when its driven by external factors

And when it's both, as was the case in 2021-2022?

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#72

Post by ryan93 »

phkahler wrote: post #70
abigail95 wrote: post #54

Earlier quoted context omitted.

If you're going to say there's a gap in theory, could you at least explain which economic theory is showing the opposite result here?

Show me an economist that uses the word hysteresis. Their models are quite primitive IMHO and not because they're powerful like the ones used in thermodynamics, but they act like they are.

https://en.wikipedia.org/wiki/Hysteresis_(economics) lol

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#73

Post by brutusborn »

notahacker wrote: post #23
brutusborn wrote: post #18

Earlier quoted context omitted.

Maybe it’s not the only factor but surely it’s the major factor right now? Sure, we had a supply shock, but then we printed the most currency in history and got soaring inflation.

We also "printed the most currency in history" in years we didn't get soaring inflation...

Which years were those?

I couldn’t find an equivalent graph for Aus, but this graph suggests there is some fairly strong correlation. https://www.longtermtrends.net/m2-money-supply-vs-inflation/

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#74

Post by lauraste1 »

abigail95 wrote: post #54
zmmmmm wrote: post #21

It's yet another example of the gap that always exists between economic theory and economic practice. In this case, what we have is that every player in the food chain has taken advantage of supply shortage to eke out additional margin along the way. And why not? Your products are in demand and there are buyers who are willing to pay more than the theoretical market price. The actual situation is that even if competi…

If you're going to say there's a gap in theory, could you at least explain which economic theory is showing the opposite result here?

Google the Phillips curve - it's from the 1960s

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#75

Post by onlyrealcuzzo »

chrishare wrote: post #11

There are so many threads here. The reserve bank governor is deeply unpopular in the broader public because of 2021 comments he made about there being no interest rate increases needed until 2024 [1]. As mentioned in the article, many companies are posting record profits, including supermarkets [2] - leaving low and middle income people hurting, and working more hours or side jobs. Those same people also face an adve…

> As mentioned in the article, many companies are posting record profits

It's easy to post record profits when dollars are worth 60 cents.

How much have their margins gone up?

Margins go up and down all the time.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#76

Post by refurb »

pmontra wrote: post #6
WalterBright wrote: post #4

The wage-price spiral theory of inflation is bunk. Inflation is caused by the devaluation of excessive printing of money.

Central banks have been printing money for years (quantitative easing, "whatever it takes" , etc) and there was no inflation.

Money velocity is an important part of inflation as well.

Back in 2008 during the financial crisis, the Fed printed a ton of money and used it to buy crappy mortgages. However, banks were worried about solvency and the Fed was paying interest on reserves the bank kept with them - as a result the "extra" money never made it into the system right away.

It's like trying to light a fire and when it doesn't start pouring more gasoline on it. It will eventually light, but if you've poured a ton of gas on it by then it's going to burn fast.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#77

Post by refurb »

Nursie wrote: post #5
WalterBright wrote: post #4

The wage-price spiral theory of inflation is bunk. Inflation is caused by the devaluation of excessive printing of money.

Nope. That’s well known bunk from alt-economics. Convenient to Austrians and Libertarians who get to blame the government (again), but wrong. Money supply is only one factor in a complex system.

Calling expansion of the monetary supply and the resulting inflation "bunk" is hilarious.

There are so many examples of inflation driven by monetary policy (Germany in the 1930's, Argentina, Venezuela, Vietnam) that denying the impact of money supply is just burying your head in the sand.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#78

Post by TheSpiceIsLife »

opportune wrote: post #66
TheSpiceIsLife wrote: post #52

Earlier quoted context omitted.

What low interest rates? What goods shortages?

In Australia the central bank rate is about 3% and inflation is much higher (I think 6-7% right now). There were goods shortages during COVID caused in part by broad increases in the monetary supply and difficulty in transportation (which is exacerbated by low unemployment, which is directly linked to aggregate demand, and hence interest rates). When unemployment is too low and inflation is too high, you are supposed…

Those conditions sing exist now.

Who cares what the RBA rate is, let's talk about what mortgagees are paying on loans now.

If the Australian government wanted to take money out of the supply it could, for example, (temporarily?) increase the GST and use that tax revenue to either / both pay back government debt or use it to ... pay public servants more.

This concept that "the RBA only has one tool" is true as far as it goes, but obviously not the only way of tackling the issue.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#79

Post by bmer »

refurb wrote: post #77
Nursie wrote: post #5

Earlier quoted context omitted.

Nope. That’s well known bunk from alt-economics. Convenient to Austrians and Libertarians who get to blame the government (again), but wrong. Money supply is only one factor in a complex system.

Calling expansion of the monetary supply and the resulting inflation "bunk" is hilarious. There are so many examples of inflation driven by monetary policy (Germany in the 1930's, Argentina, Venezuela, Vietnam) that denying the impact of money supply is just burying your head in the sand.

As far as I can see, the post in question isn't saying inflation> is bunk, they're saying inflation is bunk> bunk?

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#80

Post by FpUser »

opportune wrote: post #68
chrishare wrote: post #11

There are so many threads here. The reserve bank governor is deeply unpopular in the broader public because of 2021 comments he made about there being no interest rate increases needed until 2024 [1]. As mentioned in the article, many companies are posting record profits, including supermarkets [2] - leaving low and middle income people hurting, and working more hours or side jobs. Those same people also face an adve…

Australia is addicted to property appreciation. They have thrown so much gas on the fire that it’s burning the rest of their economy. Canada is the same way. We’ll see what Australians think when they can’t live off HELOCs and retire based on purely owning some 70’s bungalow anymore.

Not sure about Australia but Canada would probably include being poor as good enough criteria to approve MAID at some point. Our fucking politicos are already tinkering with the idea doing it for mental people. What would prevent them from going further.
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