It does really feel like the cat is out of the bag that producers anywhere in the supply chain of housing and food realized they could do whatever they want and we can all suck wind. Every significant expense I have is up more than 40% in the past two years.
Yup mine too and on top of that everything has gotten smaller and shittier in quality too. I really wish they would have met the banks collapse. That would have done wonders for fixing this inflation. Nope us wage slaves will continue to lose.
Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
11–20 of 98 posts
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#12Karl Marx was right all along.
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#13Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#14It does really feel like the cat is out of the bag that producers anywhere in the supply chain of housing and food realized they could do whatever they want and we can all suck wind. Every significant expense I have is up more than 40% in the past two years.
Competition is supposed to drive prices down to the equilibrium level. Why is it not happening? Are produces colluding to fix prices? Why new players are not entering the market to take advantage of higher prices?
because it was a cold war fairy tale.
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#15I can completely believe that producers are able to adjust prices more quickly than the labour market, and can easily overshoot, but it doesn't seem to be a /moral/ failing, as this is being portrayed in some quarters. You can -- and may well, and probably should -- get the same effect from the consequences of wage negotiations during rising inflation. Neither of these are the /source/ of the inflation though; they're both elements of prices rising in the first place. I've seen this conveyed in economics memes with a chart of inflation labelled "greed of corporations over time".
I guess looking into it more, this belief that both wage- and corporate-driven inflation is a misconception is also shared by monetarists like Milton Friedman[1], though I can totally believe conservatives might want to push the wage-driven argument, and progressives the corporate-driven model.
[1] https://www.aier.org/article/there-is-no-such-thing-as-wage-...
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#16Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#17Earlier quoted context omitted.
Competition is supposed to drive prices down to the equilibrium level. Why is it not happening? Are produces colluding to fix prices? Why new players are not entering the market to take advantage of higher prices?
You're so close. https://en.m.wikipedia.org/wiki/Capitalist_Realism
If it was working, why did it collapse?
There are lots of alternatives to capitalism but most of them are measured in mountains of skulls. No one has any difficulty imagining more, most people just noticed.
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#18This is a measure of where inflation "goes", not what fuels inflation. The narrative that profits are "fueling" inflation is completely made up and the people pushing it are lying to everyone for political reasons.
Inflation is caused - in most countries - by excessively loose monetary policy (sometimes fiscal policy, sometimes both). If government policy creates inflation (average prices go up) that money can flow to a domestic labor or domestic investors or leave the country. This depends on supply-side factors that are basically orthogonal to the inflation question. It is true that in the most recent round of inflation it primarily led to increased corporate profits.
There is a theory from the 80s called the wage-price spiral [Blanchard] that talks about how inflation (which is initially caused by fiscal or monetary policy) can become self-sustaining if wages and prices are set in a staggered back-and-forth kind of way, as workers react to higher prices by demanding raises, and firms react to higher labor costs by raising prices. However, there is no serious theory that such a process would happen with profits. That makes no sense at all! The exact opposite would be true, if anything. High profits in some time period would likely regress to the mean as price competition sets in. In fact, this is exactly what is happening right now, as corporate profits after spiking over the past 12 months are shrinking.
The "profit-price spiral" narrative is being pushed by the same disingenous idiots pushing the "greedflation" narrative - it is not a serious attempt to explain inflation, it is an attempt to use reasonable-sounding economics words to blame inflation on companies instead of the actual culprit: governments that overstimulated their economies to such a degree that they caused both inflation and profits to spike.
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#19It does really feel like the cat is out of the bag that producers anywhere in the supply chain of housing and food realized they could do whatever they want and we can all suck wind. Every significant expense I have is up more than 40% in the past two years.
Competition is supposed to drive prices down to the equilibrium level. Why is it not happening? Are produces colluding to fix prices? Why new players are not entering the market to take advantage of higher prices?
Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages
#20And their not going to, the best thing you can do is park your wealth in assets which will continue to appreciate. Not even big things necessarily, instead of renting things like Rototillers or carpet scrubbers just buy the dang things.