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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

#141

Post by truckerbill »

nostromo wrote: post #52

Inflation is caused by monetary policy. Did profits increase? Potentially, yes. But they couldn't have increased without the enabling condition of massive money printing. Companies were trying to maximize profits before 2020. That hasn't changed. What changed was the monetary policy.

Yes. But importantly its not the printing of money that was the problem either. If you think about the path money takes especially the furlough: government -> consumer -> big capital (Petro/chemicals, Pharmaceuticals, Food Conglomerates, Landlords, Tech...). And that's where it stays. How do you get it back? Well aimed taxes. Otherwise big capital buys all the assets as in investment with their new found pile.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#142

Post by miohtama »

The IMF article, probably due to political reasons, does not touch the monetary policy, or "the money printer goes brr" as it is known in Internet memes. While energy prices and poor labour productivity contribute to the inflation, the past monetary policy decisions are a major factor.

The increase in money supply created for COVID-19 response, "stimulus", goes to the prices. Furthermore the ECB cannot tame the inflation, because if it hikes rates too much the EU member countries debt burden becomes unsustainable (if it is not already it). Between a rock and a hard place: keep massive inflation going on (tax on poor) to inflate away the debt, or bankcrupt the EU member states.

More on the topic in the link below: the EU did not start hiking rates soon enough and is very lax rising the rates to avoid the breakdown of Euro system, and the inflation is caused by too low interest rates

https://www.dw.com/en/opinion-europes-monetary-policy-shift-...

Re: Corporate profits account for almost half the increase in Europe’s inflation

#143

Post by [deleted] »

taude wrote: post #116
evancox100 wrote: post #103

Earlier quoted context omitted.

What government is arguing that employee wages should be lower/stagnant in order to fight inflation? EDIT: I mean advocating not just that we should avoid a wage/price spiral through other means, but specifically that individual workers should accept/volunteer for lower wages than they could otherwise get? Edit 2: seeing several cases of "$Reserve_Bank_Person says wage increases are too high and need to come down", n…

Probably referring to news like this? https://www.nytimes.com/2023/04/28/business/wage-inflation-m...

[deleted]

Re: Corporate profits account for almost half the increase in Europe’s inflation

#144

Post by lovich »

legitster wrote: post #139
lovich wrote: post #121

Earlier quoted context omitted.

> While Bank of England Governor Andrew Bailey sparked a minor firestorm when he suggested workers shouldn’t ask for big wage increases…[1] [1] https://www.bloomberg.com/news/articles/2022-03-17/powell-tr...

He's diagnosing runaway inflation. At no point is actually chastising workers directly. Bailey's comments were squarely aimed at blaming Brexit and energy markets, people intentionally took his words out of context to bake up a "gaff".

>… when he suggested workers shouldn’t ask for big wage increases…

How is that not directly telling workers to not ask for wage increases? I’d also say adding the word “chastising” is changing the tone of what the original commentor and I were referencing when talking about governments asking workers to not ask for wage increases.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#145

Post by sMarsIntruder »

smt88 wrote: post #7
narcraft wrote: post #4

The cause of rain is the ground getting wet

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

> We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

This is terribly wrong since government spending is directly associated to money printing, and you know what? That causes inflation.

You already know that since that’s basic economics, but simply your content is 100% politically biased therefore even more wrong than before.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#146

Post by stefan_ »

BetaDeltaAlpha wrote: post #94
coliveira wrote: post #76

Earlier quoted context omitted.

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).

These acquisitions end up paying for themselves. Just look at semiconductors, where some of the only "value creation" is in ever bigger companies buying each other. You have Analog Devices buying Linear Technology for $14B in 2017, then buying Maxim for $20B in 2021, both of them massive competitors and themselves the result of countless acquisitions over the years. And it repeats all over, Intel buying Altera, AMD buying Xilinx, NXP merging with Freescale..

Re: Corporate profits account for almost half the increase in Europe’s inflation

#147

Post by derf_ »

bedobi wrote: post #35
monero-xmr wrote: post #18

Ah yes ignore the money printing, certainly all of this inflation is the private sector! Where are the price caps?!?

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

The best explanation I heard after the great financial crisis (i.e., not recently) was that during that crisis, the Japanese bubble economy of the 80's, and to a lesser extent the dot com crash, huge amounts of credit (marked to market) were destroyed. If you look at the total supply of money and credit marked to market, there was not much, if any, increase.

That was not true of the pandemic.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#148

Post by alexaholic »

concordDance wrote: post #78
alexaholic wrote: post #19

I 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.

Well the question they are asking is: why now? Were companies not wanting to maximize profits 5 years ago?

I suspect what happened was rising prices because of the pandemic and the war showed companies they can increase prices without also suffering a significant decrease in sales. After all, when virtually all prices are going up, where are consumers going to go?

Re: Corporate profits account for almost half the increase in Europe’s inflation

#149

Post by rektide »

rgbrenner wrote: post #33

I 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…

I don't disagree with anything here but it feels like it tiptoes around saying what's actually happening, which is that there isn't an effective competitive market anymore.

You say that prices go up because they can, and that's not wrong, but historically there were other providers also competing. It feels like there has been massive consolidation across industries, and that this centralization has created uncompetitive markets, where consumers don't have any option but to accept a providers price & profit increase.

That feels like the new thing, the new trouble: only the very large are left. Competition does not renew: even if there are fat profit margins waiting to be had, the risk of trying to start a new competitor is too high, too likely to get crushed, has too many personal risks (trying to provide healthcare for your family, not go bankrupt, etc).

The markets have ossified into a state where this ruin you speak is possible.

Re: Corporate profits account for almost half the increase in Europe’s inflation

#150

Post by getmeinrn »

sMarsIntruder wrote: post #145
smt88 wrote: post #7

Earlier quoted context omitted.

This kind of reply is uninteresting and unhelpful. These statements about inflation drivers are surprising (to some) and highly relevant because they counter corporate and conservative propaganda. We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too.

> We now know that government assistance isn't the main villain in the brutal inflation spikes of the last few years, and we need voters to understand that too. This is terribly wrong since government spending is directly associated to money printing, and you know what? That causes inflation. You already know that since that’s basic economics, but simply your content is 100% politically biased therefore even more wro…

I assume they said "government assistance" because they are limiting the idea of government spending to just giving money to help poor people. If they had said "government spending" in general, their point would be indefensible.
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