51–60 of 476 posts
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
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.
My personal, uneducated, unverified hypothesis was that companies overcompensate price increases for three main reasons:
* They assume consumers dislike many small price increases. The current increase, therefore, has to last until the next oportunity.
* They expect an economic downturn, and want to extract as much money in preparation of the reduction (ironically fueling the downturn).
* They use the opportunity to adjust to what they expect the market would accept, because they assume PR backlash if they do it without a reason.
I think the last one is a form of "market inefficiency" but one that generally benefits consumers.
Earlier quoted context omitted.
"corporate and conservative propaganda" Most center-left economists are pretty dismissive of the idea that inflation is a corporate-profits-driven phenomenon too.
I'd argue that there always must be something else at play in addition to greed. Greed is a given and the driver of the economy. Companies don't suddenly decide that maybe they should increase profits. So it's imperative to understand why they were able to increase profit margins without competition taking their market share. IMO that tells us what intervention is needed. The ideal market is companies at a constant k…
Danone, Kellogg among 75 companies France has asked for price cuts https://www.reuters.com/business/retail-consumer/danone-kell... ----- Meanwhile, in the US: Car Dealer Markups Helped Drive Inflation, Study Finds: The money dealers charged over makers’ suggested prices factored into a nearly 16% rise in the consumer-price index in recent years https://www.wsj.com/articles/car-dealer-markups-helped-drive...
[1] https://www.wispolitics.com/wp-content/uploads/2021/08/State... (PDF)
[2] https://en.wikipedia.org/wiki/Certificate_of_need?useskin=mo...
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…
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.
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.
Earlier quoted context omitted.
OR governments have demonstrated that they can take extreme decisions without warning, so businesses price accordingly. If you operate in this economy with unstable decision-making, then it creates margins to prepare padding. Even if all businesses were cash-flow-positive during Covid, the environment is still more unstable.
This. If govs can print out 2x the money supply in a few years, you want to “cash out” profits as fast as possible instead of reinvesting them.
TLDR: * Profits: 45 percent * Import costs: 40 percent * Labour costs: 25 percent Somehow obviously arriving at 110%? "As the Chart of the Week shows, the higher inflation so far mainly reflects higher profits and import prices, with profits accounting for 45 percent of price rises since the start of 2022." "Import costs accounted for about 40 percent of inflation, while labor costs accounted for 25 percent. Taxes ha…
Why were corporations settling for such comparatively low profits before 2022?
Since they change less frequently, changes are larger.
Example: assume the price of wheat sees steady inflation at 5%/year, and the price changes every day.
Also assume that the cost of manufacturing a loaf of bread is solely dependent on the price of wheat, but because it's sold retail, it's price is sticky, and only changes every second year.
So the annual inflation on the price of bread fluctuates between 0% and 10%.
On the year the price goes up profits increase and on the year the price doesn't increase, profits go down.
Earlier quoted context omitted.
"corporate and conservative propaganda" Most center-left economists are pretty dismissive of the idea that inflation is a corporate-profits-driven phenomenon too.
I'd argue that there always must be something else at play in addition to greed. Greed is a given and the driver of the economy. Companies don't suddenly decide that maybe they should increase profits. So it's imperative to understand why they were able to increase profit margins without competition taking their market share. IMO that tells us what intervention is needed. The ideal market is companies at a constant k…