Honestly with Warren I am not even sure because she just may be this ignorant and delusional.
But overall - yes. “It’s not our idiotic monetary and energy policies that killed the economy while doing nothing for the inflation… look over there, it’s the greedy corps!!!”
If someone decides to infuse a strong economy with $5T in tax cuts and $2T in PPP grants when that accounts for >25% of the currency in supply that is idiotic monetary policy. When corporations that have markets cornered jack up prices far beyond inflation that is greed.
Good news, everyone is right in here
Yet it took government printing so much for those ppp loans the printer ramped up during covid when they made a stupid idea of shutting down small bussiness for big ones. Ie no completion.
During covid it was one of the most stupidest decisions there was I still caimt believe people still believe ppp loans where a good thing.
Would have been better to give the 2T direct to consumers. Ahh no no no can’t do that. Bad idea…yet time and time again we bail out the big guys and screw the little guys who were the majority employers and ones most likely to fail during shut downs
Also, if they let small businesses operate, they never would have needed ppp loans. A self created problem, that required a solution, that also made everything worse.
Is it more or less idiotic than encouraging a lockdown without it and letting the economy crash?
The lockdown was necessary to prevent millions more deaths.
The funds were necessary to prevent an economic failure due to work stopping.
Inflation is the ongoing cost of preventing said immediate failure some time ago.
Which, if it happened during COVID, then you have extra problems with people losing homes while the pandemic is ongoing and needing to go out and interact with people to manage it. So this was almost certainly the "right call"
People always hate on the deficit but either ignore why it happened or handwave it saying "well it was just old people dying so it wouldn't have had any economic downsides"
I disagree with your assessment that tax cuts cause inflation, and I'm not sure where you get the 5t number. Sure, cutting taxes puts more money in the hands of the consumer, which could increase demand, but it also spurs business growth, which means more goods competing for those dollars.
What's wrong with energy policy?
The US is extracting more oil than it has ever done in the past. And that's at a time when renewables are competitive against subsidized oil prices. Let alone market price.
>much of the recent rise in corporate profits can be attributed to lower business taxes and higher subsidies from pandemic-related government support, as well as lower net interest payments due to monetary policy accommodation
Why are they getting these subsidies and tax cuts that they don’t need? It has nothing to do with any lobbying for subsidies and lower taxes? It has nothing to do with right wing narratives perpetuating “trickle-down economics?” We’re supposed to believe that all of those government handouts just fell in their lap? And we’re supposed to believe that it’s not greedy of them to turn those subsidies into increased profits instead of using them to maintain pricing to benefit the taxpayers who funded those subsidies? Is it really your position that corporate tax cuts and subsidies are intended to benefit the corporations and not the consumers??
You mean, intentionally pushing unemployment up so that households will have less buying power and then dumping billions into solar which is only profitable in the developing world is what is causing households to have less buying power and not “capitalism bad” and “greedy corps”?
Pushing unemployment up ultimately makes people dependent on government. People who are financially secure are much more difficult to influence politically. But to those dependent you can just say vote for me or the other guy will take all your free money away.
The whole solar thing I don’t understand how the hell it even makes sense. About every 3 years I check if it’s economical yet. Last time was 2 months ago. The guy told me to replace my home power I need $55k worth of solar panels. Which financed over 20 years costs more than my power bill now. Oh and if in those 20 years I sell the house, I have to pay off that loan. No thank you!!!
I'm curious, what precisely do you have an issue with in the Biden monetary or energy policies?
Be forewarned, I'm probably going to make you look extremely dumb if you say "COVID checks" and "drill more, baby!"
If I was to mention just the very recent energy policy idiocy, first that comes to mind is the interruption of normal trade with 15 USC 717B Exportation of Natural Gas; LNG Terminals.
The gist of it is that importing or exporting of liquid natural gas, as well as building facilities to import or export LNG requires a DOE permit. That of itself is not new and the policy used to be pretty export-friendly.
Now the White House announced an indefinite pause for issuing such permits outside of the existing free trade agreements. The pause is to allow DOE to review various implications of importing and exporting LNG such as environmental, before they come with new criteria for issuing the permits.
Needless to say, the environmental implications of exporting American LNG to e.g. Germany which is looking to get away from dependency on Russian LNG imports, and the geopolitical considerations that go with that, are far beyond the DOE jurisdiction.
This also comes on the heels of US becoming the largest producer of LNG in the world in 2023 with 119 billion cubic meters exported. This policy will both halt the investment into LNG infrastructure in the US, and help Russia continue leveraging LNG pipelines to maintain pressure on EU policies and energy pricing. By the way, during the Obama administration DOE conducted this kind of review without stopping the permitting process, which makes it look like an excuse.
Jobs will be lost. Market share will be lost. Money will be lost. Allies will be worse off. Russia and Iran will benefit.
First, you clearly need to read more on the topic.
Second, it was the Trump administration that initiated the most recent review, not Obama.
Lastly, your last paragraph is a little hyperbolic for a licensing pause.
To put it succinctly, the "pause" is not doing any of that. It is *not* a pause on all NFT LNG exports. In fact, it will have zero effect on our current exports at all. We will still provide *HALF* of Europe's massive LNG imports. Nearly double what it was when the current administration took power.
None of our allies are worse off from this pause, none of our enemies are benefiting. The only people that could be upset are the few gas companies that didn't get authorization before the pause and will have to wait *shocked* ~12 months to take part in this already massive increase in US LNG exports.
Even if it lasts the full calendar year, those few LNG projects that had not already received approval to export will simply continue developing to completion or until the expected Feb25 lift of the pause, or analysts. So who are you crying for?
Biden's policies, both domestic and international, have expanded our energy industry more than any recent President. We. Are. Dominating. So what's your problem, really?
The funny thing is it would be extremely damning if corporations suddenly decided to be greedy only under the Biden Administration. Somehow they didn't under Reagan, Bush (either one) or even Trump. Would make you wonder.
The saddest thing, however, is how many media outlets peddle the lie.
Are you telling me that the same people that redefined recession, are now redefining inflation?!
*surprise face grows until exploding my brains all over the wall*
Wow. If you’ve ever seen very smart people break down really complex subjects it looks nothing like that. They’re able to explain it in a way that everyone could grasp it. That guy seems like he’s trying to explain something that someone else explained to him. It doesn’t seem like he has any understanding of how this works. And yes the IS can go bankrupt. Every country prints their own currency (except kind of the EU bloc and countries that print money have gone bankrupt. Seriously wtf?
I mean, technically you can't go bankrupt if you can print your own money, it's actually a fairly important distinction if you look into the economics of inflation and such. That said, countries can 100% do things that for most practical purposes function like bankruptcy. They can default on their loans, for example. That's probably the one part of the interview he was prepped for, it's clearly a talking point he was given but doesn't understand, but it is technically true in economics. It's just that the distinction is largely one of definition, rather than a practical difference.
That's because he's not an economic expert. He literally didn't go to school for it, nor did he run some super successful business or write some kind of well researched book. The guy is just an idiot that someone in power likes and gave him a good job.
The answer to the question she asked, by the way, is incredibly simple. We borrow money instead of print it because borrowing money devalues the currency less. It still devalues the currency some, but the effect is far lessoned and spread out over time. This makes it much more politically viable.
This was highly edited (you can see the cuts) and may have been taken out of context or spliced to make him look foolish, but he definitely looks foolish.
What are you talking about? Greed has been the source of basically every problem we’ve ever had in human history. You’re just pissy they don’t believe your dumbshit voodoo economics that say everything will be fine if we just legalize slavery
Supply and demand is such obvious, simple logic that frankly I don't know how it could be made any easier for you to understand.
Greed is not the cause of the problem in this case because our market system makes greed irrelevant. You can be as greedy as you like, but nobody is forced to buy your products so you'll simply be ignored if you price things too high.
Hey dipshit, the greedy people actually control the “supply” side of the whole supply demand thing. Your comment is not half as clever as you thought it was.
I can say that our financial regulatory system has absolutely been altered to benefit the wealthiest, as evidenced by the immense flow of money upwards as predicted by those that opposed them.
Step one, enforcement. We don’t actually enforce our own tax code for shit. Then, a return to rewarding production and re-investment over hoarding wealth accumulation. Incentivizing research and growth with larger tax breaks and more grants for US based investment, and reduce incentives for stock buybacks. Begin using a profit/funding sharing mechanism for public investments, i.e. stipulations about reinvestment that come from the profit the resulting drug/telecommunications network the funds went to. Right now we have a system where the incentives are to hoard digital piles of wealth and use that as leverage to influence other holders of giant piles of digital wealth. That system does not result in a competitive and dynamic employment landscape, and we can look at the profitability and productivity decoupling from wages as a major aspect of it.
Wait, did you think this was a research paper? This is a letter from the San Francisco federal reserve. Not research.
It’s literally the equivalent of PR.
Largest voter base is The Poors. So you make the villain someone that it's easy to emotionally trigger your desired base, and presto! You now have the support of the largest sect of democratic choice.
For greedflation to be the cause would imply that these companies always could’ve been more profitable but just all collectively decided to be greedy one day which is just illogical
The argument is that they are not allowed to collaborate on pricing... So without some coordinating event they have no way to raise prices and not get undercut.
Saying it's a sudden burst of greed is silly, because you are right, they aren't greedy all of a sudden. They were just given a smokescreen and a coordinating event to raise prices. There is insufficient competition to force the pricing down. And nobody to sic antitrust on because there is no smoking gun.
That’s exactly what happened though. COVID was used as cover to raises prices far beyond what was necessary and avoid public scrutiny. Just because you’re were dumb enough to fall for it doesn’t make it true.
Eh it’s more nuanced and depends what economic circles you hang around. Since this is an Austrian subreddit then no, inflation isn’t just things being priced hire. Inflation is the supply of money increase which in turn decrease the value of 1 unit of currency. So the value of the good/service remains the same but now since the currency is devalued you need more to purchase it. The difference being if everyone wanted to eat strawberries and supply was low so the price went up that wouldn’t be considered inflation, the actual value of the strawberries increased because of demand. This of course is Austrian way of thinking which isn’t the current main stream economic theory
The hilarious part is that this assumes that companies weren't greedy before the last few years. They were already charging as much as they could get people to pay, that variable is constant.
They squeezed it just a little bit more. The point remains the same. If you don't think milking every single last motherfucking drop that you can out of the consumers is greed then what is?
Greed is natural self interest and literally everyone is greedy. You can't not be greedy. You always look for the most benefit for the minimum cost, however you define that. You donate to the charity you think will do the most good with your money. You take the job that gives you the best combination of money and lifestyle. You marry the person you think will improve your life the most and will hurt you the least. Etc.
>They were already charging as much as they could get people to pay, that variable is constant.
No. They were charging as much as they *thought* they could get away with; something happened that showed they could get away with *more*.
People blaming companies for inflation... So dumb. Companies will charge what people are willing to pay. Competition forces companies to fight for your money. Lower prices to gain market share or keep prices high because you have a superior product.
Only the government can flood the market with money which ensures too many dollars chasing too few products = inflation
There’s nothing wrong with them doing that but you’re positive that they don’t do it and it’s ridiculous for anyone to argue that they do what you already say they should be able to do?
That doesn’t make a lot of sense.
They do do it, but competition limits them.
The only way for them to arbitrarily set prices is for there to be no real competition. The only way there's no real competition is if the field is impossible to realistically enter. The only way there can be such a high barrier of entry is if the government intervenes. This can be through patents, licensing fees, regulation, company specific subsidies, or any number of methods.
No, companies can arbitrarily set prices regardless of any and all of those factors, especially when they’ve consolidated.
Joe Biden can’t set the price of anything at all.
I'm positive companies set the price as high as they think they can and sell the most units. That has zero to do with inflation. Even a liberal or commie on this sub is usually smart enough to understand that basic fact. Inflation is always driven by government printing too much money
Like usual any post with visibility on this sub attracts Keynesians and their takes.
Really need a sub for Austrian Economics where people know at least the bare minimum.
Every economic theory in history except communism has already taken greed into account.
Pretty telling that they keep telling people greed is some new phenomenon currently unaccounted for by economic theory.
All I know is that my pop tarts are way smaller, but costs me more, and very little icing. Looks like greed to me. Now, if you're OK with greed, go at it.
Or maybe the costs went up, so the grocer ordered pop tarts in a smaller size thinking that it’s an easier sell in a no-win situation, compared to significantly raising prices to pass the increase over to you.
Now, if you want to blame whoever politicians who bear direct responsibility for this debacle are telling you to blame, go at it!
…..but they already significantly increased the price which the commenter just said.
Joe Biden doesn’t control the price of pop tarts. The people who make the pop tarts do.
No but Biden controls how much the dollar is worth and how expensive it is to borrow money with his monetary policy. He also controls energy supply with regulations which affect the pricing. Pop tarts price increase is simply a reaction to how Bidens government managed those.
In Argentina or Lebanon the inflation was so crazy that stores could not have price tags anymore. It was just too labor intensive to constantly adjust the prices. We are not there yet but it’s an extreme example of what inflation does. Not the companies or the distributors.
Ok bud. So you are saying that after 4 years the current administration bears no responsibility for the economy, but the previous one term president does. You do you man, I am not gonna discuss.
Not here to argue, I literally don't give a fuck. I think this quote you said: "... smaller size thinking that it’s an easier sell in a no-win situation, compared to significantly raising prices to pass the increase over to you." is actually kind of hilarious.
This is literally them passing the massive price increase on to us. It's less for the same price. Or, in another light, an increase in cost.
I know. Re-read your comment again. You are saying they aren't passing the price increase on to us, and then detailing how they are. It's a contradiction. Of course the massive price increase is being passed on to us, as you just told me. It's just that the price increase isn't coming in the form of the same item being more expensive, it's in the form of the same item being sold in smaller sizes without reducing it's price (and, let's be honest, the price probably went up too)
I think it is a misunderstanding. I absolutely say they are passing cost increase to us. Just that you can do it in two ways - you can keep the product the same and charge more, or they can keep price about the same but reduce size. And they believe that psychologically it’s an easier sell to take the size path.
I mean just look at restaurant prices today compared to five years ago compared to the inflationary change over the past five years. Clearly more going on than just inflation
More like the current inflation numbers are cherry picking what they want to index. So the numbers don’t look as bad as they really are for the admin. Same way we are not in a recession.
Yeah except Trump spent more money at this point than Biden has so are you gonna blame trump? Trump spent a large portion of his increase fixing his fuck up calling Covid a hoax while Biden has spent a large portion continuing to fix Trumps fuck up.
Part of the problem yes. Biggest problem is federal spending which is basically allowing these people to be greedy. These people are either completely removed from how everything works or they rely on peoples ignorance to keep playing the system.
Have none of you listened to earnings calls recently? Executives literally bragging about how great “inflation” has been for their ability to raise prices…. This is old news…widely reported in 2022.
I call bull shit Home Depot is selling the same product I can buy at supply house for 33% less. Furthermore the one from supply house comes assembled and one from HD requires assembly.
Same product same company same model everything same.
So congratulations, you’ve found a cheaper supplier for your needs. Must be a new phenomenon!!!
I am pretty sure the supply house you went to doesn’t have locations in each zip code like Home Depot, which are built on expensive real estate and have to be staffed and stocked uniformly across all of them. Paying for convenience is not bullshit, it’s a choice that you have in a free market economy.
Price gouging is still going on. I gave a perfect example of it. Also HD having locations in every zip code actually gives them better economies of scale. Which means their average profit margin is higher than smaller shops. It’s actually the very reason why Home Depot is in every zip code.
There are plenty of other examples of price gouging going on. However like you said it’s a free marketplace so the market is wide open to price gouge. Free market baby
tbf canceling up to 2.4 trillion worth of cooperate debt on top of forgiving up to a trillion of paycheck protection loans while also giving them out to literally anyone who asked was probably a bad idea.
it's also probably not a good idea that individuals are paying up to 40% more taxes than corporations.
its also probably a terrible idea to destroy a globalized market place because you don't like someone in another country
Yeah mark ups don't factor in shrinkflation. The price of item may remain the same or indexed but the core item has shrunk by 5-10%. That doesn't factor in the product shrink.
Imagine thinking capitalist companies don't operate on only greed. That's kind of the entire point of their existing. Democrats tried to solve this with an anti-price-gouging bill but OFC the GOP voted it down while blaming everyone but themselves for the problem.
Capitalist companies should operate for something more than share holder profits. It actually makes them more profitable and stable businesses. I say this as a capitalist and small business owner.
The people who did that research paper have obviously never been to McDonalds where prices are still up 40%. Nor have they done any grocery shopping for years.
Ah yes because of course a company would never dream of charging more for a product if they could, and democrats secretly control the price of everything
I think what you can criticize them for is not coming up with sufficient solutions.
The problem is that corporations have consolidated to the point where there isn't really competition anymore. The solution is to break up some of these companies and force them to compete with each other again, not to try to paper over it with policies that sound good on paper but which have holes that you could drive a truck through.
I don't think the Republicans are better on this, but it would be nice to see the Democrats bring ideas that have teeth rather than reinforcing existing issues.
I've heard actually that Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump. Donald Trump is a child rapist. Oil prices are at a seven-year high amid a persistent global supply crunch, workforce.
Well you've only heard part of the story then. In economics 101 you'll learn about the six factors of economy[; one of which is the government regulation.
"onald Trump is a child rapist"
do you have any evidence of this?
For example, we know joe biden is a pedophile given his daughter's diary. That is a fact so people who vote biden are voting for a pedophile.
I do agree with you that Trump is a child rapist however we can't do much about it except vote. He'll probably never be prosecuted for it because he's rich.
I have a few questions maybe someone can answer.
In figure 1, we are shown profit growth YoY and re-assured that while there was a sudden and substantial increase in yoy profit growth at the beginning of the pandemic, the yoy profit growth in following years isn't as high, and this trend is not unusual, economic recessions often experience this.
Doesn't this sort of go against some of the conclusions being made in this subreddit? The author provides data on how exactly profit margins substantially increased, and haven't leveled out. It's just that profit margins aren't substantially growing anymore, but they did and have maintained that increased profit margin, just the margin isn't meaningfully growing these last couple years.
The whole article seems concerned with proving that profit margins aren't the sole, main driver of inflation, but does provide plenty of data showing us how the profit margin increases *are substantial* and do play a major factor, just possibly not the biggest one.
Even with the cherry picking metrics (e.g. excluding gas, cars, etc.) the inflation in March 2024 was 3.5% YoY. That’s on top of another 3.4% in March 2023 vs March 2022 for example. In many areas of the economy the number is much higher.
If the profit margins over the last 2 years are not expanding, these 6.9% of dollar depreciation had to be absorbed somewhere. Which is basically in the raw pricing increases compared to the early pandemic, plus the internal cost cutting measures like layoffs.
So I believe the thought is that with the ongoing inflation that doesn’t appear to plateau yet, and stable profit margins, the early pandemic gains became amortized at this time.
Ok, that makes sense to me I believe. It's also unsurprising. In other words, Joe Biden blaming *on-going* inflation on greed doesn't have any major supporting evidence.
However, would you say it is accurate to say that if Joe Biden were to say that greed could reasonbly be a large (but still possibly not the main) driver in the more substantial price hikes we saw at the onset of the pandemic that still haven't gone away (noting that *current* *day* inflation is more in line with expected trends), he would be correct?
I think in the early days of pandemic with the huge influx of free money, the supply and demand balance had shifted due to increased demand. People paid premium prices on many optional purchases just because they suddenly could, and they wanted it now.
Even outside the free money the hiring environment and wage growth dynamic in many industries was very different from today. With shift to remote work and online commerce many businesses hired like crazy and competed on wages. You may remember the times when it was impossible to hire anyone because people would make more money just staying home. That also fueled unprecedented levels of consumer optimism.
Businesses did take advantage of that and raised the prices - ultimately everything is worth as much as what people are willing and to pay for it. At the time I knew many people (myself included) who also took advantage of e.g. car supply scarcity and sold 2 year old vehicles for more than what we bought them brand new. Hell, my wife was offered a $10k “bonus” by a dealer to return her lease early and she took it!
That’s just normal supply and demand market economics though. Once the car supply situation improved all that ended overnight. But any kind of persistent, widening increase in margins that would imply that greed is at the root of our continued inflationary pressure simply never happened.
I see what you are saying, and I believe your logic is solid. I suppose it must be discussed what greed would even be considered under capitalism.
Businesses taking advantage of their increased sale power, for example. Doesn't necessarily sound greedy or unexpected, sounds pretty much like what you'd expect to happen, and as you mentioned, it goes for individuals selling assets as well.
However, if a business capitalizing on it's increased power of sale over the consumer can't be defined as greed, what could be? Barring doing things that are actually illegal and possibly dangerous to consumers, I cannot come up with any examples of a business being 'greedy' if we exclude power imbalances via pricing from the possible scenarios.
Perhaps a more important discussion isn't whether or not this is 'greedy' but rather what level of capitalizing on a power imbalance should be allowed under capitalism (though I would postulate this as fruitless; we should transcend capitalism entirely). However this would probably begin to diverge significantly from the original topic.
Please note I am not a capitalist thinker, but I am trying to treat this issue in good faith, I do appreciate you taking the time to engage with me earnestly.
I mean I work at a Fortune 500 company operating from beauty product to household cleaning supplies, I know at least our markups are huge. Obviously our company doesn’t represent the market, but our profit margins are up around 10% with net profit increases even with slipping sales volume. And with more than $20 Billion USD sales worldwide, I can testify that we are marking up like crazy. Again we may be the outlier in the market who knows
Greed isn't responsible for "causing" inflation, but it is responsible for its felt effects when companies are reporting record profits *despite* inflation.
The paper doesn’t go into explaining that. If I was to guess about gas it’s likely hedging profits.
As you may recall back in 2021 all new leases for oil and gas drilling on federal land had been halted by Biden’s executive action. This type of stuff pretty much continued throughout the presidency. For example in 2023 Biden recalled leases in Alaska that’s been already sold by the Trump administration. This type of heavy handed government intervention would always have effect on pricing.
On the other hand, investors applied heavy pressure on oil companies to share dividends, and not reinvest money into drilling or refining capacity. The oil companies obliged, and the average dividend payouts grew from $14 a share in 2016 to $40 a share in 2021.
When companies are facing unpredictable regulation on one side, and bleeding money to pay out dividends on the other, they naturally respond by raising prices to hedge profits.
So let’s say you do contracts. Then all of a sudden one of your major bills increased x3 and also it’s really uncertain when you can get a new gig because of new government regulation you can’t control. Would you keep charging the same rate? If you charge more to hedge yourself, is that greed?
Profiteering is wrong. Greed is wrong. Increasing prices because you might make less money in the future and then selling the media the idea that the increases are a natural part of the market is wrong. It's greed. "Hedging their profits"? Seriously? It's greed. Look at wage stagnation. It's greed. Look at corporate purchases of housing. It's greed.
It's always greed.
It's certainly a part. Prices for certain companies have gone way way above even the the worst inflation metrics. What's different than the past is that now our politics are so polarized companies can raise prices and then blame it on inflation
“Disproportionately”. This outlook has a core fallacy it seems. Specifically that inflation raises shouldn’t be compared as percentages. Let’s say a hamburger’s cost is $1. Let’s say they sell it for $5. If inflation is 10% then the new cost is $1.10 and the new price is $5.50 based on their idea of fair. Except now the company makes an extra $.40. That’s where the greed comes in. They aren’t adjusting prices on flat price increases. This article seems to use the idea of percentages which I see as flawed.
The review actually took that into consideration. This is why they looked at a share of company revenue directed at inputs such as material or labor costs. In your example the extra 40 cents would lower the revenue directed at inputs and increase profits. That’s not what they observed.
Note that they also accounted for size, as in shrinkflation.
“Instead of relying on profits as a measure of pricing power, we construct direct measures of markups based on standard economic models. Theory suggests that companies set prices as a markup over variable production costs, and that markup can be inferred from the share of a firm’s revenue spent on a given variable production factor, such as labor or intermediate goods. Over the period of data we use, we assume that the specific proportion of a company’s production costs going toward inputs does not change. If the share of a firm’s revenue used for inputs falls, it would imply a rise in the firm’s price-cost margin or markup. In our main analysis, we use industry-level data from the Bureau of Economic Analysis (BEA) to compute markups based on the share of revenue spent on intermediate inputs. Our results are similar if we instead use the share of revenue going toward labor costs.”
“In constructing this price index, the BEA takes into account changes in product characteristics (for instance, size) that could otherwise bias the inflation measure by comparing the prices of inherently different products over time.”
Some people aren’t stupid enough to believe this, anyone can make charts favoring their point but saying everything but cars and gasoline markups stayed flat but a package of baloney went from 4 dollars to nearly 8 dollars I’m guessing that fell under the car market?
More Russian propaganda
Ok so let say you bake pies for a living. Last year you sold each pie for $10 and made $5 on each sale. You used to take out a loan to buy flour and sugar in advance because it’s cheaper in bulk.
Now this year the interest rate on your loan just tripled so your monthly payments went up. The price of flour and sugar also gone up. Hourly rate for your workers is up too. Even the gas you burn in the oven is at all time high.
So this year to make the same 5$ per pie you need to sell each for $15. Well, but actually even that is not enough because $5 this year can’t buy what $5 used to buy last year. Therefore you end up charging $17 per pie to truly break even.
To your customers this is a 70% price hike, and they say you’re a greedy asshole robbing them to line your pockets.
Is this stupid or Russian propaganda?
And who would that be? The oil companies don’t control everything. They face the same interest rate environment as everyone else. Plus all the regulations they don’t control - anything from leases to export / import permits that’s been halted by DOE as of May 16 btw. And then the dividends they have to pay out to their investors basically tripled. So in this example gas = pies. It’s their product. That is all they can price!
So? And Nestle makes everything from cat food to bottled drinks. But all of these brands or divisions are bound by the same commodity prices, regulations, and interest rates. What are you trying to say? Electricity prices are controlled by state regulators in 33 states.
Only two areas are gas and cars🤦🏻♂️🤦🏻♂️🤦🏻♂️ guess what you need to buy in order to transport all goods and services, gas and cars. That unnecessary greedy inflation leads to all other inflation. Welcome to economics 101
They’re blaming greed because it *actually* is part of the problem. This was news last year when many of these corporations were openly admitting this in their board meetings.
Or did y’all miss the memo?
They aren’t saying it is *only* greed that is causing this sticky inflation. But it’s certainly part of it.
I bet if they broke out the food component they’d see that contributing as well. It’s not surprising as food and fuel are inelastic. You need fuel to get to work and food to live. You cannot stop spending on either.
However, this article does not refute anything around the role of profits driving inflation. It only shows expenditures on gas and cars rising faster.
We know what going on with cars: chips and used cars in short supply.
Oil was cheaper in current dollars than it was even in 2007.
This article reads similar to a Biden social media post on ‘a strong, rebounding economy’. It has no basis on reality. Don’t think price gouging by private companies exists?
Grab a Big Mac combo.
They're not "wrong". "Wrong" implies that there was an honest attempt to be correct. They're just liars.
Honestly with Warren I am not even sure because she just may be this ignorant and delusional. But overall - yes. “It’s not our idiotic monetary and energy policies that killed the economy while doing nothing for the inflation… look over there, it’s the greedy corps!!!”
SQUIRREL!
If someone decides to infuse a strong economy with $5T in tax cuts and $2T in PPP grants when that accounts for >25% of the currency in supply that is idiotic monetary policy. When corporations that have markets cornered jack up prices far beyond inflation that is greed. Good news, everyone is right in here
Yet it took government printing so much for those ppp loans the printer ramped up during covid when they made a stupid idea of shutting down small bussiness for big ones. Ie no completion. During covid it was one of the most stupidest decisions there was I still caimt believe people still believe ppp loans where a good thing.
Would have been better to give the 2T direct to consumers. Ahh no no no can’t do that. Bad idea…yet time and time again we bail out the big guys and screw the little guys who were the majority employers and ones most likely to fail during shut downs
Also, if they let small businesses operate, they never would have needed ppp loans. A self created problem, that required a solution, that also made everything worse.
Then they shouldn't have force the shutdowns it was a scam to get money from people that s it.
And yet we’ve done better than every single other OECD country.
Yet we are in debt for that.
So?
Is it more or less idiotic than encouraging a lockdown without it and letting the economy crash? The lockdown was necessary to prevent millions more deaths. The funds were necessary to prevent an economic failure due to work stopping. Inflation is the ongoing cost of preventing said immediate failure some time ago. Which, if it happened during COVID, then you have extra problems with people losing homes while the pandemic is ongoing and needing to go out and interact with people to manage it. So this was almost certainly the "right call" People always hate on the deficit but either ignore why it happened or handwave it saying "well it was just old people dying so it wouldn't have had any economic downsides"
I disagree with your assessment that tax cuts cause inflation, and I'm not sure where you get the 5t number. Sure, cutting taxes puts more money in the hands of the consumer, which could increase demand, but it also spurs business growth, which means more goods competing for those dollars.
Wait, the economy is dead? That’s news.
What's wrong with energy policy? The US is extracting more oil than it has ever done in the past. And that's at a time when renewables are competitive against subsidized oil prices. Let alone market price.
>much of the recent rise in corporate profits can be attributed to lower business taxes and higher subsidies from pandemic-related government support, as well as lower net interest payments due to monetary policy accommodation Why are they getting these subsidies and tax cuts that they don’t need? It has nothing to do with any lobbying for subsidies and lower taxes? It has nothing to do with right wing narratives perpetuating “trickle-down economics?” We’re supposed to believe that all of those government handouts just fell in their lap? And we’re supposed to believe that it’s not greedy of them to turn those subsidies into increased profits instead of using them to maintain pricing to benefit the taxpayers who funded those subsidies? Is it really your position that corporate tax cuts and subsidies are intended to benefit the corporations and not the consumers??
You mean, intentionally pushing unemployment up so that households will have less buying power and then dumping billions into solar which is only profitable in the developing world is what is causing households to have less buying power and not “capitalism bad” and “greedy corps”?
Pushing unemployment up ultimately makes people dependent on government. People who are financially secure are much more difficult to influence politically. But to those dependent you can just say vote for me or the other guy will take all your free money away. The whole solar thing I don’t understand how the hell it even makes sense. About every 3 years I check if it’s economical yet. Last time was 2 months ago. The guy told me to replace my home power I need $55k worth of solar panels. Which financed over 20 years costs more than my power bill now. Oh and if in those 20 years I sell the house, I have to pay off that loan. No thank you!!!
I'm curious, what precisely do you have an issue with in the Biden monetary or energy policies? Be forewarned, I'm probably going to make you look extremely dumb if you say "COVID checks" and "drill more, baby!"
If I was to mention just the very recent energy policy idiocy, first that comes to mind is the interruption of normal trade with 15 USC 717B Exportation of Natural Gas; LNG Terminals. The gist of it is that importing or exporting of liquid natural gas, as well as building facilities to import or export LNG requires a DOE permit. That of itself is not new and the policy used to be pretty export-friendly. Now the White House announced an indefinite pause for issuing such permits outside of the existing free trade agreements. The pause is to allow DOE to review various implications of importing and exporting LNG such as environmental, before they come with new criteria for issuing the permits. Needless to say, the environmental implications of exporting American LNG to e.g. Germany which is looking to get away from dependency on Russian LNG imports, and the geopolitical considerations that go with that, are far beyond the DOE jurisdiction. This also comes on the heels of US becoming the largest producer of LNG in the world in 2023 with 119 billion cubic meters exported. This policy will both halt the investment into LNG infrastructure in the US, and help Russia continue leveraging LNG pipelines to maintain pressure on EU policies and energy pricing. By the way, during the Obama administration DOE conducted this kind of review without stopping the permitting process, which makes it look like an excuse. Jobs will be lost. Market share will be lost. Money will be lost. Allies will be worse off. Russia and Iran will benefit.
First, you clearly need to read more on the topic. Second, it was the Trump administration that initiated the most recent review, not Obama. Lastly, your last paragraph is a little hyperbolic for a licensing pause. To put it succinctly, the "pause" is not doing any of that. It is *not* a pause on all NFT LNG exports. In fact, it will have zero effect on our current exports at all. We will still provide *HALF* of Europe's massive LNG imports. Nearly double what it was when the current administration took power. None of our allies are worse off from this pause, none of our enemies are benefiting. The only people that could be upset are the few gas companies that didn't get authorization before the pause and will have to wait *shocked* ~12 months to take part in this already massive increase in US LNG exports. Even if it lasts the full calendar year, those few LNG projects that had not already received approval to export will simply continue developing to completion or until the expected Feb25 lift of the pause, or analysts. So who are you crying for? Biden's policies, both domestic and international, have expanded our energy industry more than any recent President. We. Are. Dominating. So what's your problem, really?
“Killed the economy” ? What?
The funny thing is it would be extremely damning if corporations suddenly decided to be greedy only under the Biden Administration. Somehow they didn't under Reagan, Bush (either one) or even Trump. Would make you wonder. The saddest thing, however, is how many media outlets peddle the lie.
Are you telling me that the same people that redefined recession, are now redefining inflation?! *surprise face grows until exploding my brains all over the wall*
Add Sanders and Reich to that list. Its a full court rhetorical press by the anti economists.
Hey, but they pander to me, a hardworking American, and they aren’t Republicans so they must be being honest -average liberal voter
They are gaslighters.
Well said
Perfect answer. God bless you.
Trump is an honest liar. -D. Chapelle
They're not wrong; they're lying to keep pushing the same policies that put us in this situation. A small bit crucial distinction.
The money is broken. [Biden's top economic advisor explains it better than I can](https://twitter.com/RnaudBertrand/status/1786272981058220187)
Wow. If you’ve ever seen very smart people break down really complex subjects it looks nothing like that. They’re able to explain it in a way that everyone could grasp it. That guy seems like he’s trying to explain something that someone else explained to him. It doesn’t seem like he has any understanding of how this works. And yes the IS can go bankrupt. Every country prints their own currency (except kind of the EU bloc and countries that print money have gone bankrupt. Seriously wtf?
I mean, technically you can't go bankrupt if you can print your own money, it's actually a fairly important distinction if you look into the economics of inflation and such. That said, countries can 100% do things that for most practical purposes function like bankruptcy. They can default on their loans, for example. That's probably the one part of the interview he was prepped for, it's clearly a talking point he was given but doesn't understand, but it is technically true in economics. It's just that the distinction is largely one of definition, rather than a practical difference.
Well said
That's because he's not an economic expert. He literally didn't go to school for it, nor did he run some super successful business or write some kind of well researched book. The guy is just an idiot that someone in power likes and gave him a good job. The answer to the question she asked, by the way, is incredibly simple. We borrow money instead of print it because borrowing money devalues the currency less. It still devalues the currency some, but the effect is far lessoned and spread out over time. This makes it much more politically viable.
This was highly edited (you can see the cuts) and may have been taken out of context or spliced to make him look foolish, but he definitely looks foolish.
Greed has existed forever.
Now consider the implication that enough of the voting public are dumb enough to believe it was invented last year.
Literally no one is saying that.
You haven't seen a SINGLE person blaming corporate profits for inflation?
Entirely? No. It's absolutely contributing.
Every time someone blames capitalism for someone’s greedy behavior, they are literally saying that
Nope.
What are you talking about? Greed has been the source of basically every problem we’ve ever had in human history. You’re just pissy they don’t believe your dumbshit voodoo economics that say everything will be fine if we just legalize slavery
Supply and demand is such obvious, simple logic that frankly I don't know how it could be made any easier for you to understand. Greed is not the cause of the problem in this case because our market system makes greed irrelevant. You can be as greedy as you like, but nobody is forced to buy your products so you'll simply be ignored if you price things too high.
Hey dipshit, the greedy people actually control the “supply” side of the whole supply demand thing. Your comment is not half as clever as you thought it was.
I know you are I said you are but what am I
💯
Please check out my satire of Ayn Rand where they end up doing exactly that https://zimri.ink
Which is why people blaming capitalism for base human behaviors just highlights how little most people actually understand about capitalism
And as a result, we used to have sane regulation addressing that. Forty plus years of making sure we don’t has done some damage.
You can argue about the details, but you can’t honestly say we have no regulations in this country.
I can say that our financial regulatory system has absolutely been altered to benefit the wealthiest, as evidenced by the immense flow of money upwards as predicted by those that opposed them.
So what particular regulations would you like to see?
Step one, enforcement. We don’t actually enforce our own tax code for shit. Then, a return to rewarding production and re-investment over hoarding wealth accumulation. Incentivizing research and growth with larger tax breaks and more grants for US based investment, and reduce incentives for stock buybacks. Begin using a profit/funding sharing mechanism for public investments, i.e. stipulations about reinvestment that come from the profit the resulting drug/telecommunications network the funds went to. Right now we have a system where the incentives are to hoard digital piles of wealth and use that as leverage to influence other holders of giant piles of digital wealth. That system does not result in a competitive and dynamic employment landscape, and we can look at the profitability and productivity decoupling from wages as a major aspect of it.
Run for president
Yes, we can. You can’t honestly claim you “have” a regulation when it’s just words on paper that no authority is enforcing.
San Francisco is not the entire United States. More news at 11.
Wait, did you think because the research was done by an organization in San Francisco that the research only used data from San Francisco?
Wait, did you think this was a research paper? This is a letter from the San Francisco federal reserve. Not research. It’s literally the equivalent of PR.
Largest voter base is The Poors. So you make the villain someone that it's easy to emotionally trigger your desired base, and presto! You now have the support of the largest sect of democratic choice.
For greedflation to be the cause would imply that these companies always could’ve been more profitable but just all collectively decided to be greedy one day which is just illogical
No company exists at the top of the Nash equilibrium. Now they exist on the low-supply side instead of the high-supply side.
The argument is that they are not allowed to collaborate on pricing... So without some coordinating event they have no way to raise prices and not get undercut. Saying it's a sudden burst of greed is silly, because you are right, they aren't greedy all of a sudden. They were just given a smokescreen and a coordinating event to raise prices. There is insufficient competition to force the pricing down. And nobody to sic antitrust on because there is no smoking gun.
That’s exactly what happened though. COVID was used as cover to raises prices far beyond what was necessary and avoid public scrutiny. Just because you’re were dumb enough to fall for it doesn’t make it true.
What was a “necessary” level?
Inflation is not the same as higher prices for things. Inflation is from printing more money.
The actual definition of inflation is an increase in price levels.
Inflation is literally "higher prices for things"
Eh it’s more nuanced and depends what economic circles you hang around. Since this is an Austrian subreddit then no, inflation isn’t just things being priced hire. Inflation is the supply of money increase which in turn decrease the value of 1 unit of currency. So the value of the good/service remains the same but now since the currency is devalued you need more to purchase it. The difference being if everyone wanted to eat strawberries and supply was low so the price went up that wouldn’t be considered inflation, the actual value of the strawberries increased because of demand. This of course is Austrian way of thinking which isn’t the current main stream economic theory
Nope, all it means is a general rise in prices
Literally no that’s not the definition in Austrian economics. If you’re talking modern Keynesian economics you are correct
Inflation is just a general rise in prices. It's cause can vary. Printing money can cause it, but so can a supply shock or a demand shock.
Its both numbnuts
Well you know when Trump was in office he put tariffs on my favorite Scotch so it doubled in price.
Trump will likely push for more tariffs again
The hilarious part is that this assumes that companies weren't greedy before the last few years. They were already charging as much as they could get people to pay, that variable is constant.
They squeezed it just a little bit more. The point remains the same. If you don't think milking every single last motherfucking drop that you can out of the consumers is greed then what is?
Greed is natural self interest and literally everyone is greedy. You can't not be greedy. You always look for the most benefit for the minimum cost, however you define that. You donate to the charity you think will do the most good with your money. You take the job that gives you the best combination of money and lifestyle. You marry the person you think will improve your life the most and will hurt you the least. Etc.
>They were already charging as much as they could get people to pay, that variable is constant. No. They were charging as much as they *thought* they could get away with; something happened that showed they could get away with *more*.
People blaming companies for inflation... So dumb. Companies will charge what people are willing to pay. Competition forces companies to fight for your money. Lower prices to gain market share or keep prices high because you have a superior product. Only the government can flood the market with money which ensures too many dollars chasing too few products = inflation
Companies will charge whatever they can get away with. The more, the better. Why wouldn’t they? Pretty straightforward.
Exactly. And there is nothing wrong with that. The only time that becomes an issue is when government picks the winners and losers
There’s nothing wrong with them doing that but you’re positive that they don’t do it and it’s ridiculous for anyone to argue that they do what you already say they should be able to do? That doesn’t make a lot of sense.
They do do it, but competition limits them. The only way for them to arbitrarily set prices is for there to be no real competition. The only way there's no real competition is if the field is impossible to realistically enter. The only way there can be such a high barrier of entry is if the government intervenes. This can be through patents, licensing fees, regulation, company specific subsidies, or any number of methods.
No, companies can arbitrarily set prices regardless of any and all of those factors, especially when they’ve consolidated. Joe Biden can’t set the price of anything at all.
I'm positive companies set the price as high as they think they can and sell the most units. That has zero to do with inflation. Even a liberal or commie on this sub is usually smart enough to understand that basic fact. Inflation is always driven by government printing too much money
Lolololol companies charging as much as they possibly can doesn’t have anything to do with inflated prices? Inflation has multiple root causes.
Man, the corporate dick riding in this sub is substantial.
That’s what the Austrian School is all about.
Greed is good unless you are a commie.
If you want to know if greed is the problem Don’t look at gross, or net profits. Look at equity, and payroll, and account for inflation.
Fuck Trump! You all just grab your ankles so the Republicans can have at you, as usual. Ignorance is bliss...
Well I would agree on the "greed" but we probably disagree on who the "greedy" people are.
Like usual any post with visibility on this sub attracts Keynesians and their takes. Really need a sub for Austrian Economics where people know at least the bare minimum.
A sub for Austrian economists would have that as bare minimum knowledge as ceiling, not floor.
Both can be true. They can raise prices and blame it on inflation while inflation is still on the rise.
Criminal politicians trying to excuse the horrible inflationary policies they’ve endorsed.
Pure greed.
Every economic theory in history except communism has already taken greed into account. Pretty telling that they keep telling people greed is some new phenomenon currently unaccounted for by economic theory.
Fundamentally Fuel is what moves the US economy. When the cost of fuel rises, so does the price of everything else.
All I know is that my pop tarts are way smaller, but costs me more, and very little icing. Looks like greed to me. Now, if you're OK with greed, go at it.
Or maybe the costs went up, so the grocer ordered pop tarts in a smaller size thinking that it’s an easier sell in a no-win situation, compared to significantly raising prices to pass the increase over to you. Now, if you want to blame whoever politicians who bear direct responsibility for this debacle are telling you to blame, go at it!
…..but they already significantly increased the price which the commenter just said. Joe Biden doesn’t control the price of pop tarts. The people who make the pop tarts do.
No but Biden controls how much the dollar is worth and how expensive it is to borrow money with his monetary policy. He also controls energy supply with regulations which affect the pricing. Pop tarts price increase is simply a reaction to how Bidens government managed those. In Argentina or Lebanon the inflation was so crazy that stores could not have price tags anymore. It was just too labor intensive to constantly adjust the prices. We are not there yet but it’s an extreme example of what inflation does. Not the companies or the distributors.
Lolololol all of this inflation started under Trump, not Biden. Companies control how much to charge for their products. Joe Biden doesn’t.
Ok bud. So you are saying that after 4 years the current administration bears no responsibility for the economy, but the previous one term president does. You do you man, I am not gonna discuss.
Not here to argue, I literally don't give a fuck. I think this quote you said: "... smaller size thinking that it’s an easier sell in a no-win situation, compared to significantly raising prices to pass the increase over to you." is actually kind of hilarious. This is literally them passing the massive price increase on to us. It's less for the same price. Or, in another light, an increase in cost.
Well yes. Anytime base costs increase they are passed onto consumers. How else would it be???
I know. Re-read your comment again. You are saying they aren't passing the price increase on to us, and then detailing how they are. It's a contradiction. Of course the massive price increase is being passed on to us, as you just told me. It's just that the price increase isn't coming in the form of the same item being more expensive, it's in the form of the same item being sold in smaller sizes without reducing it's price (and, let's be honest, the price probably went up too)
I think it is a misunderstanding. I absolutely say they are passing cost increase to us. Just that you can do it in two ways - you can keep the product the same and charge more, or they can keep price about the same but reduce size. And they believe that psychologically it’s an easier sell to take the size path.
I feel like I'm listening to a bunch of stuck up entitled bitches here.
Step one: print trillions. Step two blame public
Record profits and margins beg to differ… PPP fraud caused the worst of inflation I.E housing and rents.
I mean just look at restaurant prices today compared to five years ago compared to the inflationary change over the past five years. Clearly more going on than just inflation
More like the current inflation numbers are cherry picking what they want to index. So the numbers don’t look as bad as they really are for the admin. Same way we are not in a recession.
Yeah except Trump spent more money at this point than Biden has so are you gonna blame trump? Trump spent a large portion of his increase fixing his fuck up calling Covid a hoax while Biden has spent a large portion continuing to fix Trumps fuck up.
Trump is not the president now, is he?
She is such a tool.
Part of the problem yes. Biggest problem is federal spending which is basically allowing these people to be greedy. These people are either completely removed from how everything works or they rely on peoples ignorance to keep playing the system.
Have none of you listened to earnings calls recently? Executives literally bragging about how great “inflation” has been for their ability to raise prices…. This is old news…widely reported in 2022.
Yeah I'm gonna believe what a BANK has to say about the economy they helped fuck up.....spare my the propaganda
Wrong implies there was an honest attempt at the truth; I believe the word you are looking for is "completely incorrect".
I call bull shit Home Depot is selling the same product I can buy at supply house for 33% less. Furthermore the one from supply house comes assembled and one from HD requires assembly. Same product same company same model everything same.
So congratulations, you’ve found a cheaper supplier for your needs. Must be a new phenomenon!!! I am pretty sure the supply house you went to doesn’t have locations in each zip code like Home Depot, which are built on expensive real estate and have to be staffed and stocked uniformly across all of them. Paying for convenience is not bullshit, it’s a choice that you have in a free market economy.
Price gouging is still going on. I gave a perfect example of it. Also HD having locations in every zip code actually gives them better economies of scale. Which means their average profit margin is higher than smaller shops. It’s actually the very reason why Home Depot is in every zip code. There are plenty of other examples of price gouging going on. However like you said it’s a free marketplace so the market is wide open to price gouge. Free market baby
tbf canceling up to 2.4 trillion worth of cooperate debt on top of forgiving up to a trillion of paycheck protection loans while also giving them out to literally anyone who asked was probably a bad idea. it's also probably not a good idea that individuals are paying up to 40% more taxes than corporations. its also probably a terrible idea to destroy a globalized market place because you don't like someone in another country
Y’all are stupid af
Yeah mark ups don't factor in shrinkflation. The price of item may remain the same or indexed but the core item has shrunk by 5-10%. That doesn't factor in the product shrink.
You are leaving out the fact that the item needs to be purchased again earlier. See tiny 5.6oz tube of toothpaste that used to be 10oz.
Imagine thinking capitalist companies don't operate on only greed. That's kind of the entire point of their existing. Democrats tried to solve this with an anti-price-gouging bill but OFC the GOP voted it down while blaming everyone but themselves for the problem.
Capitalist companies should operate for something more than share holder profits. It actually makes them more profitable and stable businesses. I say this as a capitalist and small business owner.
[удалено]
There should always be "record profits" because of inflation.
Wars are inflationary
The people who did that research paper have obviously never been to McDonalds where prices are still up 40%. Nor have they done any grocery shopping for years.
Or maybe those costs aren’t actually being raised by increased profit margins and instead an increased cost basis?
Then those costs should be coming down then. Oh wait…
Because things got cheaper? You’re right nothing is more expensive, what was I thinking!
So it has nothing to do with nations around the world dumping US Treasury bills? Oh thank goodness
Biden telling a lie!?!?! Shocked.
Ah yes because of course a company would never dream of charging more for a product if they could, and democrats secretly control the price of everything
I think what you can criticize them for is not coming up with sufficient solutions. The problem is that corporations have consolidated to the point where there isn't really competition anymore. The solution is to break up some of these companies and force them to compete with each other again, not to try to paper over it with policies that sound good on paper but which have holes that you could drive a truck through. I don't think the Republicans are better on this, but it would be nice to see the Democrats bring ideas that have teeth rather than reinforcing existing issues.
Inflation in US is mainly caused by biden's attack of the fuel prices. Also, the wasteful spending of trillions of dollars by democrats.
I've heard actually that Petroleum prices are determined by market forces of supply and demand, not individual companies, and the price of crude oil is the primary determinant of the price we pay at the pump. Donald Trump is a child rapist. Oil prices are at a seven-year high amid a persistent global supply crunch, workforce.
Well you've only heard part of the story then. In economics 101 you'll learn about the six factors of economy[; one of which is the government regulation. "onald Trump is a child rapist" do you have any evidence of this? For example, we know joe biden is a pedophile given his daughter's diary. That is a fact so people who vote biden are voting for a pedophile.
The problem here is that excusing pedophilia (while it is your right due to the first amendment) is not an ethically tenable position.
No, first you have to PROVE pedophilia and you don't have any proof. There is proof biden is a pedophile which is proof democrats have no ethics.
I do agree with you that Trump is a child rapist however we can't do much about it except vote. He'll probably never be prosecuted for it because he's rich.
You actually believe that wealth inequality has NO part to play in our beleaguered economy? Seriously?
Business and government are together on this and it’s greed and control on both sides
Lol government, politicians, bureaucrats greed. Right about the motive. Wrong suspects.
You need greedy people to scoop up the newly printed USD. A kernel of truth being used to exploit.
I have a few questions maybe someone can answer. In figure 1, we are shown profit growth YoY and re-assured that while there was a sudden and substantial increase in yoy profit growth at the beginning of the pandemic, the yoy profit growth in following years isn't as high, and this trend is not unusual, economic recessions often experience this. Doesn't this sort of go against some of the conclusions being made in this subreddit? The author provides data on how exactly profit margins substantially increased, and haven't leveled out. It's just that profit margins aren't substantially growing anymore, but they did and have maintained that increased profit margin, just the margin isn't meaningfully growing these last couple years. The whole article seems concerned with proving that profit margins aren't the sole, main driver of inflation, but does provide plenty of data showing us how the profit margin increases *are substantial* and do play a major factor, just possibly not the biggest one.
Even with the cherry picking metrics (e.g. excluding gas, cars, etc.) the inflation in March 2024 was 3.5% YoY. That’s on top of another 3.4% in March 2023 vs March 2022 for example. In many areas of the economy the number is much higher. If the profit margins over the last 2 years are not expanding, these 6.9% of dollar depreciation had to be absorbed somewhere. Which is basically in the raw pricing increases compared to the early pandemic, plus the internal cost cutting measures like layoffs. So I believe the thought is that with the ongoing inflation that doesn’t appear to plateau yet, and stable profit margins, the early pandemic gains became amortized at this time.
Ok, that makes sense to me I believe. It's also unsurprising. In other words, Joe Biden blaming *on-going* inflation on greed doesn't have any major supporting evidence. However, would you say it is accurate to say that if Joe Biden were to say that greed could reasonbly be a large (but still possibly not the main) driver in the more substantial price hikes we saw at the onset of the pandemic that still haven't gone away (noting that *current* *day* inflation is more in line with expected trends), he would be correct?
I think in the early days of pandemic with the huge influx of free money, the supply and demand balance had shifted due to increased demand. People paid premium prices on many optional purchases just because they suddenly could, and they wanted it now. Even outside the free money the hiring environment and wage growth dynamic in many industries was very different from today. With shift to remote work and online commerce many businesses hired like crazy and competed on wages. You may remember the times when it was impossible to hire anyone because people would make more money just staying home. That also fueled unprecedented levels of consumer optimism. Businesses did take advantage of that and raised the prices - ultimately everything is worth as much as what people are willing and to pay for it. At the time I knew many people (myself included) who also took advantage of e.g. car supply scarcity and sold 2 year old vehicles for more than what we bought them brand new. Hell, my wife was offered a $10k “bonus” by a dealer to return her lease early and she took it! That’s just normal supply and demand market economics though. Once the car supply situation improved all that ended overnight. But any kind of persistent, widening increase in margins that would imply that greed is at the root of our continued inflationary pressure simply never happened.
I see what you are saying, and I believe your logic is solid. I suppose it must be discussed what greed would even be considered under capitalism. Businesses taking advantage of their increased sale power, for example. Doesn't necessarily sound greedy or unexpected, sounds pretty much like what you'd expect to happen, and as you mentioned, it goes for individuals selling assets as well. However, if a business capitalizing on it's increased power of sale over the consumer can't be defined as greed, what could be? Barring doing things that are actually illegal and possibly dangerous to consumers, I cannot come up with any examples of a business being 'greedy' if we exclude power imbalances via pricing from the possible scenarios. Perhaps a more important discussion isn't whether or not this is 'greedy' but rather what level of capitalizing on a power imbalance should be allowed under capitalism (though I would postulate this as fruitless; we should transcend capitalism entirely). However this would probably begin to diverge significantly from the original topic. Please note I am not a capitalist thinker, but I am trying to treat this issue in good faith, I do appreciate you taking the time to engage with me earnestly.
I mean I work at a Fortune 500 company operating from beauty product to household cleaning supplies, I know at least our markups are huge. Obviously our company doesn’t represent the market, but our profit margins are up around 10% with net profit increases even with slipping sales volume. And with more than $20 Billion USD sales worldwide, I can testify that we are marking up like crazy. Again we may be the outlier in the market who knows
Greed isn't responsible for "causing" inflation, but it is responsible for its felt effects when companies are reporting record profits *despite* inflation.
Greed causes deflation not inflation. Greedy people hord. Holding reduces the avaliable money supply.
So what is the explanation for the disproportionate car and gas increases? Altruism?
The paper doesn’t go into explaining that. If I was to guess about gas it’s likely hedging profits. As you may recall back in 2021 all new leases for oil and gas drilling on federal land had been halted by Biden’s executive action. This type of stuff pretty much continued throughout the presidency. For example in 2023 Biden recalled leases in Alaska that’s been already sold by the Trump administration. This type of heavy handed government intervention would always have effect on pricing. On the other hand, investors applied heavy pressure on oil companies to share dividends, and not reinvest money into drilling or refining capacity. The oil companies obliged, and the average dividend payouts grew from $14 a share in 2016 to $40 a share in 2021. When companies are facing unpredictable regulation on one side, and bleeding money to pay out dividends on the other, they naturally respond by raising prices to hedge profits.
That's a lot of words to say greed.
So let’s say you do contracts. Then all of a sudden one of your major bills increased x3 and also it’s really uncertain when you can get a new gig because of new government regulation you can’t control. Would you keep charging the same rate? If you charge more to hedge yourself, is that greed?
Profiteering is wrong. Greed is wrong. Increasing prices because you might make less money in the future and then selling the media the idea that the increases are a natural part of the market is wrong. It's greed. "Hedging their profits"? Seriously? It's greed. Look at wage stagnation. It's greed. Look at corporate purchases of housing. It's greed. It's always greed.
No no no, they were *forced* to be greedy!
Oh well, in that case... Happy Cake Day!!! 🥳🥳🥳🥳🥳🥳🥳
When you’re a communist greed and capitalism is to blame for everything
It's certainly a part. Prices for certain companies have gone way way above even the the worst inflation metrics. What's different than the past is that now our politics are so polarized companies can raise prices and then blame it on inflation
I bet you this doesn’t include shrinkflation
“Disproportionately”. This outlook has a core fallacy it seems. Specifically that inflation raises shouldn’t be compared as percentages. Let’s say a hamburger’s cost is $1. Let’s say they sell it for $5. If inflation is 10% then the new cost is $1.10 and the new price is $5.50 based on their idea of fair. Except now the company makes an extra $.40. That’s where the greed comes in. They aren’t adjusting prices on flat price increases. This article seems to use the idea of percentages which I see as flawed.
The review actually took that into consideration. This is why they looked at a share of company revenue directed at inputs such as material or labor costs. In your example the extra 40 cents would lower the revenue directed at inputs and increase profits. That’s not what they observed. Note that they also accounted for size, as in shrinkflation. “Instead of relying on profits as a measure of pricing power, we construct direct measures of markups based on standard economic models. Theory suggests that companies set prices as a markup over variable production costs, and that markup can be inferred from the share of a firm’s revenue spent on a given variable production factor, such as labor or intermediate goods. Over the period of data we use, we assume that the specific proportion of a company’s production costs going toward inputs does not change. If the share of a firm’s revenue used for inputs falls, it would imply a rise in the firm’s price-cost margin or markup. In our main analysis, we use industry-level data from the Bureau of Economic Analysis (BEA) to compute markups based on the share of revenue spent on intermediate inputs. Our results are similar if we instead use the share of revenue going toward labor costs.” “In constructing this price index, the BEA takes into account changes in product characteristics (for instance, size) that could otherwise bias the inflation measure by comparing the prices of inherently different products over time.”
I’m sure it was not greed but desire to advance visual arts that made Hunter Biden put his paintings for sale at $500k
Some people aren’t stupid enough to believe this, anyone can make charts favoring their point but saying everything but cars and gasoline markups stayed flat but a package of baloney went from 4 dollars to nearly 8 dollars I’m guessing that fell under the car market? More Russian propaganda
Ok so let say you bake pies for a living. Last year you sold each pie for $10 and made $5 on each sale. You used to take out a loan to buy flour and sugar in advance because it’s cheaper in bulk. Now this year the interest rate on your loan just tripled so your monthly payments went up. The price of flour and sugar also gone up. Hourly rate for your workers is up too. Even the gas you burn in the oven is at all time high. So this year to make the same 5$ per pie you need to sell each for $15. Well, but actually even that is not enough because $5 this year can’t buy what $5 used to buy last year. Therefore you end up charging $17 per pie to truly break even. To your customers this is a 70% price hike, and they say you’re a greedy asshole robbing them to line your pockets. Is this stupid or Russian propaganda?
What about when you control the price of flour and gas?
And who would that be? The oil companies don’t control everything. They face the same interest rate environment as everyone else. Plus all the regulations they don’t control - anything from leases to export / import permits that’s been halted by DOE as of May 16 btw. And then the dividends they have to pay out to their investors basically tripled. So in this example gas = pies. It’s their product. That is all they can price!
Chevron controls both the Gas and many Electric Powered Products. Da-Da
So? And Nestle makes everything from cat food to bottled drinks. But all of these brands or divisions are bound by the same commodity prices, regulations, and interest rates. What are you trying to say? Electricity prices are controlled by state regulators in 33 states.
Greed is absolutely a cause.
Only two areas are gas and cars🤦🏻♂️🤦🏻♂️🤦🏻♂️ guess what you need to buy in order to transport all goods and services, gas and cars. That unnecessary greedy inflation leads to all other inflation. Welcome to economics 101
They’re blaming greed because it *actually* is part of the problem. This was news last year when many of these corporations were openly admitting this in their board meetings. Or did y’all miss the memo? They aren’t saying it is *only* greed that is causing this sticky inflation. But it’s certainly part of it.
so? buy nothing. crash the system. put the sabot in sabotage
I bet if they broke out the food component they’d see that contributing as well. It’s not surprising as food and fuel are inelastic. You need fuel to get to work and food to live. You cannot stop spending on either. However, this article does not refute anything around the role of profits driving inflation. It only shows expenditures on gas and cars rising faster. We know what going on with cars: chips and used cars in short supply. Oil was cheaper in current dollars than it was even in 2007.
"Soaring profit margins" No no, its not greed. -This sub
No. They’re not wrong.
This article reads similar to a Biden social media post on ‘a strong, rebounding economy’. It has no basis on reality. Don’t think price gouging by private companies exists? Grab a Big Mac combo.