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

>i dont think it would be unprecedented if some companies said "hey we are making a healthy profit already, so in order to not harm our customers we'd like to keep prices as they are or reduce them if possible"...

It won't be unprecedented that a few companies (especially founder/family controlled) showed alturism like this, but I'd be very surprised if a publicly held company straight up told its shareholders that it was going to kick back and relax this quarter because things are already pretty good.

Religion? You'll have to do better than that.

Meanwhile, what's your take on the historical fact that gold rushes (when money was backed by gold) resulted in inflation?

What's your take on the fact that the US had net zero inflation from 1800 to 1914, and endemic inflation ever since (except for a brief period during the Depression)?

And why are oil price hikes always blamed for inflation, but when oil prices fall there's no deflation?

Let's face it. Inflation is the result of the Fed policy of "spend all you want - we'll just print more!"

>Most of it goes to the lie that is the premise that interest rates are really the optimal way to control inflation

There are only 3 ways to decrease inflation:

- Interest rates

- Price controls. This tends to have a lot of harmful side effects, such as the necessity of rationing and discentivizing the production of whatever you're price controlling. You only really do this for a few goods, so this doesn't help overall inflation much, if at all.

- Effective policy and investments increasing the quantity or quality of goods and services. This is perhaps the "best" way to decrease inflation, but it takes years, if not decades to materialize. More importantly, it requires the elected members of government to formulate and agree on, which unfortunately is becoming increasingly rare.

>all you are doing is causing misery and maybe adding fuel to the fire as people already maxed out buying essentials are in fact going to seek (require) higher salaries when you add to their cost of living.

This is moot because when interest rates were 0, inflation was outpacing wage increases. Let's say that wasn't the case and inflation was 10% and wages increase 10%. All evens out right? Not really. The problem is that not the people can take advantage of an inflation-induced wage increase. Younger people, with fewer commitments are able to job hop to a better employer or prepare to negotiate for a pay raise. Meanwhile, other people don't have the bandwidth to do so or are retired and depend of fix income, but they still need to face the costs of inflation, and these are also the people who are the most vulnerable.

So in the end, all we can do is raise interest rates.

Also, Australia doesn't really have a choice, because the US is set on raising interest rates. Any country that doesn't follow will have their currency severely devalued when investors sell buy American bonds over their own.

I don't feel as though the conclusion is unspoken. The government specifically and clearly sets out to keep wages suppressed by the number of 'skilled' and 'unskilled' visas it approves. Meanwhile we have the lowest vacancy rates ever and the rate in which we are building homes is still out stripped by immigration.

You raise a really good rate with the lack of workforce mobility. From outside Australia it is probably really hard to understand how immobile our workforce is considering how large the country is. The governments at both a federal and state level seem to be very keen on ensuring the professional working class who could be remote stay immobile putting greater pressure on cost of livings in centralised cities.

> Religion? You’ll have to do better than that.

The Austrian school is expressly, overtly, an unashamedly ideologically normative rather than empirically descriptive, which is why they are the example I cited.

> Meanwhile, what’s your take on the historical fact that gold rushes (when money was backed by gold) resulted in inflation?

That money supply changes can cause inflation is not the same as all inflation being the fault of money supply changes.

> What’s your take on the fact that the US had net zero inflation from 1800 to 1914, and endemic inflation ever since (except for a brief period during the Depression)?

Well, that its false, there have been brief deflationary periods far more recently than the Great Depression (the most notable recent one, though not actually the most recent, being during the Great Recession.)

> And why are oil price hikes always blamed for inflation, but when oil prices fall there’s no deflation?

Oil price falls can lead to deflation (IIRC, that was the main cause of the brief, slight 2015 deflation).

> Let’s face it. Inflation is the result of the Fed policy of “spend all you want - we’ll just print more!”

A baseline bias to low inflation is a deliberate policy goal of the Fed (and basically every central bank, its not something unique about the Fed); that doesn’t mean every instance of actual inflation is accurately solely attributable to monetary policy as the cause. There are some inflation spikes that are due to factors like exogenous supply issues, there are others that are due to monetary policy miscalibration. The latter are more easily resolved, as demonstrated by the intense–but brief–post-COVID-recession inflation spike. (Which was, while there were other factors which contributed to it, largely caused by the failure to sufficiently-quickly dial back monetary stimulus in the rebound from the brief-but-sharp COVID recession.)