Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Analysis finds Australia’s inflation being driven by company profits, not wages

theguardian.com

Post reply on HN
Print view View original

61–70 of 316 posts

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#61

Post by drdec »

refurb wrote: post #25
Fervicus wrote: post #20

Same thing happening in Canada https://www.theglobeandmail.com/business/article-loblaw-earn...

Its called a scapegoat. The Canadian government massively expanded the money supply and took on a ton of debt giving payments during Covid. Even the BoC was caught off guard when they said “inflation was transitory”. Rather than admit it was their own policies that caused inflation they’ve decided to blame industry. Don't get me wrong, profit is going up for these industries, some of it driven by supply issues. You c…

This sounds like the same script was used in America.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#62

Post by antihipocrat »

vkou wrote: post #9
WalterBright wrote: post #4

The wage-price spiral theory of inflation is bunk. Inflation is caused by the devaluation of excessive printing of money.

Every time your local bank issues a loan, it creates money out of thin air.

It actually creates debt out of thin air. The loan receiver has debt principal plus interest to be repaid. The bank's asset is the interest on that debt.

Net money after the loan is repaid is negative - if we include fees and interest then a repaid loan from the bank in isolation actually removes money from the economy.

What keeps it all going is the continued issuance of debt, which is often used to repay existing debt, as well as invest in capital that will ideally generate enough returns to repay interest.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#63

Post by TheSpiceIsLife »

exodust wrote: post #57
chrishare wrote: post #11

There are so many threads here. The reserve bank governor is deeply unpopular in the broader public because of 2021 comments he made about there being no interest rate increases needed until 2024 [1]. As mentioned in the article, many companies are posting record profits, including supermarkets [2] - leaving low and middle income people hurting, and working more hours or side jobs. Those same people also face an adve…

NAB - the big Australian bank that uses children in their ads, reading scripts in a grown-up manner about the importance of money: https://youtu.be/bk952JcRyok They've aired several ads like this using children to convince people that NAB is "more than money". On supermarket profits. I've noticed price-jacking has reached a new level. Seemingly in collaboration with the brands to deceive customers. For example, "50%…

Coles branded dishwasher powder works fine, $0.39 per 100 grams.

The next cheapest is more than three times the price and doesn't do anything the Coles branded product doesn't.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#64

Post by JumpCrisscross »

cjbgkagh wrote: post #38
JumpCrisscross wrote: post #33

Earlier quoted context omitted.

Australia hasn’t had a reserve requirement since the late 80s. They’re largely been phased out globally in favour of capital requirements and open-market operations.

Huh, indeed. I found this on the RBA website. "The Reserve Bank’s reserve requirements are not a Required Reserve Ratio (they are not set as a percent of the financial institution’s liabilities). The Reserve Bank’s reserve requirements are set annually as an AUD amount per financial institution with the aim of ensuring that each institution has sufficient funds to settle AUD transactions after business hours. The amo…

This sounds like the discretionary component of all capital-requirement systems.

> the RBA could 'print' large amounts of money and not tell anyone

The RBA publishes accounts and money-supply estimates. Also, all banks can create money. Estimating money supply from capital requirements isn’t precise.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#65

Post by honkler »

deltree7 wrote: post #58

Tobacco companies publishes pro-tobacco research : Reddit/HN --- Pitchfork, Pitchfork, Pitchfork Anti-Corporation dude publishes anti-corp research : Reddit/HN --- Bow, Bow, Bow It's unbelievably pathetic how smart people can be easily duped as long as it fits their narrative. Yeah, it's the same crowd that feels superior over QAnons

So you mean to say everyone has an agenda to cross? Which, by the way, also means that you have an agenda to cross too. "Anti-anti-corporation guy makes anti-anti-corporation comment: Reddit/HN Pitchfork"

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#66

Post by opportune »

TheSpiceIsLife wrote: post #52
opportune wrote: post #51

This is a direct consequence of keeping low interest rates while unemployment is low and inflation is high. It’s Macro 101. You should point your finger at the Central Bank and fiscal policies, not corporations that are acting entirely rationally in the face of good shortages and consumer purchasing power increases. Inflation is increasing corporate profits, it is not driven or caused by corporate profits.

What low interest rates? What goods shortages?

In Australia the central bank rate is about 3% and inflation is much higher (I think 6-7% right now). There were goods shortages during COVID caused in part by broad increases in the monetary supply and difficulty in transportation (which is exacerbated by low unemployment, which is directly linked to aggregate demand, and hence interest rates).

When unemployment is too low and inflation is too high, you are supposed to increase interest rates to lower aggregate demand. Yes, central banks are doing this now and it has had some effect so far, but they have not gone far enough to address the problem.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#67

Post by renewiltord »

deltree7 wrote: post #58

Tobacco companies publishes pro-tobacco research : Reddit/HN --- Pitchfork, Pitchfork, Pitchfork Anti-Corporation dude publishes anti-corp research : Reddit/HN --- Bow, Bow, Bow It's unbelievably pathetic how smart people can be easily duped as long as it fits their narrative. Yeah, it's the same crowd that feels superior over QAnons

The Elephant and The Rider, right? We decide whether something is good or real before we justify that rationally.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#68

Post by opportune »

chrishare wrote: post #11

There are so many threads here. The reserve bank governor is deeply unpopular in the broader public because of 2021 comments he made about there being no interest rate increases needed until 2024 [1]. As mentioned in the article, many companies are posting record profits, including supermarkets [2] - leaving low and middle income people hurting, and working more hours or side jobs. Those same people also face an adve…

Australia is addicted to property appreciation. They have thrown so much gas on the fire that it’s burning the rest of their economy. Canada is the same way.

We’ll see what Australians think when they can’t live off HELOCs and retire based on purely owning some 70’s bungalow anymore.

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#69

Post by Fervicus »

opportune wrote: post #40
Fervicus wrote: post #31

Earlier quoted context omitted.

I agree that the government deciding to recklessly print money and not raising interest rates when they should have is the primary cause of the inflation. But are the two reasons mutually exclusive? Bad policies and corporate greed? Agree with your point about the scapegoat and the media spin too.

Corporations are motivated by profit, why would they not raise prices to reflect demand? If 100 people showed up to some guy’s hot dog stand and he periodically ran out of hot dogs everyday/had so many people in line that people didn’t even line up, he’d make more money if he raised prices until he stopped running out of hotdogs or had shorter lines. That’s because his hot dogs were mispriced relative to demand: at t…

I agree with this in principle. In reality, these grocers have been caught fixing bread prices[0] and not a single person has gone to jail. The dairy industry is also a cartel. Of course, they can keep doing this because the government is in bed with these corporations, and so we come full circle to bad policies.

[0] - https://www.ctvnews.ca/business/still-no-answers-on-yearslon...

Re: Analysis finds Australia’s inflation being driven by company profits, not wages

#70

Post by phkahler »

abigail95 wrote: post #54
zmmmmm wrote: post #21

It's yet another example of the gap that always exists between economic theory and economic practice. In this case, what we have is that every player in the food chain has taken advantage of supply shortage to eke out additional margin along the way. And why not? Your products are in demand and there are buyers who are willing to pay more than the theoretical market price. The actual situation is that even if competi…

If you're going to say there's a gap in theory, could you at least explain which economic theory is showing the opposite result here?

Show me an economist that uses the word hysteresis. Their models are quite primitive IMHO and not because they're powerful like the ones used in thermodynamics, but they act like they are.
Post reply on HN