Analysis finds Australia’s inflation being driven by company profits, not wages • Hacker News Board

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

#81

Post by motohagiography » Sat, Feb 25, 2023, 2:14 AM UTC

jeeeb wrote: post #50

motohagiography wrote: post #16

It really does look like Australia tried to print its way out of the pandemic last year, and now its purchasing power hasn't kept up with other food, energy, and other inputs prices: https://tradingeconomics.com/australia/money-supply-m1 What should happen is a return of Bond Vigilantes: https://www.investopedia.com/bond-vigilante-6386194 , but if it doesn't, I'd wonder who is holding most of Australia's debt.

What are we meant to summarise from the first link? I see a chart of total money supply with the y axis starting at 1640B and going to 1700B. I.e basically no difference

They accelerated the rate at which they issued debt / created money significantly, with the effect of it affecting purchasing power.

The "they're just printing money" is probably too simple an explanation for CPI inflation, but stimulus payments the printing paid for may have eroded purchasing power.

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

#82

Post by mrjin » Sat, Feb 25, 2023, 2:15 AM UTC

opportune wrote: post #68

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.

This is actually true for most of the countries. The governments take the biggest cut through the whole process: 1. Sales 2. Approvals 3. Duties 4. Rates

So the higher the prices, the higher their revenue would be. And the inflation caused by that would also in their favor as it virtually diminishes their liabilities. There is no better way of making quick money in short term for the governments, but it will for sure backfire at some point. Those politicians know that, but they cannot care less as long as it doesn't burst in their term.

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

#83

Post by yyy888sss » Sat, Feb 25, 2023, 2:15 AM UTC

Inflation is a monetary phenomenon. Prices are rising in Australia because the Central Bank created $450billion out of thin air during the pandemic [1]. The bank has persistently kept interest rates low, creating a massive housing bubble [2]. For everyone saying there was 'low' inflation in the 2000s despite cheap money, remember that China and Asia were rabidly growing, flooding the world with cheap manufactured goods and lowering real prices (often 10x reduction). The inflation can still be seen when looking the price of Australian real estate, or stock markets such as Nasdaq. As for this article, companies would always like to increase prices and profit. They can only do so in unison if there is suddenly more money sloshing around.

[1] - https://www.rba.gov.au/chart-pack/central-bank-balance-sheet... [2] - https://www.rba.gov.au/publications/bulletin/2012/dec/images...

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

#84

Post by opportune » Sat, Feb 25, 2023, 2:17 AM UTC

Fervicus wrote: post #69

opportune wrote: post #40

Earlier quoted context omitted.

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...

That’s a fair point. Collusion and price fixing should be prosecuted and investigated to the fullest extent since it harms the general public so much. What I am describing would apply absent of collusion though - collusion is not necessary for this to occur

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

#85

Post by Benjamin_Dobell » Sat, Feb 25, 2023, 2:17 AM UTC

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%…

> That's AUD $1.50 per tablet / USD $2.23 per tablet

I have no idea how much dishwasher tablets ought to cost, but you've applied the exchange rate in reverse. $1.50 AUD is currently about $1 USD.

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

#86

Post by dyno12345 » Sat, Feb 25, 2023, 2:21 AM UTC

yyy888sss wrote: post #83

Inflation is a monetary phenomenon. Prices are rising in Australia because the Central Bank created $450billion out of thin air during the pandemic [1]. The bank has persistently kept interest rates low, creating a massive housing bubble [2]. For everyone saying there was 'low' inflation in the 2000s despite cheap money, remember that China and Asia were rabidly growing, flooding the world with cheap manufactured goo…

inflation is any time prices increase. there are multiple reasons why prices might increase.

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

#87

Post by thaumasiotes » Sat, Feb 25, 2023, 2:24 AM UTC

dyno12345 wrote: post #86

yyy888sss wrote: post #83

Inflation is a monetary phenomenon. Prices are rising in Australia because the Central Bank created $450billion out of thin air during the pandemic [1]. The bank has persistently kept interest rates low, creating a massive housing bubble [2]. For everyone saying there was 'low' inflation in the 2000s despite cheap money, remember that China and Asia were rabidly growing, flooding the world with cheap manufactured goo…

inflation is any time prices increase. there are multiple reasons why prices might increase.

There are two possible reasons:

- The supply of money goes up.

- The demand for money goes down.

Neither wages nor profits are capable of affecting the supply. They might affect demand somehow, but it's not the first thing you'd look at.

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

#88

Post by marcosdumay » Sat, Feb 25, 2023, 2:25 AM UTC

phkahler wrote: post #70

abigail95 wrote: post #54

Earlier quoted context omitted.

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.

Hum... They all seem to say "stickiness" instead, what means the same thing. Modern macroeconomics is all about it, or, well, at least the mainstream macroeconomics is all about it.

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

#89

Post by xyzzy123 » Sat, Feb 25, 2023, 2:32 AM UTC

thaumasiotes wrote: post #87

dyno12345 wrote: post #86

Earlier quoted context omitted.

inflation is any time prices increase. there are multiple reasons why prices might increase.

There are two possible reasons: - The supply of money goes up. - The demand for money goes down. Neither wages nor profits are capable of affecting the supply. They might affect demand somehow, but it's not the first thing you'd look at.

Doesn't the supply of stuff also matter? How about people's expectations of future prices? How about global-market linked prices of economic inputs, foreign money supply creation? Etc.

I think I could come up with 50 reasons why prices might increase if I sat down long enough.

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

#90

Post by andrekandre » Sat, Feb 25, 2023, 2:33 AM UTC

WalterBright wrote: post #4

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

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

is that the only possible cause?