Energy costs, totally not a factor in the end user price of any given item. :rolleyes
This is taken into the account by the paper published by the IMF.
Corporate profits account for almost half the increase in Europe’s inflation
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Re: Corporate profits account for almost half the increase in Europe’s inflation
#92Remember: profits are a direct measure of the inefficiency of a given market.
In a functioning market, the existence of profits either drives businesses to reduce their own profits by competing on price (problem: cartels) or else drives new businesses to emerge in order to seize some of those profits (problem: barriers to entry).
To have record-breaking profits means that are markets are record-breakingly inefficient, and an inefficient market is useless (or possibly worse than useless).
Re: Corporate profits account for almost half the increase in Europe’s inflation
#93Major cause of crisis under capitalism found to be capitalism. Film at 11.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#94Earlier quoted context omitted.
> And this permits companies to increase prices, and produce higher profits. It's worth noting that this mostly reflects short-term pricing power. It takes a lot of time for new competitors to enter any industry. So we should expect these price increases to occur rarely and be somewhat time-limited as competition ultimately reestablishes itself.
Competition doesn't work correctly in modern economies because companies are allowed to buy their competitors. If you start competing with another company, they can essentially raise money to buy you and stop what would be the "normal" process. As a result, all theories that people have about how competition works don't apply as they think it should.
How many times can they keep raising money to do that?
There's not endless liquidity in the system (until rates go to zero again).
Re: Corporate profits account for almost half the increase in Europe’s inflation
#95I think this talk about costs vs profits sounds important to lay people, but is completely irrelevant. Companies do not price goods based on the goodness of their hearts. They price it at the point that maximizes volume*(unit price-COGS). Companies are constantly testing this price point. For example, a promotion may produce data that can indicate how consumers will respond to a price change. In an inflationary perio…
> Companies do not price goods based on the goodness of their hearts. Governments etc. argue that employees should not demand higher pay to match inflation to avoid a "spiral" out of the goodness of their hearts. If employers catch the absolute currency value increase of inflation the employee employer balance is shifting.
>Governments etc. argue
As they should. that's how it works and they are correct. Employees should argue against that and demand more if they dare.
The job of Central bank is to increase interest rates until unemployment rate increases to the level where employees don't dare ask more. Unemployment reduces both demand and wage growth. That will slow down inflation but it also baits recession.
Economy is a dynamic system with feedback loops.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#96I find it hilarious when companies are following their stated goal of making profits, while everybody else is rushing to explaining rising prices by factoring in everything but profits.
Companies were also seeking to maximize prices in the previous decade of record low inflation.
But could they? For example, in a normal economy if you increase prices people will spot the trick very easily. Not when everyone is concerned about "inflation".
Re: Corporate profits account for almost half the increase in Europe’s inflation
#97I think this talk about costs vs profits sounds important to lay people, but is completely irrelevant. Companies do not price goods based on the goodness of their hearts. They price it at the point that maximizes volume*(unit price-COGS). Companies are constantly testing this price point. For example, a promotion may produce data that can indicate how consumers will respond to a price change. In an inflationary perio…
> Companies do not price goods based on the goodness of their hearts. Governments etc. argue that employees should not demand higher pay to match inflation to avoid a "spiral" out of the goodness of their hearts. If employers catch the absolute currency value increase of inflation the employee employer balance is shifting.
Governments argue both, that’s what this article shows. They can shout from the hilltops to “stop asking for more everyone!”, but it’s not going to help without actual action to force it.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#98The type of inflation we're facing is possible because there's enough money in circulation. With a more or less constant money supply in regards to heavily used currencies increasing price levels at that scale would not be possible that easily.
Re: Corporate profits account for almost half the increase in Europe’s inflation
#99Earlier quoted context omitted.
Right, how does it make sense to blame the private sector for rapid inflation when it's the government and central banks that control the minting of currency? I get that corporations are evil and greedy, but inflation is not something corporations have influence over. If anything, we should be looking at banks, yet even banks count on the central bank to print them fresh bills.
> inflation is not something corporations have influence over Of course they do. Here's a simple example: if the price of energy goes up, the price of food and various goods goes up across the board.
It takes energy to produce food and various goods
Re: Corporate profits account for almost half the increase in Europe’s inflation
#100Earlier quoted context omitted.
how do you explain the fact that gazillions were printed for decades without much meaningful inflation? japan being the printiest of them all having had the least inflation of all crickets huh
As a rule of thumb, it's safe to assume anyone who complains generically about "money printing" doesn't actually have a rational point. They're generally hand-waving broadly, suggesting some John Birch Society type of inflation conspiracy.
I know right - it's certainly not like that Paul Volcker fella has any fucking clue what he's talking about.
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To quote the man himself, when referring to how he was going to solve inflation:
"But none of these policies, important as they are, can substitute for commitments to fiscal prudence and restraint on the money supply."