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Why is inflation so sticky? It could be corporate profits

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Re: Why is inflation so sticky? It could be corporate profits

#131

Post by pydry »

gfdsgfsdgfs wrote: post #121
pydry wrote: post #120

Earlier quoted context omitted.

Unless you tax land. Nobody manufactures that for profit but profit handsomely from it they do.

Taxing land would increase rent and therefore increase food prices.

Rents would go down, actually.

Demand for housing would remain the same.

Short term it would create a strong incentive not to hoard property. If it's not rented out it is losing money. Landlords would scramble to rent them out - driving up supply.

Medium term rents would decrease, too. A land tax would create a powerful incentive to yield low density housing in high value locations to be redeveloped into high density housing - increasing supply.

What would also go down is property prices. Significantly.

It would kill all political will to fight redevelopment too. There would be no point fighting to declare a launderette historic to prevent it from being turned into apartments. Desperation for local housing wouldnt get directly turned into home equity and higher rents like it does now, it would just jack up your tax bill.

Re: Why is inflation so sticky? It could be corporate profits

#132

Post by yanderekko »

NLPaep wrote: post #125
yanderekko wrote: post #104

Earlier quoted context omitted.

A good where consumers have inelastic demand does not mean that individual companies face inelastic demand curves - that's the whole point of competition. ie. It doesn't matter if you're willing to pay a lot to avoid starvation since no individual company is making profits off of having some market power to starve you. The thought that food providers are colluding to raise prices is absurd and should serve as a reduc…

> The DOJ, explained forbes.com, charged that company “executives worked together to keep prices paid to poultry farmers low while raising costs for consumers at grocery stores and restaurant chains.” https://www.producer.com/opinion/u-s-government-strikes-out-...

Seems relevant to note that these charges failed..

Re: Why is inflation so sticky? It could be corporate profits

#133

Post by yazantapuz »

perryizgr8 wrote: post #85

1. Government prints massive amount of money. 2. Money supply increases, money value drops, definition of inflation, basic economics. 3. Economists and journalists: Is causing inflation? Bs like this erodes public trust in experts and institutions, and we saw the results of that when people started resisting against covid vaccines. Eventually, public trust in US/FED/economists/journalists will drop to such a low leve…

Idk why they are downvoting you... but this inflation issue is chronic here in Argentina and the cause is the govt printing money like there is no tomorrow. And the govt officials, aligned media and the like, all blame the "price makers" (from big corp to small bussiness). Seeing articles like this here is like a dejavu.

Re: Why is inflation so sticky? It could be corporate profits

#134

Post by contravariant »

whitemary wrote: post #91
paxys wrote: post #58

Their argument is basically that while normally a company raising prices would mean that some of their customers move to a competitor, in today's environment there is an implicit agreement that every company will keep prices high. So are they saying that the free market is basically not a thing anymore because of covid, and no company wants to get an edge over its competitors by undercutting on price despite having r…

The "free market" has never been a thing

Especially not in the short term.

Re: Why is inflation so sticky? It could be corporate profits

#135

Post by dragonwriter »

digitaltrees wrote: post #126
gfdsgfsdgfs wrote: post #121

Earlier quoted context omitted.

Taxing land would increase rent and therefore increase food prices.

Not if you tax low use more heavily than higher density uses and encourage building more housing supply.

> Not if you tax low use more heavily than higher density uses and encourage building more housing supply.

If you tax land with higher taxes for lower density, then, yes, you’ll radically increase food costs.

Re: Why is inflation so sticky? It could be corporate profits

#136

Post by shoubidouwah »

mjevans wrote: post #97
paxys wrote: post #58

Their argument is basically that while normally a company raising prices would mean that some of their customers move to a competitor, in today's environment there is an implicit agreement that every company will keep prices high. So are they saying that the free market is basically not a thing anymore because of covid, and no company wants to get an edge over its competitors by undercutting on price despite having r…

Things I pay a lot for: * Rent (they're all high; and can't afford to buy anywhere near where I work) * Food (prices are pretty much the same everywhere) * Internet (Cable's the only modern-speed option where I currently rent) * Energy / Gas - either utilities or again, the same everywhere I think most everyone else is in the same boat. I can scale down some of these a little bit, but they're all fairly __inelastic__…

the rent, as always: https://en.wikipedia.org/wiki/Law_of_rent

and the companies do not want to compete: most modern large companies only exist as a _vehicle for investment_, and as such compete for shareholders, not consumers. Due to this, short-termism dominates: average CEO stays 4 years at a given company, and performance of the company after they leave is largely uncorrelated with their carreer success, while share prices during tenure actually does.

So they'll suck the blood from us, crash everything, and get a raise when politicians ask them very nicely to try and fix it. And while share prices will go down on the S&P, billionaires will gte richer, and hedges will make bank...

Re: Why is inflation so sticky? It could be corporate profits

#137

Post by WalterBright »

Inflation is caused by an increase in the supply of money relative to the value of goods and services they represent. It's simply the Law of Supply & Demand in action.

Where did the extra money come from? The federal deficit creates the money to fund the deficit.

The future deficits in Biden's budget will cause a lot more inflation.

There's no such thing as a free lunch. We will all pay for those deficits.

Re: Why is inflation so sticky? It could be corporate profits

#138

Post by yanderekko »

arcticbull wrote: post #118
yanderekko wrote: post #108

Earlier quoted context omitted.

This story is not incompatible with a more-basic one where inflation debases the currency, so when a company starts exploring price hikes for whatever reason they unsurprisingly realize greater profits (since they were implicitly lowering the price by selling for the same quantity of a less-valuable currency). Imagine that Pepsi was selling for ETH in 2021, then "discovers" after the price of ETH halves in 2022 that…

Inflation is measured from a change in purchasing power, it's not a function of supply - because what you do with the supply is what matters, not that it exists. These companies raising prices would be inflationary in and of itself. Supply may or may not yield inflationary pressure, but a change in supply is just that - a change in supply. Inflation is measured from a change in prices. For instance, a 100% sales tax…

>These companies raising prices would be inflationary in and of itself.

Sure, but there are scenarios where this would be profitable and scenarios where it wouldn't be, and we expect the former to occur when there's been an exogenous debasement to the currency. Inflation is measured from a change in prices, but that does not mean that the exogenous factors which rationalize price hikes are not fairly characterized as the cause of inflation - "greed" or "profit seeking" do not have any narrative value here since there's no covariance between these phenomena and actual observed inflation. And no one seriously expects a company to not raise prices when a currency is debased anyways.

Re: Why is inflation so sticky? It could be corporate profits

#139

Post by neilwilson »

paxys wrote: post #58

Their argument is basically that while normally a company raising prices would mean that some of their customers move to a competitor, in today's environment there is an implicit agreement that every company will keep prices high. So are they saying that the free market is basically not a thing anymore because of covid, and no company wants to get an edge over its competitors by undercutting on price despite having r…

Why are prices controlled at all?

Because as a consumer you can go somewhere else.

If there is insufficient excess supply capacity we can't do that in aggregate and prices can be hiked with impunity.

Inflation is always, everywhere, a lack of effective competition.

Re: Why is inflation so sticky? It could be corporate profits

#140

Post by ShadowBanThis01 »

WalterBright wrote: post #137

Inflation is caused by an increase in the supply of money relative to the value of goods and services they represent. It's simply the Law of Supply & Demand in action. Where did the extra money come from? The federal deficit creates the money to fund the deficit. The future deficits in Biden's budget will cause a lot more inflation. There's no such thing as a free lunch. We will all pay for those deficits.

Over-simplified and not true when oligopolies run rampant. Higher interest rates have one squat, and that’s why.

Yet no one is hammering the government on it. HUH.

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