Could you please elaborate? I'm reading his newsletter for quite some time and I'd like to read a rebuttal that's more in depth than just 'that's garbage'.
In particular the corporate profits being cited are coming from ALL non-financial corporations which is a suspiciously broad data set to use when trying to make an argument about price fixing. As an example if there were a shift in profits from small businesses towards larger corporations driven by pandemic behavior, that would contribute to increasing this.
And are we really supposed to believe that near 0 interest rates and unprecedented levels of quantitative easing have no impact on this?
Another thing that’s still worth consideration is that even if 3% of inflation were attributable to corporate profits (it’s probably safe to say he’s exaggerating this a bit at least), is the real rate of inflation actually 6.8%? Many think this is an understated number and the reality may be in the low double digits. If this were the case, corporate profits would represent a relatively smaller portion of real inflation.
It's hard to blame this purely on ZIRP or QE because we've had both for the last ten years, all without any meaningful spike in inflation.
Naming Summers over and over again is a red flag for me. I respect the guy. I think he was the last Treasury Secretary to have a balanced budget (Clinton)(?) Dude was vital in mitigating the fallout from the Asian financial crisis. Whatever.
The author seems to focus on corporate profits but fails to slice that by industry… software services are booming.
He explicitly ignores productivity gains. Many companies became more efficient due to the pandemic. I could go on and on here…
You cannot prove causality for inflation. Even the things that superficially seem intrinsically linked to inflation like the money supply cannot be proved to account causally for specific inflation. It's a complex system. No one thing causes any other one thing.
So yeah, this is a flaming pile of utter bullshit and Stoller embarrasses himself by putting it out.
In the context of inflation, the standard party line theses are like this. Right wing: inflation is caused by huge Government spending. Left wing: inflation is caused by a range of factors, and Government spending is just a minor one. The other ones are the supply chain, the emergence of the economy from a crisis, a spike in commodity prices, especially oil, some of which could be attributed to the hurricane Ida that resulted in lots of refineries being shut down, etc. About a month ago another idea was added to this list: inflation is caused by corporate greed. The problem with this idea is that corporate greed is not new. If corporate greed could cause inflation, it would have caused inflation 5 years ago, or 10, or whatever. The proponents of this idea claim that it's the market consolidation that lead to increased pricing power for the corporations, and there's some truth to this, but again, this consolidation did not experience any quantum leap recently.
I think on this topic, the Right wing is absolutely right, the inflation is without a doubt caused by the massive, unprecedented money printing. What they forget is that this money printing started during the previous administration, so there's that.
then trump wanted to do it again probably just to get reelected or something dumb but at that point the mid-point of republic thought was not really eager for more stimulus.
and now at this point the economy is fully humming along and there is no employment or business crisis, business actually have more work than they can hire for and yet democrats still want stimulus. so i can only conclude that any stimulus is ostensibly for "crisis" but really its just form of wealth redistribution since stimulus checks go not to the non-rich but will end up being paid for by the rich. so for democrat stimulus is now a form of policy implementation by a precedented and popular mechanism.
I think of government spending as all of the money needed to fund / run the federal government.
While the Fed is printing money and spending that to purchase assets..I wouldn't really put that into the same bucket as Medicare or Military spending..
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The same could be said of government or central bank spending, but the past 15 years in the U.S. and the past 30 years in Japan show that the relationship isn't quite so simple. Yet few people deny that government spending can induce consumer price inflation, so why conclude from effectively the exact same longitudinal data set that corporate pricing power cannot induce consumer price inflation?
In both cases the devil is clearly in the details. If macroeconomics were a solved problem we wouldn't even be having this conversation.
Sounds like this person is just reacting to the headline and Stoller’s name, or maybe it’s Larry Summers’ alt account.