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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

#191

Post by refurb »

dyno12345 wrote: post #86
yyy888sss wrote: post #83

Inflation is a monetary phenomenon. Prices are rising in Australia because the Central Bank created $450billion out of thin air during the pandemic [1]. The bank has persistently kept interest rates low, creating a massive housing bubble [2]. For everyone saying there was 'low' inflation in the 2000s despite cheap money, remember that China and Asia were rabidly growing, flooding the world with cheap manufactured goo…

inflation is any time prices increase. there are multiple reasons why prices might increase.

No its not, it’s a sustained increase in prices across the board, i.e. devaluation of money

Oil prices going up and causing food prices to increase is not inflation.

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

#192

Post by rmellow »

Non exhaustive list of things that drive inflation, ranked by how curious I find them:

1. A widespread belief that prices will increase (sometimes called inertial inflation). This is also deeply tied to public trust in monetary policy.

2. Increase of prices to accommodate increase in uncertainty that a business plan will be fulfilled, for whatever reason (distrust in institutions, unpredictable government, decline of shared infrastructure).

3. Increase in "Monetary supply", aka how much money is available in the economy. This includes increased Government spending, printing bills and bank leverage (i.e. for every dollar deposited in banks, how many times was it loaned out to someone else?).

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

#193

Post by bboygravity »

Khaine wrote: post #112

This is absolutely garbage, and doesn't belong on HN. From their 'analysis': "Record profits on petroleum and mining activities (reinforced by a spike in global oil and gas prices following the invasion of Ukraine) led this surge, but the overall corporate sector experienced the most rapid growth in profits of any comparable period in 35 years." So because of global shortages, commodity prices reached record highs, a…

Yeah. Im sure global inflation has nothing to with cheap almost unlimited credit created by central banks around the world all around the same time. Including the one responsible for the world reserve currency: the USD.

I mean, if a large group of people with income x, suddenly have access to 2x more credit for a mortgage that would do nothing to say... housing prices right?

It blows my mind how media so succesfully can completely steer away everybody from the quite obvious root cause with essentially "hey look, Putin, covid and a Chinese balloon".

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

#194

Post by PYTHONDJANGO »

Khaine wrote: post #112

This is absolutely garbage, and doesn't belong on HN. From their 'analysis': "Record profits on petroleum and mining activities (reinforced by a spike in global oil and gas prices following the invasion of Ukraine) led this surge, but the overall corporate sector experienced the most rapid growth in profits of any comparable period in 35 years." So because of global shortages, commodity prices reached record highs, a…

Please explain how "the market" does set a price.

Please do not do that in a symbolic, abstract way, please describe based on facts who writes a number into a computer that will be the price.

How does this happen?

Do you believe that there is a mythical "market" entity that "creates prices"?

Then please explain how it works. Thanks!

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

#195

Post by uonpopular_th »

brnt wrote: post #170
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…

What makes economics a weak science, weaker than many other humanities, is the habitual absence of experimental evidence. It's of course hard to have a number of double blind histories of the world economy, yet that is what it takes to be a hard science. If you accept that it never can be (many economists try hard to pretend otherwise!), then you have to accept (again, many don't) that building mathematical models fo…

I used to agree until I saw what has happened to biology in the last few years.

Economics is a science as good as any other. It's just that a lot of people with a lot of money want it to say something so it does. No science is insulated from its practitioners being bought out and the few with principles being silenced.

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

#196

Post by [deleted] »

Khaine wrote: post #161
gruez wrote: post #127

Earlier quoted context omitted.

> In Australia businesses like supermarkets, banks, the largest airline etc. have just announced huge profits in their latest reports. As someone who isn't from Australia, can you provide some actual figures, preferably with historical comparison? Without specifics "record profits" doesn't mean much. The most banal interpretation is that profits in nominal dollars went up, which is totally expected given that the eco…

You can see Woolworth's (one of our supermarket chains) 5 half-years worth of results here https://www.woolworthsgroup.com.au/au/en/investors/our-perfo... H23 H22 H21 H20 H19 911 798 1175 1024 1003 As you can see the 'record profit' is just coming off a low base.

[deleted]

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

#197

Post by jay_kyburz »

monero-xmr wrote: post #171
naasking wrote: post #156

Earlier quoted context omitted.

> Qantas has raised prices to ensure the flight demand meets what it can supply. This is weasly language for "price gouging". There's literally no problem with Qantas just selling the seats they had at reasonable prices and then saying, "sorry, no more seats available". Instead, you're trying to portray it as totally natural and just that they take advantage of any circumstances to squeeze as much out of their custom…

If there is 1000 units of something but demand for 5000 units, you increase the price until demand equals 1000 units. There is no conspiracy. This is fundamental economics. “Market-think” is about freedom. The alternative is “authoritarian-think” and that always ends in tears. Just start setting prices by government decree and see what happens.

In the case where products can be profitably produced at a cheaper price, the people should band together, put aside the market system, and produce all 5000 units. More people are served.

If its costs $100 to fly somebody from Sydney to Melbourne and Qantas is selling tickets for $1000, Australians should run an airline and sell tickets for $200.

Governments should get into the business of keeping markets competitive.

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

#198

Post by thriftwy »

jackvalentine wrote: post #160
Aunche wrote: post #115

Earlier quoted context omitted.

>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 overa…

Could allow the reserve bank to change the mandatory rate of retirement savings in Australia - currently 10.5% of their wages. It'd have the same effect as interest rate rises in removing consumer demand without the kinda icky feeling of just sending that money to the income statement of a bank as mortgage payment increases. Obviously not a silver bullet, but perhaps another tool to make available.

When a person has an open mortgage, pressuring them into making "voluntary but mandatory" retirement plan is financially devastating.

Let's rip the young off so that we can prop the securities up and help the banks!

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

#199

Post by jackvalentine »

thriftwy wrote: post #198
jackvalentine wrote: post #160

Earlier quoted context omitted.

Could allow the reserve bank to change the mandatory rate of retirement savings in Australia - currently 10.5% of their wages. It'd have the same effect as interest rate rises in removing consumer demand without the kinda icky feeling of just sending that money to the income statement of a bank as mortgage payment increases. Obviously not a silver bullet, but perhaps another tool to make available.

When a person has an open mortgage, pressuring them into making "voluntary but mandatory" retirement plan is financially devastating. Let's rip the young off so that we can prop the securities up and help the banks!

It’d be done in lieu of interest rate rises that hit the pocketbook of people anyway. Most mortgages in Australia aren’t fixed rate.

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

#200

Post by notahacker »

brutusborn wrote: post #73
notahacker wrote: post #23

Earlier quoted context omitted.

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/

That's a graph of growth, so every year it's above zero there's "the most money in history"! That graph is actually a neat indication that the correlation isn't particularly strong for two variables with an established causal relationship, and that inflation (high by recent standards; normal for most of the 20th century) actually kicked in properly as the money supply started to fall, at the time we were subjected to a supply shock.

Australia's money supply curve represents a much smoother upward trend compared with the US, but their recent inflation spike mirrors that of the US

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