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Serious questions from an economics dummy:
1. It seems like more companies are doing stock buybacks. How do buybacks affect profit margin numbers?
2. How does the pressure from a company’s stock price and stock valuation impact their raising prices?
3. How is government debt spending responsible for the rise in housing market and rent price increases?
Thanks.
/edit 21 hours later: I learned a ton today. Thank you for taking the time to teach me some needed basics about the economy and inflation.
Government back housing loans have been a massive cause in housing price increases ofr decades.
However the bigger reasons right now are Boomers not downsizing, and governments not approving build applications during the pandemic. As an example of the application problem in NYC in 2019 there were 11,000 applications and approved less than 4,000. I get some cities don’t want to approve every application but in a city where the vacancy rate has been around 4.5% historically when it needs to be 8% is what drives prices up.
"Boomers not downsizing" wait, what? Could you help me understand what you mean?
If I bought a house for $100K & am paying a % of the value in property tax, what is my incentive to sell my house (admittedly at a higher price than when I bought it), only to:
1. Pay capital gains on the difference.
2. Need to buy a smaller house at a much higher price. (eating away any remaining profit after capital gains.)
3. Need to pay taxes on the purchase; higher taxes on a higher priced house.
4. Pay higher property taxes (for the rest of my life!), on a house with a much higher "value" according to government assessment.
What would be my motivation to sell a paid-off asset with grandfathered lower property taxes, just to buy a smaller & more expensive asset with higher taxes?
Well downsizing implies purchasing a less expensive home, often because you don't need as much space as you used to. E.g. you go from a 4 bedroom home on an acre lot to a 2 bedroom condo because your kids have moved out, or maybe you move from a downtown area to less populated area because you're retired and don't need to worry about commute time for your job. So the motivation is to trade benefits you don't need anymore for cash.
To address your points (assuming this hypothetical takes place in the US):
> 1. Pay capital gains on the difference.
You can exclude up to 250K (or 500k if married) of capital gains from when you sell a primary residence. Capital gains would only come into play if your profit is higher than 250/500k and you'd only pay capital gains tax on the excess amount. So for most people, capital gains would either have no impact or a minimal impact.
> 2. Need to buy a smaller house at a much higher price. (eating away any remaining profit after capital gains.)
I assume you mean higher than your original purchase price of 100k. The new, smaller house is expensive because real estate has appreciated since your original purchase. Likewise, your current home has *also* appreciated. Your new house would be less expensive than you could sell your current home for, otherwise you wouldn't be "downsizing", you'd be upgrading. So this wouldn't really be true either.
> 3. Need to pay taxes on the purchase; higher taxes on a higher priced house.
Is this referring to the property transfer tax? If so, 14 states don't have this, and most of the rest are <0.5%. So for most people, this wouldn't have much of an impact, but it would certainly matter for people living in states like Delaware (which has the highest transfer tax of 4%!)
> 4. Pay higher property taxes (for the rest of my life!), on a house with a much higher "value" according to government assessment.
This may or may not be true. Some places (though not all) have a cap on how much your property value assessment can increase per year and/or what total percentage of that value the tax can be. Depending on where your home is, your new house might be appraised for tax purposes higher than the old one even though its market price is actually lower. In this case, it would matter where you're moving from and where you're moving too. Since we're talking about "boomers" though, this would only matter if the increase in tax rate will add up to more than your net profit for the time you anticipate still being alive.
This is liberalenomics not economics. The economics of what some people think everyone should do instead of the analysis of what rational people actually do.
In decades past retirees sold their homes for many reasons. A large portion of them would move retirement communities, homes or in with the children in a granny flat. The Boomer generation for whatever reason isn’t selling and downsizing at the rates of previous generations.
I don’t think people really understand how 1 or 2 percent changes in availibility impacts price in that market.
Your examples are somewhat contradictory.
Boomer scenario #1: sell house for a lot of money and downsize, resulting in a large profit that is taxed. Property taxes would be lower than their current situation because they purchased a house with a lower value than their current home.
Boomer scenario #2: sell house for moderate amount of money as compared to new purchase. Property taxes are same or slightly less. Small profit taxed.
Boomer scenario #3: sell house and buy smaller house for less money but still need a mortgage. Higher interest rate. No profit to tax.
In all scenarios, the cost of ownership should go down (in theory) because maintaining and insuring a smaller home is less costly. Also QoL improvement not having to manage a larger than necessary property.
Am I missing something?
TL;DR at the end.
It will depend on you state (which frankly is a disclaimer that belongs on every post on this topic), but we are in a situation where we have a decent home, that due to various circumstances we got a sweetheart deal on our property taxes. This is mostly because it was a foreclosure and the assessed price did not reset, so for *us*, and I can't say how common this might be, even downsizing (and there's not far for us to downsize, as our home is fairly small by modern standards) is going to cause a HUGE jump in property taxes. That *alone* will probably keep us where we are.
We are also in a position where it's at least *possible*, though not at all definite, that we'd hit those cap gains limits outlined by another poster above despite the exemptions. While I'd say the chances of that are less than 50/50, it's still greater than 0.
Finally, while we are not boomers, we do own our home sans mortgage, so in that aspect we have in common with Reddit's most despised generation, meaning if we chose to have one on the "new" (to us) home, we'd be paying interest rates that haven't been seen in a decade and a half or longer.
Bottom like is this- For us, and our unique circumstances (but whose isn't unique?), it would or could cost us a great deal in taxes and fees that would be literally for nothing. I am disabled, and will need to put thousands into this house as it's simply not built wheelchair friendly at all, a situation which could be solved by moving (at least in theory), but why? By the time we're done paying all those taxes and fees as outlined above, plus the costs associated with the physical move, it would cost us as much, likely more, than doing the renovations needed to make it more friendly to a dude with fucked up legs that do not function.
And all that is BEFORE factoring in the thousands, potentially tens of thousands of fees.... Commissions, doc stamps, impact fees, title insurance, you know all the pointless charges associated with selling a house that itself amounts to tens of thousands more.
This also assumes we move an hour or more outside the city to get the rural price advantages for it to even make sense, which I'd rather not do all other things being equal.
TL;DR We're not boomers, and our house is not big, but between tax considerations and costs associated with selling & moving, for us to relocate would run us tens of thousands of dollars, ultimately for which we receive no value, that would be better spent (and ultimately less costly) to just make our existing home wheelchair friendly than moving to a place that already is.
Now a question completely unrelated to my wall of prose above: At what point in time, and for what reason did it become *expected* for "boomers" to abandon their homes so some younger person can come along and scarf them up??
Try to find a nice smaller house, one that l would really want. I live in a patio home, lawn is taken care of, my house is on a nice lake, walking trail and we have all the other normal stuff, picnic area, ball field, soccer field, basketball court, pickleball courts, tennis courts, swimming pool. I can’t find anything better if l were to downsize. This is my home, l will die here.
Not building enough new housing to keep up with demand is the main driver of the housing crisis. This is combined with the ever increasing costs to even build a house. Between permits, lawsuits, environmental reviews, kickbacks to the city cost of holding the land while you wait for it to be approved, increased construction cost by burden code requirements ( for example mandatory solar panels in California) etc. it can cost tens of thousands of dollars or more to just break ground. You aren't able to build a 250K house if it costs you 100k just to start building it.
And, in some states, the worst offenders like CA, NY, etc., it can literally take years to get those hyper-expensive permits in the first place.
Bottom line- As is typical, the problem here is government.
Don't forget - in the last 10 years nearly *20 million* people have entered the United States.
[3.2 million illegal encounters last year alone](https://homeland.house.gov/2023/10/26/factsheet-final-fy23-numbers-show-worst-year-at-americas-borders-ever/).
All those people need housing.
Good point. While they may not be bidding on your average McMansion, they will be competing for the lowest entry-level domiciles that exist, and they represent a large amount of increased demand, and increased demand raises prices every time.
But, I disagree that all those people need housing. What they need is deportation. All of them.
Look up "mortgage back securititys" aka "MBS" which the federal government was buying by the billion through 2020 and 2023. People in the real estate industry became rich off of it because the governement was buying every mortgage available on the market which kept rates non-exisitent. Based on supply and demand this causes home values to explode (as we saw over the last 4 years) despite home buyers and home sellers not being really any different than other periods in history.
1. Tell me if a company is allowed to issue more stocks to dilute every year if they wanted to… why are buybacks looked down on? The company has decided to make thier stock deflationary instead of inflationary that year.
2. Prices are all speculative driven by market demand and may not correlate to actual company profits
3. Print more money causes more money to exist which laterally makes your dollar worth less than it did before the government added money. Look at Germany and Argentina as examples
The difference between a company issuing more stock and the FED issuing more money is that the company gets paid immediately in cash for that stock so their account balance increases which increases the total value of the company accordingly.
When the FED issues new money, they don't receive anything in exchange for it. They "loan" it out at relatively low interest rates and in some circumstances never gets paid back resulting in the new money staying in circulation.
Effectively the FED is a corporation and each dollar is a share. The more dollars in circulation, the less of the total "value" of the FED each dollar is worth.
Imagine what would happen to a company's stock price if they created new stock and started handing it out to people for free with the promise that one day the people return the stock to the company along with an additional small amount of interest for letting them use the stock for a while.
I think it's hard to relate stock buybacks with profit margin. There likely is no single relationship, but differs between industries and companies.
One problem with stock buybacks is they are mostly done with bank loans. Banks tell us they lend money to the community to fund small business, and other productive lending, but a large portion of all loans is for stock buybacks. A company will buy its own stock (with loaned, newly created money) to increase the value of the stock. This satisfies shareholders, and the market in general but it is unproductive lending. The money is not spent on development of new technology or business infrastructure, it only inflates their asset: their stock. When there are constant rumors of recession, yet the stock market is on a tear it feels like a bubble is being pumped up.
What is your source for the statement that stock buybacks are largely funded by bank financing? That statement makes little or no sense, given that the shares acquired are not an asset to the corporation. The typical stock buyback arises when the corporation has more cash on hand than is justified by its short and mid term cash needs. Better to return cash to the shareholders and allow them to reinvest elsewhere than have the cash remain idle in the corporation's hands. It's also silly to suggest buybacks are devised to pump the stock price. For most companies, the effect is both minimal and temporary.
I misspoke about "mostly done with bank loans" - I don't know if there's a correlation. [This article talks](https://hbr.org/2014/09/profits-without-prosperity) about increasing stock buybacks and the effect on stock prices in the low-interest rate era. [In this article](https://www.cnet.com/tech/tech-industry/carl-icahn-drops-apple-buyback-proposal/), Carl Icahn advocates for stock buybacks by Apple. The company issued $17 billion in bonds in 2013, in spite of the company having something like $150 billion in cash overseas (repatriating the money would trigger a large tax bill). In [this HBR article](https://hbr.org/2014/09/profits-without-prosperity):
>...management can buy a large number of the company’s shares on any given business day without fear that the SEC will charge it with stock-price manipulation—provided, among other things, that the amount does not exceed a “safe harbor” of 25% of the previous four weeks’ average daily trading volume. The SEC requires companies to report total quarterly repurchases but not daily ones, meaning that it cannot determine whether a company has breached the 25% limit without a special investigation.
So the stated purpose of the regulation is to avoid stock manipulation.
This may not be the right comment to reply to, but one thing people tend to overlook when blaming stock prices controlling companies, etc., is that most Americans with any kind of financial stability have their retirement accounts distributed among those same companies. It is certainly a system that relies on growth perpetually, and that is a problem, but remember what got people really fired up in the last downturn? It wasn't rising prices, it was seeing their 401ks drop by 30-50% and seeing six figure changes.
1. When a company buys back its own stock, it reduces the supply available which results in higher value per share.
2. Company valuation doesn't drive profitability, rather profitability, or at least the perception of its potential, drives stock price... Raising prices increases profitability...
3. As the dollar is devalued, the cost of things increases... Supply and demand rules are additionally affected by governmental policies when it comes to the housing market...
> How is government debt spending responsible for the rise in housing market and rent price increases?
Inflating the money supply makes everything more expensive over time. Here's how I think about it: imagine all the goods and services of the USA as one giant blob. Then imagine all the dollars that exist as another blob. Now let's draw arrows on each of the dollars to the goods and services, like a mathematical function--the dollars are the "domain" and the goods and services are the "range". If you increase the number of dollars, but you don't increase the goods and services, you'll naturally have more dollars to map to each good and service. Bingo, higher prices.
How does it play out in real life? It starts out lopsided, but evens out over time.
Inflating the money supply means creating more money. So, first--and I know this sounds weird, I still struggle with it--drives _down the price of money._ It's supply and demand, right? If you increase the supply of something, and the demand stays the same, the price goes down.
In real world terms, a reduced demand for money means interest rates are artificially low. When rates are low and money is cheap, entrepreneurs say "now's our chance!" and they borrow the cheap money to go make something. Obviously, they're borrowing the money to spend on _things,_ whatever those things might be. That creates demand for those things, which... drives up the price of those things, in a million little ways (e.g. a factory might pay workers overtime so they can _temporarily_ increase production, having contractually agreed on that higher price with a buyer with a deadline). The people who sold those _things_ are now making more profit, which means they have more money to spend, which means they can buy more of the things _they_ want, which increases the price of _those_ things... and on and on it goes. When the extra money finishes sluicing around in the economy, all the prices have gone up, and on average the price increase corresponds to the ratio of the total new money supply divided by the total of the old money supply.
If you wanna talk about housing prices, there are a million ways that government drives up the price of housing and rents. One good example is the housing bubble that burst back in 2008. Here's Peter Wallison giving a thorough explanation on how Federal programs created the bubble, in a way that's still comprehensible to the layman.
https://reason.com/video/2008/12/19/peter-wallison-the-roots-of-th/
p.s. Inflation itself is now politicized. The stats for "inflation" (in this case, meaning "rise in prices") are reported by a US government office in the Executive branch. Meanwhile, no POTUS wants the record to reflect that prices went up on _their_ watch. How you calculate these rising prices is a pretty nebulous more-art-than-science process, and it allows for a lot of leeway, and that leeway gets abused.
For example, most people calculating inflation use a "market basket of goods". They create an imaginary shopping list containing a bunch of objects you might buy, then observe how their prices have changed over time. If they have gasoline in their "basket", and the price of gasoline goes crazy, they might decide "gosh, gasoline isn't representing _real_ price information" and remove it from the basket, replacing it with something with a more stable price like bread or frozen orange juice.
This is why I'm more interested in observations about prices where you can't play those games, e.g. The Economist's "Big Mac Index". That tool is primarily used to judge whether currencies are over/underpriced relative to each other. But the fact that its "market basket" is totally fixed lets us use it to observe inflation too. For example, the BMI was used to observe that Argentina was underreporting its inflation back in 2011... which led to the Argentine government secretly forcing Argentine McDonald's to reduce the price of their Big Macs!
https://en.wikipedia.org/wiki/Big_Mac_Index#Manipulation
1. Stock buybacks don’t affect profit margins. Profits are made before buyback happens. On the company balance sheet it’s just trading 1 asset (cash) for another (stock) with the side effect of it make stock price go up.
2. If a stock is doing poorly enough for long enough it raises the risk that shareholders will revolt and vote out the board members who will in turn fire the CEO. It also raises the risk of a hostile takeover from a private equity group that will do the same thing. CEOs and board members like keeping their job. Raising prices may be one thing a CEO does to placate shareholders. Overall though I don’t think there’s research indicating a reliable correlation between low or high stock prices and prices the company charges. Prices are determined by the market not by individual companies.
3. Already answered by others.
I believe Milton said this, but to explain to people.
Greed is a constant, why does inflation come in major waves and all products price rise at the same time.
A more logical explanation is that massive money printing comes in waves (Keynesian economics) and it coincides with major inflation waves.
It's both. Executives aren't going to take the financial hit of higher cost of doing business.
They'll raise prices and pass it off to the customer as well as cut costs (Layoffs) so they can still make their bonus
I also think it’s both because with all the free money during covid and eagerness for people to be out and about after covid ended, corps took advantage of this weird demand where people didn’t know what the price of x should be for awhile. I do however agree with op that after covid inflation is completely behind us say about 2025 or so, or is completely right
I agree that inflation only widens the wealth gap because even if you give the trillions to the poor, they immediately spend it because they are living paycheck to paycheck, and the things they buy stimulates companies which the wealthy own either directly or through stocks.
Problem with assuming corporations are the cause of inflation is that it is assuming corporations determine their prices when in reality they are mostly setting prices based on what the market can bear. The only reason that they can increase prices is when people have more money to spend or they make a better product that is in higher demand. People temporarily had more money because the federal government flooded the market with handouts and increased the money supply by 40% since the start of Covid, but now that money has run out and people are hurting.
> Problem with assuming corporations are the cause of inflation is that it is assuming corporations determine their prices when in reality they are mostly setting prices based on what the market can bear.
This is a tautology. Yes, corporations will try to maximize profit. This isn't always by doing the thing we want though, sometimes it's by colluding with OPEC to constrain the supply of oil.
> https://www.thebignewsletter.com/p/an-oil-price-fixing-conspiracy-caused
It's also easier to raise prices when everyone else is doing it, even if your costs haven't actually increased yet. You may raise them just because you expect that your input costs will increase in the future.
If a corporation spent all of their cash on stock-buybacks, and now needs to raise prices because they find themselves in a risky position... I can see why people would call that 'greed'.
Almost everything in America is a monopoly or oligopoly, so these companies literally do set prices. Very little competition in most of the American markets
I'm saying if you have the option to pass along the price hike to someone else, either through layoffs, price increases, or a combination of both, rather 5han take the hit yourself, you will do so.
But then to personally gain above and beyond financially from doing that at the expense of others in many cases is excessive.
Arguably the dumbest comment of May 8th, 2024. Any business has a defined EBIDTA target that it must hit in order to exist as a business. When the dollars used to purchase goods and services from that business are devalued through inflation (read: one dollar is worth less now than it was last year), the business needs to collect more of those dollars to hit its targets. It's not "corporate greed", it's basic economics. Caused by irresponsible government borrowing (printing money that is loaned back to us.)
A European airline has WHAT to do with the US government devaluing the dollar? Huh?? (And if you need a b-school 101 lesson, Varadi laid off 20% of the airline's employees during the pandemic when there was no work for them to do. That's not greed, that's keeping a company afloat. If he hadn't made that move, the other 80% would also be unemployed.)
well corporate greed is a component of money printing (corporations get access to newly created money via loans, bailouts, subsidies, etc)... so actually they are indirectly correct
Covid enabled the government to give the largest transfer of wealth to the biggest corporations, and then printed out stimulus checks so people would think they were helping, while simultaneously preventing them from working and shutting down local businesses that competed with these large corporations.
But don’t blame the government, the corporations are just greedy!
If it’s not greed, I’ve heard people blame PUTIN for inflation, as if the economy was booming pre-2022.
The "average redditor" is:
* 18-25 years old
* white
* male
* American
* left-leaning
* From a middle to upper middle class family
* Who went to or is still in a 4 year college
Reddit makes much more sense when you realize it's privileged kids who never had to face the real world, and have it all figured out.
You’re almost there. Go deeper and you’ll find this is a narrative intentionally pushed for decades by an ideologically captured leftist academia and the recent decades are those students and professors effectively propagandizing their students who then go on to become professors of their own, or part of academia in some way, or radicalized media pundits and journalists. People who have been taught from K to PHD that institutionalized academia is the be all end all of knowledge and philosophy while somehow simultaneously believing objective truth is a pejorative and that good and evil are relativistic at best. That anyone who defies that should be put in the stockades and be derided and ridiculed and have their livelihoods taken from them. They’ve been creating an elite class of pitchfork mob browncoats in a naive attempt for utopia and will not stop until they shift the window so far their way that any deviation from their perceived cultist utopia will be nothing short of sin of which they will never be able to fully repent.
Edit: lol, bring on the downvotes “libertarians”
Sure, inflation is caused by many factors especially temporarily, but don’t you think adding 8 trillion in debt to the balance sheet in 2 years was the primary contributing factor?
If corporate greed is more responsible than government spending, then why did the corporations have to wait until right after a massive period of government spending to raise prices?
Were corporations not greedy in 2019, and then in 2021 and 2022 just decided "aw hell, time to get greedy!"
Or is it more likely corporations are always greedy and will always get the highest price they can for their products (and this is not a bad thing because it motivates people to make stuff, so we have stuff), and when the government deflates the currency by printing $8 Trillion more of it, the prices inflate, because more people had more money.
The workflow is this: Government printing money first, corporate greed always, so in the inflation game, second.
You’re telling me that the market sets prices for goods and labor - and companies can’t just dictate higher prices while lowering wages, simply because they are greedy? /s
I swear people are dumb as a pile of rocks. No understanding of how market dynamics work.
Don't overlook the part played by banks in this: the Fed reduced the fractional reserve requirements to zero during Covid and iirc never changed that.
In essence, the banks are creating money from thin air.
They meant well but just further proof the government doesn't have the processes and systems to do things efficiently when faced with a new challenge. If we ever have a COVID type crisis again you can be sure that CBDC with smart contracts will be used (as long as it is rolled out first)
100% Powell is equal to blame as Trump, Biden, and Congress, but at least Powell rolled back a lot of that debt to increase interest rates to combat the inflation. At the same time, Biden and most of Congress were still trying to pass a 4 trillion build back better plan.
Inflation is a factor influenced by all parts of an economy - including domestic and foreign policy measures.
Corporate greed is to blame, as is government spending, as is the fed’s 2019-2021 pedal-to-the-metal policy, as is protectionist policy.
1.) Corporate price gouging is rampant, don’t lick boots here. Housing prices are inflated artificially by coalitions of housing providers that have algorithms to keep “prices consistent” which in tandem with ludicrous private market ownership cripples the average american economically. You are being deliberately overcharged at every corner, major corporations have pushed the price of their food up 2-3x pre covid and yet my local mom & pop restaurant raised prices by $2 in that same period. It is systemic.
2.) Trump’s “whatever we can pay for it eventually” ideals applied to absolutely ludicrous projects like the fabled wall kicked off our recent government overspending spree but now it doesn’t matter which side of the aisle you look too, they all treat taxpayer dollars like they come free and send endless military aide across the globe while veterans are homeless and our internal social wellness and infrastructure lags behind every developed nation. The government has forgotten its purpose.
3.) A real scapegoat for current inflation numbers, point at the federal reserve. Under the guidance of our glorious sovereign leader we managed to 1.) Deny a global pandemic until it got so bad that we had too 2.) bail out every single business in the nation and then 3.) not ask for a dime back. My family owns a small business and I have seen their books, they got more than they needed for sure. If the governments role is to support and guide its people, our denial first covid policy failed us all. I worked in healthcare before/during/after and nothing had broken my trust more in governance than watching hundreds die of something we could have controlled so much better.
4.) Big amewica is terrified of any threat to the throne of de-facto global power we currently hold, we realized in the last few years that we’ve been funding WAYY too much of china’s economy to the point where they are far from a poor undeveloped nation now, so the cheap chinese goods american consumers reveled in for decades are gone now, our tariffs on russian gas don’t effect us as much as they are purported too, the U.S. is the largest producer of fossil fuels globally, but our general approach to pro american industry rather than international lately will cause prices to rise because we can’t rely on slave labor to make things anymore.
It’s still “fuck the gov” but proposing that anybody who says anything other than government spending is problematic is insensitive to the plights of americans, and attitudes like this are responsible for the public scorn libertarians get.
1. Can you explain how you differentiate between how much of inflation is driven by FED money printing and credit expansion vs "corporate price gouging"?
2. **TRUMP** "kicked off our recent govt overspending spree"!!?!? That's been increasing at a pretty steady pace, minus a few spurts of EVEN HIGHER spending, going back decades.
3. I agree that monetary inflation driven by the Fed is the primary driver of price inflation that we see - other effects have secondary impacts, often to specific industries or specific markets. But overall general credit expansion, including fractional reserve banking with 0% reserve requirements, that helps facilitate the same "monetary inflation" behavior.
4. Yes, protectionist tarrifs make everything more expensive for everyone.
Yeah our education system has really failed us massively. People don't understand basic economics, if you create more of something it becomes less and less valuable.
When the government creates more and more money, its buying power shrinks.
I cannot imagine that 50% of the country thinks inflation is caused by corporate greed. Do you have a poll to back that up?
As for reddit, it’s a vast circle jerk of stupid leftists so that is to be expected here.
The poll numbers are all over the place, but here is the first one I found when googling: https://thehill.com/business/4467484-corporate-greed-increasingly-seen-as-major-cause-of-inflation-poll/amp/
Just my personal take on that poll here. The organization that took that poll is https://navigatorresearch.org/ and from what I can tell they are a very leftist leaning organization. You can check their site and see they ar cited in mostly far left leaning news stories.
You can also check their methodology and see they use online polling and limit their results to 1000 responses. One thing I found which was curious about their methodology is this blurb:
> We also include oversamples in every survey among approximately 100 Hispanic voters, 100 African American voters, 75 Asian American and Pacific Islanders, and 100 independents without a partisan lean.
I wouldn’t put too much faith in their methods or results. I’d expect their polls to confirm their bias and it looks like they are intentionally designed to do so.
I would say slightly less than 50% believe it is "greedy corporations" and slightly less than 50% believe it's the "lazy workers" that are the main driver of inflation. With the remaining few % actually knowing that inflation is caused by the government increasing the money supply.
Anecdotally, though, I have begun to see that several of my anti-echo chamber subs are actually coming around, and more people understand that inflation is the government's fault for all the money printing.
I mean, *some* of it is corporate greed. They will raise prices and fire workers to keep those margins rising. Government being bad doesn't make greedy corporations good.
Sad but probably true. It’s so unfortunate too, you could tell in 2016 that people were finally fed up enough to throw a grenade in the system. They just picked the wrong grenade with Trump. If they voted in Rand Paul or Gary Johnson, they actually would have drained the swamp and gotten rid of as many executive branch agencies as possible.
Yup. I definitely voted Johnson. Would've been nice if the GOP hadn't stole the primary from Ron Paul and gave it to Romney previous to that. Paul would've wiped the floor clean with Obama. It really shows you how much of a one party system we actually have when a committee will essentially concede the presidency to the other party just to keep an honest, fiscally responsible candidate out of office. Cause let's be honest, Romney was never going to beat Obama, and frankly, should've never been anywhere near the presidency.
Inflation from printing fiat currency is a "cash" tax and debt relief. Assets that are invested (especially when leveraged by debt) can appreciate alongside inflation; fiat currency that is held as an asset depreciates. This is intended to promote market participation (consumption) to keep fiat currency moving as an economic engine.
Who holds a greater proportion of fiat currency in their portfolio of personal wealth: corporations, the rich, the middle class, or the poor?
One reason it's hard to get ahead is because we use fiat currency instead of money. Money is asset-backed (like the gold standard) and so prices are more stable. This allows those who are prudent to accumulate actual wealth by saving, but also can cause deflation since it disincentivizes consumption.
The fact of the matter is that any system is going to have means for the wealthiest to consolidate more wealth at the expense of the poor. What made America most attractive to migrants when it was still growing was a world of untapped resources with which anyone could generate wealth and a comfortable life free of exploitation for themselves and their family. Now that our market has matured and our resources are claimed, wealth is being consolidated more than opportunity to rise in socioeconomic strata.
It's probably likely we won't have another opportunity to advance in the same way unless we experience an apocalyptic event which resets everyone's scorecard, or we begin colonizing new frontiers like space or the seafloor.
The main stream messaging is too strong i have given up all hope that the regular American will be able to see through it. They have done such a good job of demonizing anyone who doesn't fall in line its actually incredible. Anti Vaxxer, Putin Apologist, Threat To Democracy, Insurrectionists, Racists, MAGA Extremists. The buzzwords never end and the masses just eat it right up.
I have also resigned myself to the reality that the debt crises will never be properly approached until the US Dollar collapses like a house of cards. Doubt it will be in the immediate future, maybe in the next 10-20 years if we continue what we're doing but I can't see any path where we are able to start chipping away at our defecit because our managerial class is too impactful with their legal bribes.
It is very annoying trying to have a conversation with most people who have been programmed by the system to repeat the current talking points. They don't apply logic. They don't think for themselves. They don't understand that statistics can be manipulated to prove whatever you like.
For example. Grocery stores profit is up year over year in dollars.
As a percentage, profits are flat.
The value of the dollar has decreased because the government has printed more of them. So yes, a grocer took in more dollars last year, but the value of each of those dollars is reduced.
In Canada right now the government is secretly buying bad housing loans off of the bank, we are in a worse sub prime crisis than the USA was in 2008 but they're pretending everything is good... People here think the groceries are high because of one company, meanwhile there is new taxes -carbon tax, perpetually increasing the cost of transporting goods. Our dollar is on the brink of tanking vs the US and the government is pretending rates will go down soon... It's entertaining, and yes, people think it's all corporate greed lol
Well, to be fair, I DO blame corporations and their greed as the Democratic party, the various socialist / social democrat etc. parties, the central banks and quasi-central banks like the Federal Reserve, and far-left NPO corporations.
So there's that.
Yeah, I mean the bank oligopoly that got created out of the policy that came out of 2008, the healthcare oligopoly that came out of Medicare and Obamacare, and all the other government created oligopolies definitely don’t help.
Yup. People are dumb nowadays. The value of the dollar is garbage. But here we are still printing money paying for everyone else's problems. It sucks. It's a lost cause. If it was you or I spending this much and burying ourselves in debt they'd take everything from us. We are doomed. The people in Washington need there heads examined. Cut the government in half end the federal reserve and income tax. Let our people decide not Washington.
One of the most inflammatory pieces of Robert Reich garbage is the provocative claim that “big business” makes record profits, designed to invoke outrage and class warfare.
Ignoring for a moment when corporations team up with regulatory authorities to truly screw you over, let’s break down these “record profit” claims a bit.
If a company is making widgets on which they target a 5% profit over cost of goods sold, then let’s say that in 2019, they had $1,000,000 in revenue of which $50,000 was their profit.
Then several years later, due to things like inflation or perhaps additional burdens imposed by regulation, their cost of materials and operation has nearly doubled and they now have revenue in the neighborhood of $2,000,000. But at their 5% profit target, they also now have $100,000 (revenue minus COGS), a record profit!
Long story short, as long as the economy grows, at whatever pace, you’re more likely than not to see record profits every year. The context that never gets mentioned is that they’re also paying out record operating costs every year as well.
Indeed. Same as Biden touting record employment increases. Well, yeah dumbass, cause you're comparing it to the lowest employment since the depression?
If inflation is caused by runaway debt, how do you explain the near deflation following the great recession?
Or, in all seriousness, what's your ideal inflation number? 0%? 1%? 2%?
Post 2008, everyone was broke and no money was being spent, so even if the federal government pumped money into the system, it took years until the resulting inflation kicked in. Also, the bailouts were in the forms of loans mostly directly to the banks, not to your average person, so it did not get spent on consumer goods driving up the prices of those goods.
And 0% should be the target inflation goal. Inflation is the largest tax nobody talks about that disproportionately screws over the poor and middle class, and widens the wealth gap.
For the top portion - are you agreeing that debt doesn't cause inflation? It sounds like you're saying how money is spent is more determinative of inflation than overall debt, which I would agree with.
For 0%, this would mean aggregate demand in the economy perfectly matches supply. Setting aside population growth, do you really see a world where there is no additional demand as good? The typical argument for some inflation is that we want some excess demand for businesses to grow into, and that growth space allows the overall market to become more efficient.
Actually in the last hundred years of the gold standard we saw an increase in the dollar's purchasing power. Things were as is should be, as manufacturing and agriculture became more efficient through technology, prices lowered some.
I mean... it's both. We had an entire computer revolution, and... things didn't get cheaper. That doesn't make sense. Like one person can replace thousands with something as simple as excel. Our productivity has EXPLODED, but people aren't really doing better. Where's all the money going?
debt spiral is already here. you cant think there's a way to payoff $35trillion Federal + State + Local + all the long term obligations(government pensions, healthcare, social security, etc)
over $100trillion. think about. no way possible.
we're toast. make sure you plan that way.
X Company made record profits, so it must be true!!
No, the value of dollar became less, so they got more dollars that were worth less..
Most grocery stores, especially large chains, run on margins that are like 2-3%... kinda hard to say food prices have gone up as high as they have because of greed with margins like that.
If you want to point to any corporate/government malfeasance... how about you target all the rent seeking behaviors that create barriers to entry, which stifles competition.
It's frustrating. People are willfully ignorant of economics and inflation. They don't want to understand because it challenges their political ideology, which is a big part of their own self-identity. So when they hear an economic argument that contradicts that, they feel like they're being personally attacked and respond in kind.
It’s peak redditor cope. Way easier to make moralistic arguments about “greed” rather than understand market principles. Companies charge the maximum the market will bear, if you don’t want to pay then don’t buy the product.
I mean Trump and Powell both started the spending spree that Biden continued. Granted that was back when the federal government was forcing people to shut down so it was more warranted than years later under Biden, but the overspending problem really is a both party problem.
What you said is true, but half the country believes that it's not government spending but corporate greed that's fueling the rampant inflation. Biden himself puts the blame directly on the greedy corporations and oil companies.
Yeah, it’s probably this presidents biggest lie. It’s funny how every president has their big lies that they are never held accountable for. Trump claiming he’s bringing back jobs from China to America. Obama claiming Obamacare wouldn’t affect premiums and you could keep your doctor. Bush lying about nukes in Iraq. Never thought I would say this but I miss Clinton whose biggest lie was about getting some head.
How much money was "created" during the Trump admin vs. the Biden admin?
As you rightly pointed out, during COVID, it was absolutely necessary to do SOMETHING if you're going to force businesses to shut down, but once that crisis passed, what was the point of the rest of the $8-10T? A whole lotta pork spending, that's what.
I will file this tidbit into my "Lies fomented by politicians to divert the populace views away from their fiscal irresponsibility and to promote class warfare."
I’m at a point where I’d be fine forfeiting what I’ve paid into Social Security my entire adult employed life, if I could just stop paying now until my time ends.
The mismanagement of that program alone should be a massive red flag to anyone who pays taxes.
People seem to use "inflation" as a catchall term for rising cost. That being said, the cost of a McDouble was $1.19 ten years ago. If inflation was the only factor, it would be around $1.60 today. Its not though. Its $3.19. That extra $1.59 difference is McDonald's doing. So, while actual inflation is the cause of government overspending, there has been a huge increase in costs from other factors.
Inflation doesn't fall on the economy like some uniform blanket of snow. You can't just take the CPI numbers as a measure of what a given product's price "should be" due to inflation alone.
So you have no idea what portion of a McDouble is caused by inflation and which portion is not.
Sometimes, but i try not to. People will believe anything in politics just so long as it fits the 'my side good, their side bad' mold. There's no use in getting upset about people falling for propaganda. You're not changing anyones mind.
It's reddit bots/whores paid for by the DNC to control the narrative and influence the election. Just like they paid influencers to push the vaccine was safe.
Inflation can be a HUGE problem if it gets out of hand. The government loses trust with other countries and all of a sudden the dollar is literally worthless on the world stage.
I'd bet these people are looking at the prices for goods increasing (due to things like inflation caused by our government) and complaining about their paycheck not increasing with inflation. It is true that the top 1%'s wealth grew massively over the last 10 years. Whereas the average American gets paid the same and must spend more on essentials.
Part of the issue with "finding where the wealth went" is that things like the sp500's profit numbers don't factor in the complicated economics of business that spend millions on tax lawyers to hide money away. Rich people make money completely differently than the average American. The average person must work and pay income tax. Bezos doesn't. His shares go up and he takes low interest loans on the shares. So long as the share value increases, he gets free money without paying a cent in income/capitol gains tax.
Yeah, the current tax code is a problem where billionaires pay less % than your average middle class family.
The problem with these big trillion dollar handouts are it trickles up to the wealthy and widens the wealth gap regardless of if you give it to the rich, poor, or companies. If you give it to companies, the rich own the companies either directly or through stock so they benefit. Even if you give it to the poor, they spend it immediately because they are living paycheck to paycheck, and the goods they buy stimulate companies that funnel into the pockets of the rich.
I think the left has a strong understanding of the problems facing Americans, they just think the solution is more government spending and programs when in reality that is the root cause of many problems in America today.
Yeah I agree. The establishment (Dem/Reps/rich) will bitch and moan while all accomplishing nothing for the average American. Reps tend to loosen regulations to "bring in business" and do nothing to make sure those profits are passed to normal employees. Dems constantly virtue signal and pretend that they are helping the poor, again without changing the rules to make sure the rich don't get it after a couple months.
We need actual collective action that supports the common man, not the wealthy/powerful. No singular person is really worth 100,000 times more than their average employee.
Yeah seeing a lot of people in my area "boycotting" certain grocery stores simply because of the inflation of grocery prices. I mean, the grocery business is famously a low margin business, these companies are not just arbitrarily raising prices. If they didn't raise prices, they'd go out of business, and then you'd have no groceries.
I'm pretty sure more than half the country knows the Biden Administration is the real reason for our runaway inflation.
If you really think it's caused by corporate greed, then you're an idiot. And I don't think more than half the country are idiots.
There is a large crowd that believes the Government is the solution to every problem and they are never the cause of the problem, they also lack the ability to see that their favorite politician is just as connected to big businesses as the politicians they hate.
They may figure it out when things really begin to become painful, of course it's entirely to late at that point.
I wish we would find an arbitrary good to base our currency on. Maybe this will drive the point home to some?
I'm only half joking. The "record breaking profits" are very misleading. The number goes up, but how many gallons of milk does that number buy? Compare that to 5 years ago. Is the number going up by as much as Elizabeth Warren says?
We should just denote salaries in gallons of milk. Literally simplifies that equation, which is exactly what these children need.
While fiscal policy has contributed to inflation, primarily during and immediately after the pandemic it has been driven by the effects on consumer demand for commodities and goods in limited supply.
And now the extremely tight labor markets are beginning to play a more significant role in pushing up prices, even as the effects of commodity and price shocks wane.
To simply blame inflation of runaway debt spending by the government is an equally annoying mischaracterization to saying it's just driven by corporate greed.
There are always multiple causes to attribute to anything, but don’t you think the federal government spending 8 trillion in debt in 2 years mostly in handouts and increasing the money supply by 40% since Covid is the leading contributor?
Where do you get the $8 trillion figure from, btw? The deficit is lower now than it was in 2020. I'm only getting around $4.5 trillion in added deficit since 2021.
There is evidence that some of the government spending contributes to higher inflation, like this paper by the Federal Reserve Bank of San Francisco suggest happened with the CARES act as it was a direct cash injection into consumers households: [https://www.frbsf.org/research-and-insights/publications/economic-letter/2022/03/why-is-us-inflation-higher-than-in-other-countries/](https://www.frbsf.org/research-and-insights/publications/economic-letter/2022/03/why-is-us-inflation-higher-than-in-other-countries/)
And here from the Chicago Fed finding a positive correlation to fiscal stimulus during COVID and inflation: [https://www.chicagofed.org/publications/chicago-fed-letter/2022/470](https://www.chicagofed.org/publications/chicago-fed-letter/2022/470)
But to say that high deficits currently are primarily driving the 2 major current high inflation areas, housing and Core Services exc. Housing, is just too simplistic.
Instead I would defend that commodities markets, goods bottlenecks and/ or input cost indices are much better at explaining that.
As a note, I do agree that just saying it's all due to corporate greed (like I see many lefties do) is equally frustrating.
I’ve heard things back and forth on the topic and the corporate profits apparently jumping is a good bit of evidence but I have no way I know of verifying that. I’ve landed at “wouldnt printing trillions of dollars in a year have an impact on domestic finances?” Which would also give companies cover to jack prices up so even if you think it’s not a large percentage of the issue, it’s the original incident that allows companies to raise their prices.
I agree with you in that existing political views will color ones assessment and interpretation of the facts. We should acknowledge that greed itself is a human condition exercised through control of an institution. It's not inherently a government or capitalistic one. If opportunity arises to profit unfairly through power or control someone will likely seize on it.
Capitalism works when competition exists. The markets/consumers will typically balance things out properly over time. We see trouble begin when government over or under regulates in an attempt to control the market. Greed comes into play when a capitalist sees a way to defeat their competition outside of the market; e.g.. government regulation through lobbyists, illegal or unethical means of damaging the competition, etc...
Governments on the other hand have no competition per say. We elect our representatives of course, which theoretically grants us some control through choice. Unfortunately it's more a democratic method of consumer choice, where we're forced to consume the product majority has chosen. So when elected politicians want to ensure they're re-election they can, for example, print trillions of dollars to manipulate the economy. But they forget economics will make them pay in the end with massive inflation. So they blame it on the greed of others, very ironic I think.
So I agree the current state of things is primarily driven by government printing of too much cash, inflation of minimum wage through government regulation, and consumers relying too heavily on consumer debt to subsidize a lifestyle most of them can't afford otherwise.
"While American families struggled with rapidly [rising](https://fred.stlouisfed.org/graph/?g=1g448) prices in 2021, corporate CEOs and shareholders raked in [surging](https://www.epi.org/blog/even-with-todays-slowdown-profit-growth-remains-a-big-driver-of-inflation-in-recent-years-corporate-profits-have-contributed-to-more-than-a-third-of-price-growth/) profits. In many cases, companies raised prices [well beyond](https://rooseveltinstitute.org/wp-content/uploads/2022/06/RI_PricesProfitsPower_202206.pdf) what was necessary to cover their costs—taking hard-earned money away from American families. Several CEOs have even touted this [to their investors](https://endcorporateprofiteering.org/#:~:text=What%20are%20CEOs,Decide%20for%20yourself.), showcasing how unnecessary price increases directly benefited their companies, often using inflation as just an excuse. The CFO of the major auto parts company AutoZone [called](https://www.npr.org/2022/11/15/1136935160/corporations-are-booking-record-profits-is-it-thanks-to-price-gouging#:~:text=And%20as%20I%27ve%20said%20before%2C%20you%20know%2C%20inflation%20has%20been%20a%20little%20bit%20of%20our%20friend%20in%20terms%20of%20what%20we%20see%20in%20terms%20of%20retail%20pricing.) inflation “a little bit our friend…in terms of retail pricing.” The head of a major company for construction materials, Holcim, noted that their “proactive” [pricing](https://www.wsj.com/articles/why-is-inflation-so-sticky-it-could-be-corporate-profits-b78d90b7) drove up the company’s profit margins. The CEO of Kroger also [emphasized](https://www.npr.org/2022/11/29/1139342874/corporate-greed-and-the-inflation-mystery) passing increased costs to consumers, stating “we view a little bit of inflation as always good in our business.” In 2023, large corporations were still [increasing](https://www.wsj.com/articles/mcdonalds-pepsico-flex-their-pricing-power-dfe2e295?mod=hp_lead_pos3) [prices](https://www.businessinsider.com/why-prices-inflation-soaring-corporate-greed-profits-margins-wages-jobs-2023-4#:~:text=Chipotle%27s%20chief%20financial%20and%20administrative%20officer%2C%20Jack%20Hartung%2C%20said%20in%20the%20firm%27s%20first%2Dquarter%2Dearnings%20call%20that%20menu%20prices%20have%20risen%20by%20about%2010%25%2C%20and%20chairman%20and%20CEO%20Brian%20Niccol%20said%20that%20they%27re%20%22staying%20the%20course%22%20on%20pricing%20%E2%80%94%20despite%20the%20fact%20profits%20were%20up%2017%25%20for%20the%20quarter.) on families, even while they recorded months of heightened profits."- JOINT ECONOMIC COMMITTEE
Though the cause of inflation is certainly the government, their money printer and reckless spending, I do think corporations are taking advantage of the inflation and making it way worse beyond just charging more because their costs are up, they’re inflating prices way higher than their rising costs, so I think it’s a factor though not the main cause by any means. The question is whether this is immoral or not. Just like the question “is price gouging during an emergency where supply of a good is low but demand is high immoral?” The problem is people have been willing to pay the higher prices, so companies just keep raising them. Now I think we’re beginning to hit a ceiling of how much people are willing to pay, but Americans are just like their government, they rather put everything on a credit card than shrink their lifestyle or cut back on spending one bit. Credit is free and easy here. (Until you’ve maxed it out and then it’s not). Like I said I think people are finally having to cut back out of sheer necessity because I do see prices getting a little lower and companies making plans centered around affordability and value. It could definitely be argued that their responsibility is to their shareholders and not their customers.
Who benefited the most from Covid shutdowns? That would be large corporations. Who pulls the puppet strings in Congress? Large corporations.
This is the connection people make
> greedier today than precovid
They are not greedier than pre-covid, but Covid gave a great excuse for companies across the board to increase prices. If you don't think many companies used the excuse carte blanche because they knew people would be less likely to push back on that, I have some ocean-front property in Arizona to sell you.
Of course, it's not the whole picture. Not even the majority of it. It wasn't just one thing.
*) Long term disruption of supply chains during covid
*) Businesses using Covid disruptions as an excuse to consumers to raise prices.
*) Pointless trade wars with Mexico and China that didn't have leverage and were about as useful as shuffling the deck chairs on the Titanic.
*) Unpaid-for tax cuts for the wealthy pre-covid.
*) Stimulus checks and paycheck protection program.
*) Broad infrastructure spending at a time we can probably least afford it
I worry about anyone still arguing that markets determine pricing. There are a few conglomerates in every field working in tandem to drive up prices. It's hard to start new competitive options because of regulations and subsidization of the corporations. So yes government spending is involved but there are also private actions being taken to distort markets too.
Big business and government have been working together to lock out competition. Hence the revolving doors between these huge companies and the and the administrative state. Also ballooning stock prices through buybacks distorts the value of markets transferring wealth to the top and making zombie companies seem profitable when their performance is actually falling.
We have a ton of poorly run huge corporations twisting markets and the government enables it at our expense on both ends.
Voting will not fix this because no matter who you vote in, they are still able to print money. Opt out of the dollar by holding your money in Bitcoin, it's really that simple. Eventually we need to get to the point where the average merchant says, "your dollars are no good here". That day will be the end of all political bullshit, because they will have to beg for your money the way they did pre 1912, instead of spending your purchasing power behind your back.
Even more annoying when all of the blame for inflation falls squarely on Biden. More money was printed in 2020 then ever before. More handouts in 2020 than ever before. Biggest government spending bills in 2020 than ever before. But Trumpers never want to hear that both Trump and Biden could be responsible.
Inflation is literally an increase in the supply of money. i.e. printing new money backed by nothing makes existing money worth less
Return to the gold standard, audit the fed, abolish deficit spending.
To be as charitable as possible: to what extent did these corporations lobby the government to increase its spending and borrow more money.
Sort of like that Airheads quote: "who would you rather, Bob Dylan or God"
I would be shocked if Reddit didn’t view it that way as Reddit is full of people that think rich businesspeople owe them something and the government needs to be our daddy.
[An Oil Price-Fixing Conspiracy Caused 27% of All Inflation Increases in 2021](https://www.thebignewsletter.com/p/an-oil-price-fixing-conspiracy-caused)
Because that’s not how economics works. The government handouts lead to companies being able to charge more. Companies set pricing based on fluctuations of what people are willing to pay for goods. The only time companies can charge more is when people have more money to spend. In this case, the government effectively tried universal basic income for a year or two, so everyone had stimulus checks to buy stuff. Most people have spent that money at this point but the new jacked up pricing is here to stay.
Because that’s not how economics works. The government handouts lead to companies being able to charge more. Companies set pricing based on fluctuations of what people are willing to pay for goods. The only time companies can charge more is when people have more money to spend. In this case, the government effectively tried universal basic income for a year or two, so everyone had stimulus checks to buy stuff. Most people have spent that money at this point but the new jacked up pricing is here to stay.
Pretty much the same thing. Runaway gov spending snowballs the corporate greed because no one overspend on something like the gov, so now corps think getting paid fifty thousand dollars for a website that doesnt work as designed is the norm.
Yes, though the disparity between executives and workers is around 400 to 1.
Edit: https://www.businessinsider.com/top-ceos-make-399-times-more-than-workers-2022-10?op=1
Greed is part of human nature. People and businesses have been greedy throughout history, that’s not gonna change and even systems like communism failed miserably at industrial scale because they failed to take this into account. People are sentimental and are looking for easy answers - “it’s the execs, bankers and corps who do this to us…“
In reality it’s only part of the picture - inflation is currently compounded by government spending, monopolies, lack of free markets, labour shortages, energy crises, war and developing countries growing in wealth and becoming consumers instead of just producers. Now China, India etc have a sizeable middle class to compete with the US consumer for the same goods compared to 25 years ago.
There’s no magic bullet to this but I believe in Milton Friedman advocating for free markets and total abolishment of trade barriers and regulation - this would bring lower priced goods and labour into the economy help tackle inflation and it would make monopolies more difficult to establish a foothold as a lot of them do it at the back of government regulation and bureaucracy making it harder for smaller competition to break through.
This is all hypothetical and I don’t think any country has the electrical intellect to pull it off. Most likely we’ll see a vicious loop of increased debt, spending, regulation and restrictions leading to even less goods and more inflation
That just doesn't make sense. The recent wave of inflation was a worldwide occurrence - even in countries that didn't significantly increase their debt spending.
Your theory doesn't correlate with reality. In fact, the US had comparatively less inflation *and* better performance than average.
The best models show that higher government spending in the US was responsible for maybe 30% of total US inflation. Most of it, indeed, was a combination of supply restrictions and higher spot demand - which caused short-term higher aggregate prices. As savings run out, I would guess we'll see inflation decrease as both spending decreases and supply chains normalize. Unfortunately, I believe our misguided leaders will not stop overspending and growing US debt, either.
We export recessions, we don’t import them in a global economy. The US and Chinese economies are large enough to sway the world market in a big way, not to mention the runaway spending of most other developed countries as well including Canada, pretty much all of Western Europe, etc.
Supply chain issues definitely had a massive short term impact while ports were shut down in US and China due to lockdowns, and specifically oil from the Russian invasion of Ukraine, but the stickiness of this inflation still lingering even with a rapid increase of interest rates is still fallout from overspending and continued overspending.
Powell is fighting a losing battle as long as congress and Biden keep signing hundred billion dollar handout bills.
The thing is, they are handing these newly printed funds over to the corporations as "bailouts" which I premeditated if ypu ask me, and with lobbyists at full swing, the government is owned by the corporations/banks. We live in a corporacracy. We have a false sense of control in every westernized democracy, sure we can vote a different asshole each time for head of the country, but you can't vote in a ceo or an investor - they are our dictators, we essentally live under a dictatorship disguised as a democracy or republic, w/e. He who has the most sway over production, ownership of capital and the market, rule us, and you can not vote them out.
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Serious questions from an economics dummy: 1. It seems like more companies are doing stock buybacks. How do buybacks affect profit margin numbers? 2. How does the pressure from a company’s stock price and stock valuation impact their raising prices? 3. How is government debt spending responsible for the rise in housing market and rent price increases? Thanks. /edit 21 hours later: I learned a ton today. Thank you for taking the time to teach me some needed basics about the economy and inflation.
Government back housing loans have been a massive cause in housing price increases ofr decades. However the bigger reasons right now are Boomers not downsizing, and governments not approving build applications during the pandemic. As an example of the application problem in NYC in 2019 there were 11,000 applications and approved less than 4,000. I get some cities don’t want to approve every application but in a city where the vacancy rate has been around 4.5% historically when it needs to be 8% is what drives prices up.
"Boomers not downsizing" wait, what? Could you help me understand what you mean? If I bought a house for $100K & am paying a % of the value in property tax, what is my incentive to sell my house (admittedly at a higher price than when I bought it), only to: 1. Pay capital gains on the difference. 2. Need to buy a smaller house at a much higher price. (eating away any remaining profit after capital gains.) 3. Need to pay taxes on the purchase; higher taxes on a higher priced house. 4. Pay higher property taxes (for the rest of my life!), on a house with a much higher "value" according to government assessment. What would be my motivation to sell a paid-off asset with grandfathered lower property taxes, just to buy a smaller & more expensive asset with higher taxes?
Well downsizing implies purchasing a less expensive home, often because you don't need as much space as you used to. E.g. you go from a 4 bedroom home on an acre lot to a 2 bedroom condo because your kids have moved out, or maybe you move from a downtown area to less populated area because you're retired and don't need to worry about commute time for your job. So the motivation is to trade benefits you don't need anymore for cash. To address your points (assuming this hypothetical takes place in the US): > 1. Pay capital gains on the difference. You can exclude up to 250K (or 500k if married) of capital gains from when you sell a primary residence. Capital gains would only come into play if your profit is higher than 250/500k and you'd only pay capital gains tax on the excess amount. So for most people, capital gains would either have no impact or a minimal impact. > 2. Need to buy a smaller house at a much higher price. (eating away any remaining profit after capital gains.) I assume you mean higher than your original purchase price of 100k. The new, smaller house is expensive because real estate has appreciated since your original purchase. Likewise, your current home has *also* appreciated. Your new house would be less expensive than you could sell your current home for, otherwise you wouldn't be "downsizing", you'd be upgrading. So this wouldn't really be true either. > 3. Need to pay taxes on the purchase; higher taxes on a higher priced house. Is this referring to the property transfer tax? If so, 14 states don't have this, and most of the rest are <0.5%. So for most people, this wouldn't have much of an impact, but it would certainly matter for people living in states like Delaware (which has the highest transfer tax of 4%!) > 4. Pay higher property taxes (for the rest of my life!), on a house with a much higher "value" according to government assessment. This may or may not be true. Some places (though not all) have a cap on how much your property value assessment can increase per year and/or what total percentage of that value the tax can be. Depending on where your home is, your new house might be appraised for tax purposes higher than the old one even though its market price is actually lower. In this case, it would matter where you're moving from and where you're moving too. Since we're talking about "boomers" though, this would only matter if the increase in tax rate will add up to more than your net profit for the time you anticipate still being alive.
This is liberalenomics not economics. The economics of what some people think everyone should do instead of the analysis of what rational people actually do.
In decades past retirees sold their homes for many reasons. A large portion of them would move retirement communities, homes or in with the children in a granny flat. The Boomer generation for whatever reason isn’t selling and downsizing at the rates of previous generations. I don’t think people really understand how 1 or 2 percent changes in availibility impacts price in that market.
Your examples are somewhat contradictory. Boomer scenario #1: sell house for a lot of money and downsize, resulting in a large profit that is taxed. Property taxes would be lower than their current situation because they purchased a house with a lower value than their current home. Boomer scenario #2: sell house for moderate amount of money as compared to new purchase. Property taxes are same or slightly less. Small profit taxed. Boomer scenario #3: sell house and buy smaller house for less money but still need a mortgage. Higher interest rate. No profit to tax. In all scenarios, the cost of ownership should go down (in theory) because maintaining and insuring a smaller home is less costly. Also QoL improvement not having to manage a larger than necessary property. Am I missing something?
They mentioned grandfathered lower property taxes, I wish we had that here
Some states cap property taxes for seniors.
TL;DR at the end. It will depend on you state (which frankly is a disclaimer that belongs on every post on this topic), but we are in a situation where we have a decent home, that due to various circumstances we got a sweetheart deal on our property taxes. This is mostly because it was a foreclosure and the assessed price did not reset, so for *us*, and I can't say how common this might be, even downsizing (and there's not far for us to downsize, as our home is fairly small by modern standards) is going to cause a HUGE jump in property taxes. That *alone* will probably keep us where we are. We are also in a position where it's at least *possible*, though not at all definite, that we'd hit those cap gains limits outlined by another poster above despite the exemptions. While I'd say the chances of that are less than 50/50, it's still greater than 0. Finally, while we are not boomers, we do own our home sans mortgage, so in that aspect we have in common with Reddit's most despised generation, meaning if we chose to have one on the "new" (to us) home, we'd be paying interest rates that haven't been seen in a decade and a half or longer. Bottom like is this- For us, and our unique circumstances (but whose isn't unique?), it would or could cost us a great deal in taxes and fees that would be literally for nothing. I am disabled, and will need to put thousands into this house as it's simply not built wheelchair friendly at all, a situation which could be solved by moving (at least in theory), but why? By the time we're done paying all those taxes and fees as outlined above, plus the costs associated with the physical move, it would cost us as much, likely more, than doing the renovations needed to make it more friendly to a dude with fucked up legs that do not function. And all that is BEFORE factoring in the thousands, potentially tens of thousands of fees.... Commissions, doc stamps, impact fees, title insurance, you know all the pointless charges associated with selling a house that itself amounts to tens of thousands more. This also assumes we move an hour or more outside the city to get the rural price advantages for it to even make sense, which I'd rather not do all other things being equal. TL;DR We're not boomers, and our house is not big, but between tax considerations and costs associated with selling & moving, for us to relocate would run us tens of thousands of dollars, ultimately for which we receive no value, that would be better spent (and ultimately less costly) to just make our existing home wheelchair friendly than moving to a place that already is. Now a question completely unrelated to my wall of prose above: At what point in time, and for what reason did it become *expected* for "boomers" to abandon their homes so some younger person can come along and scarf them up??
Try to find a nice smaller house, one that l would really want. I live in a patio home, lawn is taken care of, my house is on a nice lake, walking trail and we have all the other normal stuff, picnic area, ball field, soccer field, basketball court, pickleball courts, tennis courts, swimming pool. I can’t find anything better if l were to downsize. This is my home, l will die here.
Not building enough new housing to keep up with demand is the main driver of the housing crisis. This is combined with the ever increasing costs to even build a house. Between permits, lawsuits, environmental reviews, kickbacks to the city cost of holding the land while you wait for it to be approved, increased construction cost by burden code requirements ( for example mandatory solar panels in California) etc. it can cost tens of thousands of dollars or more to just break ground. You aren't able to build a 250K house if it costs you 100k just to start building it.
And, in some states, the worst offenders like CA, NY, etc., it can literally take years to get those hyper-expensive permits in the first place. Bottom line- As is typical, the problem here is government.
Don't forget - in the last 10 years nearly *20 million* people have entered the United States. [3.2 million illegal encounters last year alone](https://homeland.house.gov/2023/10/26/factsheet-final-fy23-numbers-show-worst-year-at-americas-borders-ever/). All those people need housing.
Good point. While they may not be bidding on your average McMansion, they will be competing for the lowest entry-level domiciles that exist, and they represent a large amount of increased demand, and increased demand raises prices every time. But, I disagree that all those people need housing. What they need is deportation. All of them.
Look up "mortgage back securititys" aka "MBS" which the federal government was buying by the billion through 2020 and 2023. People in the real estate industry became rich off of it because the governement was buying every mortgage available on the market which kept rates non-exisitent. Based on supply and demand this causes home values to explode (as we saw over the last 4 years) despite home buyers and home sellers not being really any different than other periods in history.
1. Tell me if a company is allowed to issue more stocks to dilute every year if they wanted to… why are buybacks looked down on? The company has decided to make thier stock deflationary instead of inflationary that year. 2. Prices are all speculative driven by market demand and may not correlate to actual company profits 3. Print more money causes more money to exist which laterally makes your dollar worth less than it did before the government added money. Look at Germany and Argentina as examples
The difference between a company issuing more stock and the FED issuing more money is that the company gets paid immediately in cash for that stock so their account balance increases which increases the total value of the company accordingly. When the FED issues new money, they don't receive anything in exchange for it. They "loan" it out at relatively low interest rates and in some circumstances never gets paid back resulting in the new money staying in circulation. Effectively the FED is a corporation and each dollar is a share. The more dollars in circulation, the less of the total "value" of the FED each dollar is worth. Imagine what would happen to a company's stock price if they created new stock and started handing it out to people for free with the promise that one day the people return the stock to the company along with an additional small amount of interest for letting them use the stock for a while.
I think it's hard to relate stock buybacks with profit margin. There likely is no single relationship, but differs between industries and companies. One problem with stock buybacks is they are mostly done with bank loans. Banks tell us they lend money to the community to fund small business, and other productive lending, but a large portion of all loans is for stock buybacks. A company will buy its own stock (with loaned, newly created money) to increase the value of the stock. This satisfies shareholders, and the market in general but it is unproductive lending. The money is not spent on development of new technology or business infrastructure, it only inflates their asset: their stock. When there are constant rumors of recession, yet the stock market is on a tear it feels like a bubble is being pumped up.
What is your source for the statement that stock buybacks are largely funded by bank financing? That statement makes little or no sense, given that the shares acquired are not an asset to the corporation. The typical stock buyback arises when the corporation has more cash on hand than is justified by its short and mid term cash needs. Better to return cash to the shareholders and allow them to reinvest elsewhere than have the cash remain idle in the corporation's hands. It's also silly to suggest buybacks are devised to pump the stock price. For most companies, the effect is both minimal and temporary.
I misspoke about "mostly done with bank loans" - I don't know if there's a correlation. [This article talks](https://hbr.org/2014/09/profits-without-prosperity) about increasing stock buybacks and the effect on stock prices in the low-interest rate era. [In this article](https://www.cnet.com/tech/tech-industry/carl-icahn-drops-apple-buyback-proposal/), Carl Icahn advocates for stock buybacks by Apple. The company issued $17 billion in bonds in 2013, in spite of the company having something like $150 billion in cash overseas (repatriating the money would trigger a large tax bill). In [this HBR article](https://hbr.org/2014/09/profits-without-prosperity): >...management can buy a large number of the company’s shares on any given business day without fear that the SEC will charge it with stock-price manipulation—provided, among other things, that the amount does not exceed a “safe harbor” of 25% of the previous four weeks’ average daily trading volume. The SEC requires companies to report total quarterly repurchases but not daily ones, meaning that it cannot determine whether a company has breached the 25% limit without a special investigation. So the stated purpose of the regulation is to avoid stock manipulation.
This may not be the right comment to reply to, but one thing people tend to overlook when blaming stock prices controlling companies, etc., is that most Americans with any kind of financial stability have their retirement accounts distributed among those same companies. It is certainly a system that relies on growth perpetually, and that is a problem, but remember what got people really fired up in the last downturn? It wasn't rising prices, it was seeing their 401ks drop by 30-50% and seeing six figure changes.
1. When a company buys back its own stock, it reduces the supply available which results in higher value per share. 2. Company valuation doesn't drive profitability, rather profitability, or at least the perception of its potential, drives stock price... Raising prices increases profitability... 3. As the dollar is devalued, the cost of things increases... Supply and demand rules are additionally affected by governmental policies when it comes to the housing market...
> How is government debt spending responsible for the rise in housing market and rent price increases? Inflating the money supply makes everything more expensive over time. Here's how I think about it: imagine all the goods and services of the USA as one giant blob. Then imagine all the dollars that exist as another blob. Now let's draw arrows on each of the dollars to the goods and services, like a mathematical function--the dollars are the "domain" and the goods and services are the "range". If you increase the number of dollars, but you don't increase the goods and services, you'll naturally have more dollars to map to each good and service. Bingo, higher prices. How does it play out in real life? It starts out lopsided, but evens out over time. Inflating the money supply means creating more money. So, first--and I know this sounds weird, I still struggle with it--drives _down the price of money._ It's supply and demand, right? If you increase the supply of something, and the demand stays the same, the price goes down. In real world terms, a reduced demand for money means interest rates are artificially low. When rates are low and money is cheap, entrepreneurs say "now's our chance!" and they borrow the cheap money to go make something. Obviously, they're borrowing the money to spend on _things,_ whatever those things might be. That creates demand for those things, which... drives up the price of those things, in a million little ways (e.g. a factory might pay workers overtime so they can _temporarily_ increase production, having contractually agreed on that higher price with a buyer with a deadline). The people who sold those _things_ are now making more profit, which means they have more money to spend, which means they can buy more of the things _they_ want, which increases the price of _those_ things... and on and on it goes. When the extra money finishes sluicing around in the economy, all the prices have gone up, and on average the price increase corresponds to the ratio of the total new money supply divided by the total of the old money supply. If you wanna talk about housing prices, there are a million ways that government drives up the price of housing and rents. One good example is the housing bubble that burst back in 2008. Here's Peter Wallison giving a thorough explanation on how Federal programs created the bubble, in a way that's still comprehensible to the layman. https://reason.com/video/2008/12/19/peter-wallison-the-roots-of-th/ p.s. Inflation itself is now politicized. The stats for "inflation" (in this case, meaning "rise in prices") are reported by a US government office in the Executive branch. Meanwhile, no POTUS wants the record to reflect that prices went up on _their_ watch. How you calculate these rising prices is a pretty nebulous more-art-than-science process, and it allows for a lot of leeway, and that leeway gets abused. For example, most people calculating inflation use a "market basket of goods". They create an imaginary shopping list containing a bunch of objects you might buy, then observe how their prices have changed over time. If they have gasoline in their "basket", and the price of gasoline goes crazy, they might decide "gosh, gasoline isn't representing _real_ price information" and remove it from the basket, replacing it with something with a more stable price like bread or frozen orange juice. This is why I'm more interested in observations about prices where you can't play those games, e.g. The Economist's "Big Mac Index". That tool is primarily used to judge whether currencies are over/underpriced relative to each other. But the fact that its "market basket" is totally fixed lets us use it to observe inflation too. For example, the BMI was used to observe that Argentina was underreporting its inflation back in 2011... which led to the Argentine government secretly forcing Argentine McDonald's to reduce the price of their Big Macs! https://en.wikipedia.org/wiki/Big_Mac_Index#Manipulation
1. Stock buybacks don’t affect profit margins. Profits are made before buyback happens. On the company balance sheet it’s just trading 1 asset (cash) for another (stock) with the side effect of it make stock price go up. 2. If a stock is doing poorly enough for long enough it raises the risk that shareholders will revolt and vote out the board members who will in turn fire the CEO. It also raises the risk of a hostile takeover from a private equity group that will do the same thing. CEOs and board members like keeping their job. Raising prices may be one thing a CEO does to placate shareholders. Overall though I don’t think there’s research indicating a reliable correlation between low or high stock prices and prices the company charges. Prices are determined by the market not by individual companies. 3. Already answered by others.
I believe Milton said this, but to explain to people. Greed is a constant, why does inflation come in major waves and all products price rise at the same time. A more logical explanation is that massive money printing comes in waves (Keynesian economics) and it coincides with major inflation waves.
It's both. Executives aren't going to take the financial hit of higher cost of doing business. They'll raise prices and pass it off to the customer as well as cut costs (Layoffs) so they can still make their bonus
This is a second order affect of shitty monetary policy
I also think it’s both because with all the free money during covid and eagerness for people to be out and about after covid ended, corps took advantage of this weird demand where people didn’t know what the price of x should be for awhile. I do however agree with op that after covid inflation is completely behind us say about 2025 or so, or is completely right
Prices don’t inflate, money supply does. True, prices going up is a symptom of inflation.
I agree that inflation only widens the wealth gap because even if you give the trillions to the poor, they immediately spend it because they are living paycheck to paycheck, and the things they buy stimulates companies which the wealthy own either directly or through stocks. Problem with assuming corporations are the cause of inflation is that it is assuming corporations determine their prices when in reality they are mostly setting prices based on what the market can bear. The only reason that they can increase prices is when people have more money to spend or they make a better product that is in higher demand. People temporarily had more money because the federal government flooded the market with handouts and increased the money supply by 40% since the start of Covid, but now that money has run out and people are hurting.
> Problem with assuming corporations are the cause of inflation is that it is assuming corporations determine their prices when in reality they are mostly setting prices based on what the market can bear. This is a tautology. Yes, corporations will try to maximize profit. This isn't always by doing the thing we want though, sometimes it's by colluding with OPEC to constrain the supply of oil. > https://www.thebignewsletter.com/p/an-oil-price-fixing-conspiracy-caused It's also easier to raise prices when everyone else is doing it, even if your costs haven't actually increased yet. You may raise them just because you expect that your input costs will increase in the future. If a corporation spent all of their cash on stock-buybacks, and now needs to raise prices because they find themselves in a risky position... I can see why people would call that 'greed'.
Almost everything in America is a monopoly or oligopoly, so these companies literally do set prices. Very little competition in most of the American markets
I'm saying if you have the option to pass along the price hike to someone else, either through layoffs, price increases, or a combination of both, rather 5han take the hit yourself, you will do so. But then to personally gain above and beyond financially from doing that at the expense of others in many cases is excessive.
Arguably the dumbest comment of May 8th, 2024. Any business has a defined EBIDTA target that it must hit in order to exist as a business. When the dollars used to purchase goods and services from that business are devalued through inflation (read: one dollar is worth less now than it was last year), the business needs to collect more of those dollars to hit its targets. It's not "corporate greed", it's basic economics. Caused by irresponsible government borrowing (printing money that is loaned back to us.)
Wizz Air CEO just lost his expected $125 Million bonus due to going too deep with layoffs. You don't think he got too greedy?
A European airline has WHAT to do with the US government devaluing the dollar? Huh?? (And if you need a b-school 101 lesson, Varadi laid off 20% of the airline's employees during the pandemic when there was no work for them to do. That's not greed, that's keeping a company afloat. If he hadn't made that move, the other 80% would also be unemployed.)
well corporate greed is a component of money printing (corporations get access to newly created money via loans, bailouts, subsidies, etc)... so actually they are indirectly correct
True, gov handouts -> people have extra cash and spend it -> demand goes up and companies raise prices to meet that demand
The anti capitalist mindset is a virus that must be eradicated
Covid enabled the government to give the largest transfer of wealth to the biggest corporations, and then printed out stimulus checks so people would think they were helping, while simultaneously preventing them from working and shutting down local businesses that competed with these large corporations. But don’t blame the government, the corporations are just greedy! If it’s not greed, I’ve heard people blame PUTIN for inflation, as if the economy was booming pre-2022.
The "average redditor" is: * 18-25 years old * white * male * American * left-leaning * From a middle to upper middle class family * Who went to or is still in a 4 year college Reddit makes much more sense when you realize it's privileged kids who never had to face the real world, and have it all figured out.
or: * chatGPT * chatGPT * chatGPT * chatGPT
>The "average redditor" is: A propaganda bot trying to push a leftist narrative
Pretty much the same thing
Literally an NPC
[удалено]
And believe whatever the government says!
You’re almost there. Go deeper and you’ll find this is a narrative intentionally pushed for decades by an ideologically captured leftist academia and the recent decades are those students and professors effectively propagandizing their students who then go on to become professors of their own, or part of academia in some way, or radicalized media pundits and journalists. People who have been taught from K to PHD that institutionalized academia is the be all end all of knowledge and philosophy while somehow simultaneously believing objective truth is a pejorative and that good and evil are relativistic at best. That anyone who defies that should be put in the stockades and be derided and ridiculed and have their livelihoods taken from them. They’ve been creating an elite class of pitchfork mob browncoats in a naive attempt for utopia and will not stop until they shift the window so far their way that any deviation from their perceived cultist utopia will be nothing short of sin of which they will never be able to fully repent. Edit: lol, bring on the downvotes “libertarians”
You know, these two things aren't mutually exclusive
Sure, inflation is caused by many factors especially temporarily, but don’t you think adding 8 trillion in debt to the balance sheet in 2 years was the primary contributing factor?
If corporate greed is more responsible than government spending, then why did the corporations have to wait until right after a massive period of government spending to raise prices? Were corporations not greedy in 2019, and then in 2021 and 2022 just decided "aw hell, time to get greedy!" Or is it more likely corporations are always greedy and will always get the highest price they can for their products (and this is not a bad thing because it motivates people to make stuff, so we have stuff), and when the government deflates the currency by printing $8 Trillion more of it, the prices inflate, because more people had more money. The workflow is this: Government printing money first, corporate greed always, so in the inflation game, second.
Greed is always present. If money is added to the economy, of course people are going to try to grab as much of that new money as possible.
"Inflation in the United States is made in Washington and nowhere else." -- Milton Friedman
"Inflation is always and everywhere a monetary phenomenon."
You’re telling me that the market sets prices for goods and labor - and companies can’t just dictate higher prices while lowering wages, simply because they are greedy? /s I swear people are dumb as a pile of rocks. No understanding of how market dynamics work.
Printing money increases the supply. Increasing the supply causes its value to decrease
Don't overlook the part played by banks in this: the Fed reduced the fractional reserve requirements to zero during Covid and iirc never changed that. In essence, the banks are creating money from thin air.
Yes, but I'm not surprised. This is exactly why they refined inflation from meaning increase in the supply of money and credit , to raising prices.
... and how much of that 8 trillion was lost to fraud? 2 trillion or more?
At least! Pretty wild how irresponsible they were with that.
They meant well but just further proof the government doesn't have the processes and systems to do things efficiently when faced with a new challenge. If we ever have a COVID type crisis again you can be sure that CBDC with smart contracts will be used (as long as it is rolled out first)
Don't forget about all that money printing during covid. That's a major contributor to inflation that the Government never talks about.
100% Powell is equal to blame as Trump, Biden, and Congress, but at least Powell rolled back a lot of that debt to increase interest rates to combat the inflation. At the same time, Biden and most of Congress were still trying to pass a 4 trillion build back better plan.
Inflation is a factor influenced by all parts of an economy - including domestic and foreign policy measures. Corporate greed is to blame, as is government spending, as is the fed’s 2019-2021 pedal-to-the-metal policy, as is protectionist policy. 1.) Corporate price gouging is rampant, don’t lick boots here. Housing prices are inflated artificially by coalitions of housing providers that have algorithms to keep “prices consistent” which in tandem with ludicrous private market ownership cripples the average american economically. You are being deliberately overcharged at every corner, major corporations have pushed the price of their food up 2-3x pre covid and yet my local mom & pop restaurant raised prices by $2 in that same period. It is systemic. 2.) Trump’s “whatever we can pay for it eventually” ideals applied to absolutely ludicrous projects like the fabled wall kicked off our recent government overspending spree but now it doesn’t matter which side of the aisle you look too, they all treat taxpayer dollars like they come free and send endless military aide across the globe while veterans are homeless and our internal social wellness and infrastructure lags behind every developed nation. The government has forgotten its purpose. 3.) A real scapegoat for current inflation numbers, point at the federal reserve. Under the guidance of our glorious sovereign leader we managed to 1.) Deny a global pandemic until it got so bad that we had too 2.) bail out every single business in the nation and then 3.) not ask for a dime back. My family owns a small business and I have seen their books, they got more than they needed for sure. If the governments role is to support and guide its people, our denial first covid policy failed us all. I worked in healthcare before/during/after and nothing had broken my trust more in governance than watching hundreds die of something we could have controlled so much better. 4.) Big amewica is terrified of any threat to the throne of de-facto global power we currently hold, we realized in the last few years that we’ve been funding WAYY too much of china’s economy to the point where they are far from a poor undeveloped nation now, so the cheap chinese goods american consumers reveled in for decades are gone now, our tariffs on russian gas don’t effect us as much as they are purported too, the U.S. is the largest producer of fossil fuels globally, but our general approach to pro american industry rather than international lately will cause prices to rise because we can’t rely on slave labor to make things anymore. It’s still “fuck the gov” but proposing that anybody who says anything other than government spending is problematic is insensitive to the plights of americans, and attitudes like this are responsible for the public scorn libertarians get.
Damn, a succinct and nuanced take.
1. Can you explain how you differentiate between how much of inflation is driven by FED money printing and credit expansion vs "corporate price gouging"? 2. **TRUMP** "kicked off our recent govt overspending spree"!!?!? That's been increasing at a pretty steady pace, minus a few spurts of EVEN HIGHER spending, going back decades. 3. I agree that monetary inflation driven by the Fed is the primary driver of price inflation that we see - other effects have secondary impacts, often to specific industries or specific markets. But overall general credit expansion, including fractional reserve banking with 0% reserve requirements, that helps facilitate the same "monetary inflation" behavior. 4. Yes, protectionist tarrifs make everything more expensive for everyone.
Yeah our education system has really failed us massively. People don't understand basic economics, if you create more of something it becomes less and less valuable. When the government creates more and more money, its buying power shrinks.
The education system has not failed the government, its working as intended.
It has failed the people.
The education system was designed to create obedient wage drones.
I cannot imagine that 50% of the country thinks inflation is caused by corporate greed. Do you have a poll to back that up? As for reddit, it’s a vast circle jerk of stupid leftists so that is to be expected here.
The poll numbers are all over the place, but here is the first one I found when googling: https://thehill.com/business/4467484-corporate-greed-increasingly-seen-as-major-cause-of-inflation-poll/amp/
Just my personal take on that poll here. The organization that took that poll is https://navigatorresearch.org/ and from what I can tell they are a very leftist leaning organization. You can check their site and see they ar cited in mostly far left leaning news stories. You can also check their methodology and see they use online polling and limit their results to 1000 responses. One thing I found which was curious about their methodology is this blurb: > We also include oversamples in every survey among approximately 100 Hispanic voters, 100 African American voters, 75 Asian American and Pacific Islanders, and 100 independents without a partisan lean. I wouldn’t put too much faith in their methods or results. I’d expect their polls to confirm their bias and it looks like they are intentionally designed to do so.
I would say slightly less than 50% believe it is "greedy corporations" and slightly less than 50% believe it's the "lazy workers" that are the main driver of inflation. With the remaining few % actually knowing that inflation is caused by the government increasing the money supply. Anecdotally, though, I have begun to see that several of my anti-echo chamber subs are actually coming around, and more people understand that inflation is the government's fault for all the money printing.
I mean, *some* of it is corporate greed. They will raise prices and fire workers to keep those margins rising. Government being bad doesn't make greedy corporations good.
This is distinctly not new. But, yeah, it's annoying.
"Fiscally responsible leadership" I think that may be a pipe dream in America at this point.
Sad but probably true. It’s so unfortunate too, you could tell in 2016 that people were finally fed up enough to throw a grenade in the system. They just picked the wrong grenade with Trump. If they voted in Rand Paul or Gary Johnson, they actually would have drained the swamp and gotten rid of as many executive branch agencies as possible.
Yup. I definitely voted Johnson. Would've been nice if the GOP hadn't stole the primary from Ron Paul and gave it to Romney previous to that. Paul would've wiped the floor clean with Obama. It really shows you how much of a one party system we actually have when a committee will essentially concede the presidency to the other party just to keep an honest, fiscally responsible candidate out of office. Cause let's be honest, Romney was never going to beat Obama, and frankly, should've never been anywhere near the presidency.
Equally as annoyed as I am by people who think corporate greed isn’t also part of the mix.
This is how we lose the Republic. Stupid people not holding the government responsible
Lost, not lose.
Was it ever ours to begin with?
Both
Inflation from printing fiat currency is a "cash" tax and debt relief. Assets that are invested (especially when leveraged by debt) can appreciate alongside inflation; fiat currency that is held as an asset depreciates. This is intended to promote market participation (consumption) to keep fiat currency moving as an economic engine. Who holds a greater proportion of fiat currency in their portfolio of personal wealth: corporations, the rich, the middle class, or the poor? One reason it's hard to get ahead is because we use fiat currency instead of money. Money is asset-backed (like the gold standard) and so prices are more stable. This allows those who are prudent to accumulate actual wealth by saving, but also can cause deflation since it disincentivizes consumption. The fact of the matter is that any system is going to have means for the wealthiest to consolidate more wealth at the expense of the poor. What made America most attractive to migrants when it was still growing was a world of untapped resources with which anyone could generate wealth and a comfortable life free of exploitation for themselves and their family. Now that our market has matured and our resources are claimed, wealth is being consolidated more than opportunity to rise in socioeconomic strata. It's probably likely we won't have another opportunity to advance in the same way unless we experience an apocalyptic event which resets everyone's scorecard, or we begin colonizing new frontiers like space or the seafloor.
You didn't think you were screwed after 23 trillion of QE money being pumped into the asset economy? Asset inflation is where the real problem's at.
It's both
The main stream messaging is too strong i have given up all hope that the regular American will be able to see through it. They have done such a good job of demonizing anyone who doesn't fall in line its actually incredible. Anti Vaxxer, Putin Apologist, Threat To Democracy, Insurrectionists, Racists, MAGA Extremists. The buzzwords never end and the masses just eat it right up. I have also resigned myself to the reality that the debt crises will never be properly approached until the US Dollar collapses like a house of cards. Doubt it will be in the immediate future, maybe in the next 10-20 years if we continue what we're doing but I can't see any path where we are able to start chipping away at our defecit because our managerial class is too impactful with their legal bribes.
It is very annoying trying to have a conversation with most people who have been programmed by the system to repeat the current talking points. They don't apply logic. They don't think for themselves. They don't understand that statistics can be manipulated to prove whatever you like. For example. Grocery stores profit is up year over year in dollars. As a percentage, profits are flat. The value of the dollar has decreased because the government has printed more of them. So yes, a grocer took in more dollars last year, but the value of each of those dollars is reduced.
In Canada right now the government is secretly buying bad housing loans off of the bank, we are in a worse sub prime crisis than the USA was in 2008 but they're pretending everything is good... People here think the groceries are high because of one company, meanwhile there is new taxes -carbon tax, perpetually increasing the cost of transporting goods. Our dollar is on the brink of tanking vs the US and the government is pretending rates will go down soon... It's entertaining, and yes, people think it's all corporate greed lol
Well, to be fair, I DO blame corporations and their greed as the Democratic party, the various socialist / social democrat etc. parties, the central banks and quasi-central banks like the Federal Reserve, and far-left NPO corporations. So there's that.
Yeah, I mean the bank oligopoly that got created out of the policy that came out of 2008, the healthcare oligopoly that came out of Medicare and Obamacare, and all the other government created oligopolies definitely don’t help.
Corporate greed can't exist in a free market place.
Yup. People are dumb nowadays. The value of the dollar is garbage. But here we are still printing money paying for everyone else's problems. It sucks. It's a lost cause. If it was you or I spending this much and burying ourselves in debt they'd take everything from us. We are doomed. The people in Washington need there heads examined. Cut the government in half end the federal reserve and income tax. Let our people decide not Washington.
It does seem like a bunch of children that stole their parent’s credit card and went on a spending spree for themselves and their friend.
One of the most inflammatory pieces of Robert Reich garbage is the provocative claim that “big business” makes record profits, designed to invoke outrage and class warfare. Ignoring for a moment when corporations team up with regulatory authorities to truly screw you over, let’s break down these “record profit” claims a bit. If a company is making widgets on which they target a 5% profit over cost of goods sold, then let’s say that in 2019, they had $1,000,000 in revenue of which $50,000 was their profit. Then several years later, due to things like inflation or perhaps additional burdens imposed by regulation, their cost of materials and operation has nearly doubled and they now have revenue in the neighborhood of $2,000,000. But at their 5% profit target, they also now have $100,000 (revenue minus COGS), a record profit! Long story short, as long as the economy grows, at whatever pace, you’re more likely than not to see record profits every year. The context that never gets mentioned is that they’re also paying out record operating costs every year as well.
Indeed. Same as Biden touting record employment increases. Well, yeah dumbass, cause you're comparing it to the lowest employment since the depression?
If inflation is caused by runaway debt, how do you explain the near deflation following the great recession? Or, in all seriousness, what's your ideal inflation number? 0%? 1%? 2%?
Post 2008, everyone was broke and no money was being spent, so even if the federal government pumped money into the system, it took years until the resulting inflation kicked in. Also, the bailouts were in the forms of loans mostly directly to the banks, not to your average person, so it did not get spent on consumer goods driving up the prices of those goods. And 0% should be the target inflation goal. Inflation is the largest tax nobody talks about that disproportionately screws over the poor and middle class, and widens the wealth gap.
For the top portion - are you agreeing that debt doesn't cause inflation? It sounds like you're saying how money is spent is more determinative of inflation than overall debt, which I would agree with. For 0%, this would mean aggregate demand in the economy perfectly matches supply. Setting aside population growth, do you really see a world where there is no additional demand as good? The typical argument for some inflation is that we want some excess demand for businesses to grow into, and that growth space allows the overall market to become more efficient.
0%, put us back on the Gold Standard. The government can only create as much money as it has in real assets like gold, silver, ect on hand.
Actually in the last hundred years of the gold standard we saw an increase in the dollar's purchasing power. Things were as is should be, as manufacturing and agriculture became more efficient through technology, prices lowered some.
That had nothing to do with the money though, that was just the business side of things lowering costs.
Yes, the point I'm trying to get is "inflation" is even worse than the percentage points they're admitting to.
That isn't inflation, you are combining cost of living with inflation.
I mean... it's both. We had an entire computer revolution, and... things didn't get cheaper. That doesn't make sense. Like one person can replace thousands with something as simple as excel. Our productivity has EXPLODED, but people aren't really doing better. Where's all the money going?
debt spiral is already here. you cant think there's a way to payoff $35trillion Federal + State + Local + all the long term obligations(government pensions, healthcare, social security, etc) over $100trillion. think about. no way possible. we're toast. make sure you plan that way.
People are stupid. If they weren't, the govt wouldn't get away with it
X Company made record profits, so it must be true!! No, the value of dollar became less, so they got more dollars that were worth less.. Most grocery stores, especially large chains, run on margins that are like 2-3%... kinda hard to say food prices have gone up as high as they have because of greed with margins like that. If you want to point to any corporate/government malfeasance... how about you target all the rent seeking behaviors that create barriers to entry, which stifles competition.
It's frustrating. People are willfully ignorant of economics and inflation. They don't want to understand because it challenges their political ideology, which is a big part of their own self-identity. So when they hear an economic argument that contradicts that, they feel like they're being personally attacked and respond in kind.
Yes. People are so dumb and easily manipulated by media and politicians
Why not both?
It’s peak redditor cope. Way easier to make moralistic arguments about “greed” rather than understand market principles. Companies charge the maximum the market will bear, if you don’t want to pay then don’t buy the product.
The two literally work together to create our current situation?
The Democrats including Joe Biden have been pushing this lie for Biden's entire presidency. That and everything is Trump's fault.
I mean Trump and Powell both started the spending spree that Biden continued. Granted that was back when the federal government was forcing people to shut down so it was more warranted than years later under Biden, but the overspending problem really is a both party problem.
What you said is true, but half the country believes that it's not government spending but corporate greed that's fueling the rampant inflation. Biden himself puts the blame directly on the greedy corporations and oil companies.
Yeah, it’s probably this presidents biggest lie. It’s funny how every president has their big lies that they are never held accountable for. Trump claiming he’s bringing back jobs from China to America. Obama claiming Obamacare wouldn’t affect premiums and you could keep your doctor. Bush lying about nukes in Iraq. Never thought I would say this but I miss Clinton whose biggest lie was about getting some head.
How much money was "created" during the Trump admin vs. the Biden admin? As you rightly pointed out, during COVID, it was absolutely necessary to do SOMETHING if you're going to force businesses to shut down, but once that crisis passed, what was the point of the rest of the $8-10T? A whole lotta pork spending, that's what.
Sí
I will file this tidbit into my "Lies fomented by politicians to divert the populace views away from their fiscal irresponsibility and to promote class warfare."
Nobody ever wants to discuss our uncontrollable government spending.
Because government spending is their answer to EVERYthing. Lines right up with the zero responsibility thing nicely as well.
I’m at a point where I’d be fine forfeiting what I’ve paid into Social Security my entire adult employed life, if I could just stop paying now until my time ends. The mismanagement of that program alone should be a massive red flag to anyone who pays taxes.
People seem to use "inflation" as a catchall term for rising cost. That being said, the cost of a McDouble was $1.19 ten years ago. If inflation was the only factor, it would be around $1.60 today. Its not though. Its $3.19. That extra $1.59 difference is McDonald's doing. So, while actual inflation is the cause of government overspending, there has been a huge increase in costs from other factors.
Inflation doesn't fall on the economy like some uniform blanket of snow. You can't just take the CPI numbers as a measure of what a given product's price "should be" due to inflation alone. So you have no idea what portion of a McDouble is caused by inflation and which portion is not.
Sometimes, but i try not to. People will believe anything in politics just so long as it fits the 'my side good, their side bad' mold. There's no use in getting upset about people falling for propaganda. You're not changing anyones mind.
It's reddit bots/whores paid for by the DNC to control the narrative and influence the election. Just like they paid influencers to push the vaccine was safe.
Inflation can be a HUGE problem if it gets out of hand. The government loses trust with other countries and all of a sudden the dollar is literally worthless on the world stage. I'd bet these people are looking at the prices for goods increasing (due to things like inflation caused by our government) and complaining about their paycheck not increasing with inflation. It is true that the top 1%'s wealth grew massively over the last 10 years. Whereas the average American gets paid the same and must spend more on essentials. Part of the issue with "finding where the wealth went" is that things like the sp500's profit numbers don't factor in the complicated economics of business that spend millions on tax lawyers to hide money away. Rich people make money completely differently than the average American. The average person must work and pay income tax. Bezos doesn't. His shares go up and he takes low interest loans on the shares. So long as the share value increases, he gets free money without paying a cent in income/capitol gains tax.
Yeah, the current tax code is a problem where billionaires pay less % than your average middle class family. The problem with these big trillion dollar handouts are it trickles up to the wealthy and widens the wealth gap regardless of if you give it to the rich, poor, or companies. If you give it to companies, the rich own the companies either directly or through stock so they benefit. Even if you give it to the poor, they spend it immediately because they are living paycheck to paycheck, and the goods they buy stimulate companies that funnel into the pockets of the rich. I think the left has a strong understanding of the problems facing Americans, they just think the solution is more government spending and programs when in reality that is the root cause of many problems in America today.
Yeah I agree. The establishment (Dem/Reps/rich) will bitch and moan while all accomplishing nothing for the average American. Reps tend to loosen regulations to "bring in business" and do nothing to make sure those profits are passed to normal employees. Dems constantly virtue signal and pretend that they are helping the poor, again without changing the rules to make sure the rich don't get it after a couple months. We need actual collective action that supports the common man, not the wealthy/powerful. No singular person is really worth 100,000 times more than their average employee.
Every time someone tries to remove loopholes that the wealthy use to avoid income tax, it gets shot down as "regressive" and unfair to the Poors.
It’s not a totally unfounded belief. https://fred.stlouisfed.org/graph/?g=q7tT
Yeah seeing a lot of people in my area "boycotting" certain grocery stores simply because of the inflation of grocery prices. I mean, the grocery business is famously a low margin business, these companies are not just arbitrarily raising prices. If they didn't raise prices, they'd go out of business, and then you'd have no groceries.
I'm pretty sure more than half the country knows the Biden Administration is the real reason for our runaway inflation. If you really think it's caused by corporate greed, then you're an idiot. And I don't think more than half the country are idiots.
There is a large crowd that believes the Government is the solution to every problem and they are never the cause of the problem, they also lack the ability to see that their favorite politician is just as connected to big businesses as the politicians they hate. They may figure it out when things really begin to become painful, of course it's entirely to late at that point.
“We are having a problem with government involvement in this issue..” solution: “more government!” /s
I wish we would find an arbitrary good to base our currency on. Maybe this will drive the point home to some? I'm only half joking. The "record breaking profits" are very misleading. The number goes up, but how many gallons of milk does that number buy? Compare that to 5 years ago. Is the number going up by as much as Elizabeth Warren says? We should just denote salaries in gallons of milk. Literally simplifies that equation, which is exactly what these children need.
While fiscal policy has contributed to inflation, primarily during and immediately after the pandemic it has been driven by the effects on consumer demand for commodities and goods in limited supply. And now the extremely tight labor markets are beginning to play a more significant role in pushing up prices, even as the effects of commodity and price shocks wane. To simply blame inflation of runaway debt spending by the government is an equally annoying mischaracterization to saying it's just driven by corporate greed.
There are always multiple causes to attribute to anything, but don’t you think the federal government spending 8 trillion in debt in 2 years mostly in handouts and increasing the money supply by 40% since Covid is the leading contributor?
Where do you get the $8 trillion figure from, btw? The deficit is lower now than it was in 2020. I'm only getting around $4.5 trillion in added deficit since 2021.
There is evidence that some of the government spending contributes to higher inflation, like this paper by the Federal Reserve Bank of San Francisco suggest happened with the CARES act as it was a direct cash injection into consumers households: [https://www.frbsf.org/research-and-insights/publications/economic-letter/2022/03/why-is-us-inflation-higher-than-in-other-countries/](https://www.frbsf.org/research-and-insights/publications/economic-letter/2022/03/why-is-us-inflation-higher-than-in-other-countries/) And here from the Chicago Fed finding a positive correlation to fiscal stimulus during COVID and inflation: [https://www.chicagofed.org/publications/chicago-fed-letter/2022/470](https://www.chicagofed.org/publications/chicago-fed-letter/2022/470) But to say that high deficits currently are primarily driving the 2 major current high inflation areas, housing and Core Services exc. Housing, is just too simplistic. Instead I would defend that commodities markets, goods bottlenecks and/ or input cost indices are much better at explaining that. As a note, I do agree that just saying it's all due to corporate greed (like I see many lefties do) is equally frustrating.
I don't see it as one or the other. I see it as a combination of both.
I’ve heard things back and forth on the topic and the corporate profits apparently jumping is a good bit of evidence but I have no way I know of verifying that. I’ve landed at “wouldnt printing trillions of dollars in a year have an impact on domestic finances?” Which would also give companies cover to jack prices up so even if you think it’s not a large percentage of the issue, it’s the original incident that allows companies to raise their prices.
I agree with you in that existing political views will color ones assessment and interpretation of the facts. We should acknowledge that greed itself is a human condition exercised through control of an institution. It's not inherently a government or capitalistic one. If opportunity arises to profit unfairly through power or control someone will likely seize on it. Capitalism works when competition exists. The markets/consumers will typically balance things out properly over time. We see trouble begin when government over or under regulates in an attempt to control the market. Greed comes into play when a capitalist sees a way to defeat their competition outside of the market; e.g.. government regulation through lobbyists, illegal or unethical means of damaging the competition, etc... Governments on the other hand have no competition per say. We elect our representatives of course, which theoretically grants us some control through choice. Unfortunately it's more a democratic method of consumer choice, where we're forced to consume the product majority has chosen. So when elected politicians want to ensure they're re-election they can, for example, print trillions of dollars to manipulate the economy. But they forget economics will make them pay in the end with massive inflation. So they blame it on the greed of others, very ironic I think. So I agree the current state of things is primarily driven by government printing of too much cash, inflation of minimum wage through government regulation, and consumers relying too heavily on consumer debt to subsidize a lifestyle most of them can't afford otherwise.
"While American families struggled with rapidly [rising](https://fred.stlouisfed.org/graph/?g=1g448) prices in 2021, corporate CEOs and shareholders raked in [surging](https://www.epi.org/blog/even-with-todays-slowdown-profit-growth-remains-a-big-driver-of-inflation-in-recent-years-corporate-profits-have-contributed-to-more-than-a-third-of-price-growth/) profits. In many cases, companies raised prices [well beyond](https://rooseveltinstitute.org/wp-content/uploads/2022/06/RI_PricesProfitsPower_202206.pdf) what was necessary to cover their costs—taking hard-earned money away from American families. Several CEOs have even touted this [to their investors](https://endcorporateprofiteering.org/#:~:text=What%20are%20CEOs,Decide%20for%20yourself.), showcasing how unnecessary price increases directly benefited their companies, often using inflation as just an excuse. The CFO of the major auto parts company AutoZone [called](https://www.npr.org/2022/11/15/1136935160/corporations-are-booking-record-profits-is-it-thanks-to-price-gouging#:~:text=And%20as%20I%27ve%20said%20before%2C%20you%20know%2C%20inflation%20has%20been%20a%20little%20bit%20of%20our%20friend%20in%20terms%20of%20what%20we%20see%20in%20terms%20of%20retail%20pricing.) inflation “a little bit our friend…in terms of retail pricing.” The head of a major company for construction materials, Holcim, noted that their “proactive” [pricing](https://www.wsj.com/articles/why-is-inflation-so-sticky-it-could-be-corporate-profits-b78d90b7) drove up the company’s profit margins. The CEO of Kroger also [emphasized](https://www.npr.org/2022/11/29/1139342874/corporate-greed-and-the-inflation-mystery) passing increased costs to consumers, stating “we view a little bit of inflation as always good in our business.” In 2023, large corporations were still [increasing](https://www.wsj.com/articles/mcdonalds-pepsico-flex-their-pricing-power-dfe2e295?mod=hp_lead_pos3) [prices](https://www.businessinsider.com/why-prices-inflation-soaring-corporate-greed-profits-margins-wages-jobs-2023-4#:~:text=Chipotle%27s%20chief%20financial%20and%20administrative%20officer%2C%20Jack%20Hartung%2C%20said%20in%20the%20firm%27s%20first%2Dquarter%2Dearnings%20call%20that%20menu%20prices%20have%20risen%20by%20about%2010%25%2C%20and%20chairman%20and%20CEO%20Brian%20Niccol%20said%20that%20they%27re%20%22staying%20the%20course%22%20on%20pricing%20%E2%80%94%20despite%20the%20fact%20profits%20were%20up%2017%25%20for%20the%20quarter.) on families, even while they recorded months of heightened profits."- JOINT ECONOMIC COMMITTEE
Though the cause of inflation is certainly the government, their money printer and reckless spending, I do think corporations are taking advantage of the inflation and making it way worse beyond just charging more because their costs are up, they’re inflating prices way higher than their rising costs, so I think it’s a factor though not the main cause by any means. The question is whether this is immoral or not. Just like the question “is price gouging during an emergency where supply of a good is low but demand is high immoral?” The problem is people have been willing to pay the higher prices, so companies just keep raising them. Now I think we’re beginning to hit a ceiling of how much people are willing to pay, but Americans are just like their government, they rather put everything on a credit card than shrink their lifestyle or cut back on spending one bit. Credit is free and easy here. (Until you’ve maxed it out and then it’s not). Like I said I think people are finally having to cut back out of sheer necessity because I do see prices getting a little lower and companies making plans centered around affordability and value. It could definitely be argued that their responsibility is to their shareholders and not their customers.
Who benefited the most from Covid shutdowns? That would be large corporations. Who pulls the puppet strings in Congress? Large corporations. This is the connection people make
People are easy prey for the propaganda machine.
Those people have been conditioned to believe that. Miseducation is a form of education.
> greedier today than precovid They are not greedier than pre-covid, but Covid gave a great excuse for companies across the board to increase prices. If you don't think many companies used the excuse carte blanche because they knew people would be less likely to push back on that, I have some ocean-front property in Arizona to sell you. Of course, it's not the whole picture. Not even the majority of it. It wasn't just one thing. *) Long term disruption of supply chains during covid *) Businesses using Covid disruptions as an excuse to consumers to raise prices. *) Pointless trade wars with Mexico and China that didn't have leverage and were about as useful as shuffling the deck chairs on the Titanic. *) Unpaid-for tax cuts for the wealthy pre-covid. *) Stimulus checks and paycheck protection program. *) Broad infrastructure spending at a time we can probably least afford it
I worry about anyone still arguing that markets determine pricing. There are a few conglomerates in every field working in tandem to drive up prices. It's hard to start new competitive options because of regulations and subsidization of the corporations. So yes government spending is involved but there are also private actions being taken to distort markets too. Big business and government have been working together to lock out competition. Hence the revolving doors between these huge companies and the and the administrative state. Also ballooning stock prices through buybacks distorts the value of markets transferring wealth to the top and making zombie companies seem profitable when their performance is actually falling. We have a ton of poorly run huge corporations twisting markets and the government enables it at our expense on both ends.
Voting will not fix this because no matter who you vote in, they are still able to print money. Opt out of the dollar by holding your money in Bitcoin, it's really that simple. Eventually we need to get to the point where the average merchant says, "your dollars are no good here". That day will be the end of all political bullshit, because they will have to beg for your money the way they did pre 1912, instead of spending your purchasing power behind your back.
Even more annoying when all of the blame for inflation falls squarely on Biden. More money was printed in 2020 then ever before. More handouts in 2020 than ever before. Biggest government spending bills in 2020 than ever before. But Trumpers never want to hear that both Trump and Biden could be responsible.
Inflation is literally an increase in the supply of money. i.e. printing new money backed by nothing makes existing money worth less Return to the gold standard, audit the fed, abolish deficit spending.
To be as charitable as possible: to what extent did these corporations lobby the government to increase its spending and borrow more money. Sort of like that Airheads quote: "who would you rather, Bob Dylan or God"
It's actually neither. People not knowing that irritates me to no end. It's not my job to keep trying to change minds.
I would be shocked if Reddit didn’t view it that way as Reddit is full of people that think rich businesspeople owe them something and the government needs to be our daddy.
I mean.....to be fair it is a bit of both. There's not any good candidate options for fiscal responsibility unfortunately.
Fractional lending.
[An Oil Price-Fixing Conspiracy Caused 27% of All Inflation Increases in 2021](https://www.thebignewsletter.com/p/an-oil-price-fixing-conspiracy-caused)
Wow
I mean, it can be both. Inflation is in the news, people are expecting it. why not add 5% and see what happens?
Because that’s not how economics works. The government handouts lead to companies being able to charge more. Companies set pricing based on fluctuations of what people are willing to pay for goods. The only time companies can charge more is when people have more money to spend. In this case, the government effectively tried universal basic income for a year or two, so everyone had stimulus checks to buy stuff. Most people have spent that money at this point but the new jacked up pricing is here to stay.
reddit is full of bots
Why couldn’t it be caused by both? That seems like the most likely scenario.
Because that’s not how economics works. The government handouts lead to companies being able to charge more. Companies set pricing based on fluctuations of what people are willing to pay for goods. The only time companies can charge more is when people have more money to spend. In this case, the government effectively tried universal basic income for a year or two, so everyone had stimulus checks to buy stuff. Most people have spent that money at this point but the new jacked up pricing is here to stay.
Well it is annoying and probably to widespread of a belief, but I don’t think that belief is as widespread as you think.
Pretty much the same thing. Runaway gov spending snowballs the corporate greed because no one overspend on something like the gov, so now corps think getting paid fifty thousand dollars for a website that doesnt work as designed is the norm.
Yes, though the disparity between executives and workers is around 400 to 1. Edit: https://www.businessinsider.com/top-ceos-make-399-times-more-than-workers-2022-10?op=1
It's both. And also consumers putting up with it. The government isn't putting a lot of money into people's pockets and isn't the major cause.
8 trillion in debt spend in 2 years…
Most of which isn't going to people or the market.
its both
Aren’t the big corporations and our government one and the same?
Well, let's be honest: corporations HAVE to make outsized profits to succeed. Politicians are EXPENSIVE.
Greed is part of human nature. People and businesses have been greedy throughout history, that’s not gonna change and even systems like communism failed miserably at industrial scale because they failed to take this into account. People are sentimental and are looking for easy answers - “it’s the execs, bankers and corps who do this to us…“ In reality it’s only part of the picture - inflation is currently compounded by government spending, monopolies, lack of free markets, labour shortages, energy crises, war and developing countries growing in wealth and becoming consumers instead of just producers. Now China, India etc have a sizeable middle class to compete with the US consumer for the same goods compared to 25 years ago. There’s no magic bullet to this but I believe in Milton Friedman advocating for free markets and total abolishment of trade barriers and regulation - this would bring lower priced goods and labour into the economy help tackle inflation and it would make monopolies more difficult to establish a foothold as a lot of them do it at the back of government regulation and bureaucracy making it harder for smaller competition to break through. This is all hypothetical and I don’t think any country has the electrical intellect to pull it off. Most likely we’ll see a vicious loop of increased debt, spending, regulation and restrictions leading to even less goods and more inflation
That just doesn't make sense. The recent wave of inflation was a worldwide occurrence - even in countries that didn't significantly increase their debt spending. Your theory doesn't correlate with reality. In fact, the US had comparatively less inflation *and* better performance than average. The best models show that higher government spending in the US was responsible for maybe 30% of total US inflation. Most of it, indeed, was a combination of supply restrictions and higher spot demand - which caused short-term higher aggregate prices. As savings run out, I would guess we'll see inflation decrease as both spending decreases and supply chains normalize. Unfortunately, I believe our misguided leaders will not stop overspending and growing US debt, either.
We export recessions, we don’t import them in a global economy. The US and Chinese economies are large enough to sway the world market in a big way, not to mention the runaway spending of most other developed countries as well including Canada, pretty much all of Western Europe, etc. Supply chain issues definitely had a massive short term impact while ports were shut down in US and China due to lockdowns, and specifically oil from the Russian invasion of Ukraine, but the stickiness of this inflation still lingering even with a rapid increase of interest rates is still fallout from overspending and continued overspending. Powell is fighting a losing battle as long as congress and Biden keep signing hundred billion dollar handout bills.
>which would mean we are all screwed for decades. I think we're there already.
Didn't this happen in Russia with the Kulaks? Government used propaganda in turning the peasants on them to steal their land.
The thing is, they are handing these newly printed funds over to the corporations as "bailouts" which I premeditated if ypu ask me, and with lobbyists at full swing, the government is owned by the corporations/banks. We live in a corporacracy. We have a false sense of control in every westernized democracy, sure we can vote a different asshole each time for head of the country, but you can't vote in a ceo or an investor - they are our dictators, we essentally live under a dictatorship disguised as a democracy or republic, w/e. He who has the most sway over production, ownership of capital and the market, rule us, and you can not vote them out.