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Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

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Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#81

Post by yellowapple »

diordiderot wrote: post #55
Auracle wrote: post #29

Earlier quoted context omitted.

So, literally everyone is colluding then?

Landlords as well https://www.propublica.org/article/yieldstar-rent-increase-r...

Landlords especially. Land value (whether you're measuring by sale price or rental value) is largely a function of economic activity or the potential thereof; landlords - even when they ain't colluding with one another - are well-positioned to respond to any growth in wages or profits by jacking up rents accordingly.

Land value taxation paired with a citizens' dividend would close that hole - alongside myriad other socioeconomic benefits.

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#82

Post by kelseyfrog »

aeneasmackenzie wrote: post #17
hiddencost wrote: post #8

Earlier quoted context omitted.

You're so close. https://en.m.wikipedia.org/wiki/Capitalist_Realism

> The collapse of the Soviet Union, which Fisher believes represented the only real example of a working non-capitalist system 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.

Maybe we don't live in a just world? Consider, for a second, that in the Cold War the bad guys won.

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#83

Post by diordiderot »

Fervicus wrote: post #35
acslater00 wrote: post #18

Fake news. This 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…

> governments that overstimulated their economies I don't understand the nuances of global economics, but makes you think how and why so many governments made the same monetary policy mistakes in lockstep.

In software the phenomenon is called best practices.

Think of Chicago School and MIT economists as Meta and Amazon leads.

In finance they say, 'no one ever got fired for buying IBM'

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#84

Post by diordiderot »

astrange wrote: post #38
flangola7 wrote: post #24

Earlier quoted context omitted.

Deposits are insured for regular people amounts of money.

No, I mean your employer's payroll account, and their payroll processor's.

Physical and human capital is all still there. Who cares.

https://youtu.be/HuepiJcMKoQ

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#85

Post by jrs235 »

pcthrowaway wrote: post #52
dools wrote: post #36

Earlier quoted context omitted.

> This 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 an increase in price level. When prices go up, one might consider that the price of inputs has gone up, or that profits has gone up, or both. If the inputs go up, and the price stays the sam…

Who had increased spending power exactly? I was under the impression the stimulus was mainly directed towards people who had suffered wage loss due to covid.

Some of the money went to folks who lost jobs. A lot of money also went to business owners who were supposed to use it "to not lay people off". Many probably didn't even need the money but took it because "free money". The number of business owners who bought new "toys" (i.e. cars, boats, etc.) or second and vacation homes during a time of supposedly difficult financial times is daunting...

Think about this: the cost to write off outstanding college loans is ~$350 billion. This amount was accumulated over a few decades. ~$700 billion was given to business owners in under a year...

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#86

Post by astrange »

js8 wrote: post #77
astrange wrote: post #12

Earlier quoted context omitted.

I believe Marx's thing was "the tendency of the rate of profit to fall", not "the tendency of the rate of profit to rise because of greed".

Isn't "the tendency of the rate of profit to fall" what ultimately prevents new companies to enter the market, causing "the tendency of the rate of profit to rise because of greed" due to price collusion of existing companies?

There's no correlation between price increases and industry concentration in the last few years.

https://chrisconlon.github.io/site/markups_pnp.pdf

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#87

Post by astrange »

diordiderot wrote: post #84
astrange wrote: post #38

Earlier quoted context omitted.

No, I mean your employer's payroll account, and their payroll processor's.

Physical and human capital is all still there. Who cares. https://youtu.be/HuepiJcMKoQ

The human capital certainly wouldn't be there since they'd all quit when they don't get paid for weeks.

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#88

Post by Fervicus »

Ekaros wrote: post #68
Fervicus wrote: post #37

Earlier quoted context omitted.

We see less of these kinds of problems the closer we are to a free market. A pure free market is not realistic, but sadly our current flavor of capitalism has headed far away in the opposite direction.

To me it is increasingly critical to separate capitalism from free market. They have gone together for some time, but in the end capitalism aims to crush free market when it benefits the capital. State is needed to stop too much consolidation from occurring and prevent monopolies where alternatives are sensible.

I don't agree. It is state intervention that causes consolidation and monopolies. A free market keeps monopolies in check.

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#89

Post by Fervicus »

diordiderot wrote: post #83
Fervicus wrote: post #35

Earlier quoted context omitted.

> governments that overstimulated their economies I don't understand the nuances of global economics, but makes you think how and why so many governments made the same monetary policy mistakes in lockstep.

In software the phenomenon is called best practices. Think of Chicago School and MIT economists as Meta and Amazon leads. In finance they say, 'no one ever got fired for buying IBM'

Interesting point. I could agree with this analogy if different countries had "bought IBM" at different times and thus made the same mistake. But what has happened here is that many countries have bought IBM together at the same time.

Re: Profit-Price Spiral: Excess Profits Fuelling Inflation, Not Wages

#90

Post by SamPatt »

littlestymaar wrote: post #80
SamPatt wrote: post #79

Earlier quoted context omitted.

Astounding that you're claiming monetary policy can lead to hyperinflation, but not inflation. As if those are unrelated concepts. You are very eager to put nails in coffins and claim that the common sense understanding of inflation (if you print too much money it loses value) is an urban legend.

> As if those are unrelated concepts. They are. A slow/moderate increase in prices (even 20% a year) has nothing in common with “the salary you've received on the first of the month has lost most of its value by the end of the month”, the social and economic causes and consequences of these two events are completely different. > that the common sense understanding of inflation It's only “common sense” because Milton…

I'm listening to the audiobook "The Price of Time" right now and it gives chapter after chapter of empirical evidence.

Friedman was absolutely not the first economist to notice the connection between monetary supply and inflation. Locke wrote against artificial low interest rates in the 18th century.

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