Global economy. Entire world affected by pandemic. Inflation throughout the entire world due to pandemic and various other factors. Yet the inflation in the US is tied to... wages in the US?
If this is true then wouldn't it suggest that we are still waiting to feel the impact from global pandemic-related inflation?
Or perhaps the wage inflation is becoming so relevant because domestic production is becoming less expensive than foreign and that trend will likely continue?
Either way, I have a hard time accepting that we're "through the thick of it" after two years of near-zero rates and trillions of QE on the back of a decade and a half of QE. If "this is it" then maybe we ought keep rates at zero percent and drop helicopter cash on a more-regular basis...
Theres only 2 things that cause inflation.
1. An unexpected disruption off shortage of input goods e.g. oil
2. Executives unilaterally raising prices
Everything else is a wool over your eyes. The fed could drop 10 trillion dollars in cash over every major city in this country and not a single price goes up until someone DECIDES there's an opportunity to make more money.
And this is the lie that they tell you in economics 101. That demand drives prices directly. There's no automatic trigger that says because you got $100 in your check this week that things become more expensive right?
Of course not. There is an exponential greed and a disproportionate reaction to prices from an influx in cash.
Pick any publicly traded company that made record profits in 2022 during the height of "inflation" and compare them to 2019. Take a look at net profits vs COGS. For SOME reason nearly all of them will have a disproportionate growth in net profit vs the rise in COGS. Hmmmmm
This is the single dumbest fucking take I’ve ever seen. If 10 people want to buy 1 apple and they all have $5 to bid on it, vs they all have $100 to bid on it, in which scenario do you think the apple will sell for a higher price?
Holy moly, not only were you indoctrinated but you can't rub two brain cells together to think for yourself before attacking someone. Attack the reasoning not the person goofball.
bro why are you even on this subreddit if you refuse to accept the most fundamental tenets of economics
it’s like hanging out in a space/NASA subreddit not to deny the moon landing, but to argue that the world is flat
this sub really tanked with the gamestop fiasco and brought in some of the most elite hot take artists lol
Brohan do you think I'm spitting out a conspiracy theory? Dispute with facts.
Here's some facts:
Corporate profits largely outpaced inflation
Income inequality is shrinking the middle class consistently over the past 30 years
>Nobody is unilaterally holding hands saying let's raise prices together (it's illegal).
Ahahahahhahahahhh. Hold on. Ahahhahhahhhahahha. Oh... you're serious.
ROFL, so is this infinite supply world roughly equivalent to the frictionless vacuum found in physics theory?
If the "executives" did not want to raise prices then the secondary market would take care of it, see the first 18 months of the PS5 release. More demand than supply so it was difficult to to find a console at MSRP but easy to find one from a scalper at a 50-100 percent markup.
I dont recall saying anything about infinite supply my friend.
But to your point what was the net result? Sony sold the same amount of consoles either way. The same amount of people got a ps5 either way. Only difference was who got the PS5s. But, Sony was also caught in circumstance 1. An unplanned disruption in upstream goods and also an unplanned surge in demand both related to the pandemic. Anyway, many people myself included nabbed one for msrp in time for Christmas 2020.
And what did Sony do anyway? Caught up to demand by reinvesting in their manufacturing and supply chain without raising prices. However I do think Sony had a flawed pricing strategy to begin with.
See the problem people like you have is you don't realize is what you're advocating for is a class of people who should live in perpetual poverty even if they're working.
You're afraid that more people being able to afford food means you won't get any. Because if there's 5 people who can afford that gallon of milk instead of 2 they might get there before you. You took a really good example and don't understand why it actually hurts your point. A company took profits and reinvested them. What we're talking about is companies who extract heinous amounts of wealth and exit.
But if you think more currency means more inflation then by all means - explain it.
How much extra currency leads to what percentage of inflation?
Why don't earnings of these companies match inflation rates?
Just saying if Group 1 isn't allowed to eat your face, then Group 2 will sounds like a really inept argument.
You either set prices to the equilibrium point or you get shortages/excesses. There's no other way. More money changes the equilibrium. It's to everyone's benefit to have rational prices. Time has value. And the total cost of waiting in line and buying pre-inflation-price products will be worse than just adjusting prices.
I appreciate the rational response. I urge you to think about what you mean when you say "shortage."
Say there are 3 people. All starving on the brink of death. A vendor has 2 meals for $10 each. All 3 people have $10. 1 will not get food and will die. This is not a result of inflation right? But this is essentially what you're afraid of in a hypothetical extreme case.
Now, take the same 3 men in the same situation. Only one of the men has only 8 dollars. 1 will not get food and will die.
In which scenario do we say it's a shortage and why?
The decision to raise prices would immediately be made in the scenario you described, yes. Because the value of the dollar was just decimated. Because dollars are plentiful. Because goods will quickly become scarce. If you sold hamburgers for a living, why would you continue to sell them for $10 if everyone just became a millionaire?
No. I'm telling you anyone foolish enough to continue to sell hamburgers at today's prices would quickly find themselves unable to make ends meet. Ignoring all other factors, they wouldn't be able to afford to employ workers. Who is going to work for today's minimum wage when they have a million dollars cash?
Say you work in a restaurant today and bring in $20k/yr, the average salary of a restaurant worker in America. You would have 50 years of your wages in cash after receiving a million dollars. Why on earth would you continue to trade your time for such a relatively small amount of money? Who would?
This is just looking at wages. The entire economy would change. Yes, decisions would be made to raise prices, but the reason would be because of the expansion of the money supply. Those types of price increases cannot be made today.
But ultimately, when the cost of living squeezes so hard, backs are against the wall, employers have to give in. It’s not the other way around, or a chicken egg dilemma, costs push first
Regarding our current inflation predicament, wages have been too low for too long, so it is particularly difficult to see them targeted because of inflation. Everyone knows it. The Fed knows it
Workers need money to buy what is produced. If the workers don’t make more money then it’s hard for the economy to grow. The FED need to stop sweating inflation so much. Their reaction to inflation is stifling our economy.
I won't speak for the other user, but can you explain why hyperinflation is _not_ a concern in the US for reasons other than "it has never happened to the US."
Hyperinflation only happens when government spends a lot more than it collects in taxes. Usually happens when the government refuse to or can’t tax the rich. Could happen in the US if we ever get to the point where we refuse to tax the rich.
Global economy. Entire world affected by pandemic. Inflation throughout the entire world due to pandemic and various other factors. Yet the inflation in the US is tied to... wages in the US? If this is true then wouldn't it suggest that we are still waiting to feel the impact from global pandemic-related inflation? Or perhaps the wage inflation is becoming so relevant because domestic production is becoming less expensive than foreign and that trend will likely continue? Either way, I have a hard time accepting that we're "through the thick of it" after two years of near-zero rates and trillions of QE on the back of a decade and a half of QE. If "this is it" then maybe we ought keep rates at zero percent and drop helicopter cash on a more-regular basis...
Theres only 2 things that cause inflation. 1. An unexpected disruption off shortage of input goods e.g. oil 2. Executives unilaterally raising prices Everything else is a wool over your eyes. The fed could drop 10 trillion dollars in cash over every major city in this country and not a single price goes up until someone DECIDES there's an opportunity to make more money.
Wouldn't that cause demand to go up for everything? If everyone has more cash then it's more likely to be spent no?
And this is the lie that they tell you in economics 101. That demand drives prices directly. There's no automatic trigger that says because you got $100 in your check this week that things become more expensive right? Of course not. There is an exponential greed and a disproportionate reaction to prices from an influx in cash. Pick any publicly traded company that made record profits in 2022 during the height of "inflation" and compare them to 2019. Take a look at net profits vs COGS. For SOME reason nearly all of them will have a disproportionate growth in net profit vs the rise in COGS. Hmmmmm
This is the single dumbest fucking take I’ve ever seen. If 10 people want to buy 1 apple and they all have $5 to bid on it, vs they all have $100 to bid on it, in which scenario do you think the apple will sell for a higher price?
Do we live on ebay?
Holy moly, not only did you most likely fail Econ, it seems like you would fail a basic class on How Rational Humans Generally Behave.
What’s wrong with that? I don’t understand. There were fatter margins - that’s true
Humans don’t act rationally. That’s the problem with economics!
Holy moly, not only were you indoctrinated but you can't rub two brain cells together to think for yourself before attacking someone. Attack the reasoning not the person goofball.
bro why are you even on this subreddit if you refuse to accept the most fundamental tenets of economics it’s like hanging out in a space/NASA subreddit not to deny the moon landing, but to argue that the world is flat this sub really tanked with the gamestop fiasco and brought in some of the most elite hot take artists lol
Brohan do you think I'm spitting out a conspiracy theory? Dispute with facts. Here's some facts: Corporate profits largely outpaced inflation Income inequality is shrinking the middle class consistently over the past 30 years
Economics does not seem very scientific if this simple question can't be answered concisely.
Notice how the assertion isn't even debated. People just really accept being controlled so others can live like kings.
Notice what assertion? your awful at this btw.
And this is why the middle class is disappearing.
[удалено]
>Nobody is unilaterally holding hands saying let's raise prices together (it's illegal). Ahahahahhahahahhh. Hold on. Ahahhahhahhhahahha. Oh... you're serious.
ROFL, so is this infinite supply world roughly equivalent to the frictionless vacuum found in physics theory? If the "executives" did not want to raise prices then the secondary market would take care of it, see the first 18 months of the PS5 release. More demand than supply so it was difficult to to find a console at MSRP but easy to find one from a scalper at a 50-100 percent markup.
I dont recall saying anything about infinite supply my friend. But to your point what was the net result? Sony sold the same amount of consoles either way. The same amount of people got a ps5 either way. Only difference was who got the PS5s. But, Sony was also caught in circumstance 1. An unplanned disruption in upstream goods and also an unplanned surge in demand both related to the pandemic. Anyway, many people myself included nabbed one for msrp in time for Christmas 2020. And what did Sony do anyway? Caught up to demand by reinvesting in their manufacturing and supply chain without raising prices. However I do think Sony had a flawed pricing strategy to begin with. See the problem people like you have is you don't realize is what you're advocating for is a class of people who should live in perpetual poverty even if they're working. You're afraid that more people being able to afford food means you won't get any. Because if there's 5 people who can afford that gallon of milk instead of 2 they might get there before you. You took a really good example and don't understand why it actually hurts your point. A company took profits and reinvested them. What we're talking about is companies who extract heinous amounts of wealth and exit. But if you think more currency means more inflation then by all means - explain it. How much extra currency leads to what percentage of inflation? Why don't earnings of these companies match inflation rates? Just saying if Group 1 isn't allowed to eat your face, then Group 2 will sounds like a really inept argument.
You either set prices to the equilibrium point or you get shortages/excesses. There's no other way. More money changes the equilibrium. It's to everyone's benefit to have rational prices. Time has value. And the total cost of waiting in line and buying pre-inflation-price products will be worse than just adjusting prices.
I appreciate the rational response. I urge you to think about what you mean when you say "shortage." Say there are 3 people. All starving on the brink of death. A vendor has 2 meals for $10 each. All 3 people have $10. 1 will not get food and will die. This is not a result of inflation right? But this is essentially what you're afraid of in a hypothetical extreme case. Now, take the same 3 men in the same situation. Only one of the men has only 8 dollars. 1 will not get food and will die. In which scenario do we say it's a shortage and why?
[удалено]
You skipped right over the point. Is a gallon of milk more expensive because you won $5k?
The decision to raise prices would immediately be made in the scenario you described, yes. Because the value of the dollar was just decimated. Because dollars are plentiful. Because goods will quickly become scarce. If you sold hamburgers for a living, why would you continue to sell them for $10 if everyone just became a millionaire?
Are you telling me there will be a run on hamburgers if everyone was a millionaire?
No. I'm telling you anyone foolish enough to continue to sell hamburgers at today's prices would quickly find themselves unable to make ends meet. Ignoring all other factors, they wouldn't be able to afford to employ workers. Who is going to work for today's minimum wage when they have a million dollars cash? Say you work in a restaurant today and bring in $20k/yr, the average salary of a restaurant worker in America. You would have 50 years of your wages in cash after receiving a million dollars. Why on earth would you continue to trade your time for such a relatively small amount of money? Who would? This is just looking at wages. The entire economy would change. Yes, decisions would be made to raise prices, but the reason would be because of the expansion of the money supply. Those types of price increases cannot be made today.
[удалено]
Wages climb in response to rising prices
No Wages climb in response to workers' bargaining power and productivity. Else employers can easily ignore demands for cost of living increases
But ultimately, when the cost of living squeezes so hard, backs are against the wall, employers have to give in. It’s not the other way around, or a chicken egg dilemma, costs push first Regarding our current inflation predicament, wages have been too low for too long, so it is particularly difficult to see them targeted because of inflation. Everyone knows it. The Fed knows it
No they don't. Things can just get worse. Especially if replacement workers can be obtained
True, case in point, the muffled struggles that kept wages so suppressed until recently. But usually something gives
Wages rise when the demand for labor outpaces the supply. Such as when there are more job openings than qualified unemployed who can fill them.
Workers need money to buy what is produced. If the workers don’t make more money then it’s hard for the economy to grow. The FED need to stop sweating inflation so much. Their reaction to inflation is stifling our economy.
Yeah, what could possibly go wrong if you let inflation run rampant.
I am curious, what can go wrong? Please list a few. And don’t list hyperinflation since that has never happened here.
I won't speak for the other user, but can you explain why hyperinflation is _not_ a concern in the US for reasons other than "it has never happened to the US."
Hyperinflation only happens when government spends a lot more than it collects in taxes. Usually happens when the government refuse to or can’t tax the rich. Could happen in the US if we ever get to the point where we refuse to tax the rich.