Once a fringe theory, “greedflation” gets its due
axios.com
axios.com
Now competition has been consolidated away.
With the pandemic, corporations have accidentally entered into an experiment leading to new price discovery. Without competitors, all that’s in the way of increasing prices is consumers’ willingness to buy.
If two brands of cereal are owned by the same parent company, they aren't really competitors.
If one hundred parent companies are owned by the same investment index fund, whose management votes on behalf of its investors, are those hundred companies really competitors with each other?
Every other aisle is the same story. Two or three companies, with a few small groups also throwing a hat in the ring.
The grocery store is also owned by one of two companies, with again, a couple small time competitors that haven't been purchased yet.
You can't blame the voters for this, the institutions are long ago corrupted.
[0]https://pnhp.org/news/gilens-and-page-average-citizens-have-...
There is plenty of evidence of consolidation. For most recent one look up analysis on spike of price of eggs. The egg production turned out to be controlled by just a few conglomerates. Which were able to take advantage of (small to almost non-existent) loss of chickens and voila. Price of eggs is non-elastic; that is, you can't easily replace it with other products and it is an important part of Western diet, so people didn't have a choice but to pay up.
https://thehumaneleague.org/article/how-many-chickens-are-in...
Approx 58 million chickens have been culled in the United States due to bird flu.
https://www.cdc.gov/flu/avianflu/avian-flu-summary.htm
The first link seems to be specific to meat birds, but I think the concept stands for layers too.
In that light, the loss of 58 million chickens to flu is a very different kind of shock.
[1] https://unitedegg.com/facts-stats/#:~:text=U.S.%20Egg%20Prod.... [2] https://extension.umn.edu/small-scale-poultry/raising-chicke....
I mean if you go just a few hundred years back I'm 100% sure consolidation was worse because lords and kings owned everything. It remains to be seen if it was better during the 1800s and 1900s but my searching skills aren't coming up with much.
I don't know offhand of any specific and scientific measures of consolidation, but it's painfully clear from observation that over the past 40 years, we have had a massive wave of consolidation in many sectors. Just as one example, I recently saw a chart of consolidation in the (book) publishing industry, where dozens of publishers consolidated into several, and then into the big 4 we have today. Similarly, there are a number of fairly widely-circulated charts of the few companies that own nearly all of the various food and household product brands in the US and in Europe.
These are widely-known and well-documented phenomena, and it should be easy to find evidence if you go looking for it at all.
As for the most recent spike in price of eggs a quick search showed
https://farmaction.us/wp-content/uploads/2023/01/Farm-Action...
which yes, is prepared by the smaller competitors of the larger conglomerates, but it does present some factual information. Including very small decrease in egg production, high degree of industry consolidation, with one company controlling about 20% of the entire market (and the company saw 600% increase in profits).
Here
https://www.forbes.com/sites/daniellenierenberg/2023/01/27/c...
you can see more analysis and other examples of industries that are even more consolidated, e.g., 4 companies control 70% of the pork producing market, other 4 companies control about 80% of beef producing market.
Look at finance. Look at IT. Consolidation is everywhere. It is natural direction of free markets and, if left unchecked, causes massive disruptions of free market mechanisms.
Something like "trustflation" would be a better name. Want to reduce prices by allowing/encouraging corporations to consolidate their supply chains? Maybe that's a good short term trade off. But prepared for the inevitable trustflation when your too-big-to-fail, risk-averse monster can now hike prices as it sees fit.
That's exactly what happened before.
During the Nixon recession, leading up to the wage & price freeze.
And after the freeze was lifted, the financial power imbalance was no different so inflation went even wilder due to pent-up un-fulfilled greed among the financial leaders whom had to do without growth for a little while there.
Even though the value of the dollar was declining due to destabilization, there were less available for the majority of workers/taxpayers, but financialists still needed more of them or the math would have made them look like their greed had failed like never before. They are rewarded on greed numerically in ways that everyone else can not compare.
The freeze worked to cement the imbalance leading to the exaggerated wealth inequality we have now.
The more apparent income inequality today is minor by comparison, but they were both locked in like never before mainly by pure unchecked greed.
Freezing prices didn't help much, but freezing wages even for a little bit was completely counterproductive by setting the workers/taxpayers back many more years by comparison to capital.
Those years have grown to generations now.
https://www.npr.org/2023/05/11/1175487806/corporate-profit-p...
Any corporate action that results in negative PR is more likely in an environment where others are doing the same thing, since the negative PR cost is lower when it's a normal industry trend. So we should expect this kind of stairstep behavior.
Relevant clip is here:
The standard rebuttal seems to be "are corporations greedier today than five years ago" and the likely answer seems to be no. As best I can tell, the supply shock legitimately increased prices, and the pace at which prices are reverting is slowed by profit taking. In theory, high profits should lead to more competitors entering the market, but this is either a laggy response, or stymied by interest rate increases raising the cost of capital formation.
Does a dog become more greedy for food on the table when you turn your back?
A "no" answer doesn't disprove the theory because the theory is only arguing (among other things) that companies are taking advantage of an opportunity that didn't exist 5 years ago, which is consumer expectations of rising prices.
Indeed, everything I've seen about this seems to be focusing more on acknowledging that these companies are greedy, and will use any opportunity to enrich themselves at everyone else's expense (and, often, at their future expense—short-term thinking is a big part of it too). Once we acknowledge that, we can work on ways to counteract its effects, and prevent the worst excesses that the greed would otherwise bring.
We're all better off ensuring there are so many companies bidding up wages and products competing on price that margins decline. The good news is that recent data shows that margins are already declining[1].
I really think you don't give Stewart enough credit. Stewart is an intellectual that chooses comedy as his medium.
I think Jon Stewart wouldn't have gotten into that interview if he couldn't hold his own, intellectually. I was recently watching the Stewart/O'Reilly debates from about 10 years ago on Fox News and surprised how well both could lay out their arguments and not end up in a cacophony of noise. Stewart respected O'Reilly as much O'Reilly respected Stewart.
> While that might be difficult in the long run, "over the shorter term though, yes," Powell said, dipping tentatively into a debate that may become more pointed over time depending on how inflation, the job market and the economy evolve.
https://www.reuters.com/markets/us/feds-powell-acknowledges-...
"Wages affect prices and prices affect wages," Powell said, associating current earnings growth to the current ultra-low unemployment rate of 3.4%, and suggesting the labor market may need to weaken at least somewhat for inflation to fall.
meaning that in his opinion inflation is driven by high employment, aka people spending money like crazy because they have more money that they know what to do with, and the solution is to make sure more people are out of work and with less funds to spend. Perfectly logical solution to producer-driven inflation I guess.
> The experts were worried about a so-called wage-price spiral. This occurs when workers expect inflation to keep rising, so demand — and achieve — higher salaries to keep up with price rises. Businesses then raise the prices of goods and services to cover higher labor costs, at the same time as workers have more disposable income to increase demand. This creates an inflationary loop, or in the language of economists, “second-round effects.”
> But while concerns this time around aren’t totally gone, what’s being discussed more frequently now is the fact that a wage-price spiral has not occurred in the 18 months or so that inflation has been running red-hot in much of the world.
> “What we’ve seen in the last year is prices rising very rapidly, but wages have not increased nearly as much, and that’s why we have a cost of living crisis,” Gourinchas said, after noting that core inflation remained high in many countries and in some cases was increasing.
> “We should expect wages to catch up eventually and people’s real income to recover,” he said. Real income refers to wages adjusted for inflation, reflecting changes in purchasing power.
> But the increase doesn’t present a risk because “the corporate sector has been sitting on pretty comfortable margins,” Gourinchas continued. Businesses’ revenues “have risen faster than costs, and so margins have room to absorb rising labor costs.”
Tangentially, Powell cannot destroy aggregate demand via the benchmark rate in a way that materially impacts the unemployment rate due to structural demographics. ~2 million people over the age of 55 die every year in the US. ~3 million Baby Boomers retire every year. 55+ workers clinging to the participation rate is holding a lot of this together.
https://www.barrons.com/articles/the-labor-market-bends-towa...
https://seekingalpha.com/article/4531829-older-workers-propp...
EXACTLY. Wages driving inflation my behind. If anything, businesses increasing prices cause other businesses (that purchase their goods) to increase their own prices. While most businesses manage to keep wages low (and increasingly laying off more and more staff). How is increasing unemployment rate supposed to tame the inflation in this scenario????????
Ah, the old wage-price spiral theory of inflation, which is total bunk because it doesn't explain the increase in the money supply.
Inflation follows the increase in the money supply due to money creation by the Fed. It's in Powell's best interest to deny this.
Reducing the supply of goods/materials will have the same effect - even at a constant money supply.
In Europe the ECB/EU gov is hiding behind the War in Ukraine and global supply chain issues to hide what is mostly their own pandemic purchasing program and overspending driving massive inflation.
Then there's also their there's also sanctions, trade wars and over-regulation adding fuel to the fire.
Of course none of these are a "natural effect from market dynamics" - as much as they'd love to make it sound like that.
Here's the actual cause of inflation:
https://www.federalbudgetinpictures.com/federal-spending-per...
This extra spending is paid for with inflation.
The inflation is a convenient foil for explaining price hikes. Federal spending certainly contributes to the problem, but is not the whole story.
If you direct spending towards production it's much harder to have per-unit inflation since there are more goods available; instead, you get more total consumption. The classic "make the pie bigger."
If you don't then yeah, you have more dollars chasing the same number of goods. So we need to be smarter overall in terms of how we look at allocation of money.
It seems like the 2020 admin threw more money at the problem than was necessary, and did it in the second form, but it's probably still much better than having thrown too little at the problem would've been.
Yes, the Covid stimulus was an experiment in "helicopter money", with a predictable response in price, especially in light of concurrent supply-chain issues.
> it's probably still much better than having thrown too little at the problem would've been
No, some interventions leave things worse off than it would have been without. When it comes to the public's money, and truly stupendous amounts of it at 25% of GDP, the bar has to be a lot higher than "eh, probably better". I suppose it's a job for economists and historians in the future to study this, but one wonders if there is some relationship between the amount of Covid stimulus response and the recent inflation, and how persistent it would be in the years to come.
Yes, some interventions leave things worse off than without. But with sudden massive unemployment and low savings, why do you think the default hypothesis is "nothing would be better"? You can have both "persistent lingering inflation for several years" AND "still better than the alternative."
The argument is that something better should have been done.
There are many alternatives and we did one. It’s not like the only options were to drop trillions in cash on people or to do nothing.
This is learning the wrong lesson from broken windows / TANSTAAFLing yourself into thinking "all spending has the same ROI and it's never positive."
Private companies will only do things that accrue economic gains to themselves instead of returning those economic gains across the population as a whole.
Re: "usually" I'm not sure if I disagree with it because I don't know what you mean. "Usually" in practice or "usually" in possibility? By dollar share or by project share or other? And how directly are we measuring ROI, especially in terms of infrastructure or technology development from large projects?
I believe we could certainly get to a point where most government spending was net beneficial without needing to shrink the services provided by the government.
EDIT: and if we're picking on logical errors instead of getting into more details: my claim was that other forms of spending could avoid inflationary problems. I don't see your response that this would usually be mis-allocation or unproductive saying anything directly about my claim.
Suppose ham costs $50 and eggs cost $50. You have $100.
Now Porky Pig gets greedy and raises the price of ham to $60. Now you have only $40 to spend on eggs, and (due to the Law of Supply & Demand) the price of eggs declines.
I.e. this greediness does not put more money in peoples' pockets to pay for it. A general price increase is not possibly caused by greed. Inflation is a general increase, and requires an increase in the supply of money relative to the value of goods and services in the economy.
And that way that happens is the government prints the extra money with no collateral. History is full of examples, including our current inflation.
Pull the other one, it's got bells on. Supply and demand is a nice theory, but calling it a law is magical thinking. If I go to the store and say "please sir I'd like to buy eggs but I don't have enough money" they tell me to piss right off, this isn't candyland.
It’s not magic, and it isn’t candy land. But arguing that the law of supply and demand is pretty silly as there’s massive evidence of its existence.
Don’t mistake your own experience with the entire market.
The market doesn’t care what happens to you. The market cares what happens to everyone. Of course you’ll go hungry. Supply and demand doesn’t determine how much you will pay or if you will eat. It just sets a price and maybe you can afford it and maybe you can’t.
The grocery store can’t jack up the price if people aren’t willing or able to pay that amount. They might stop carrying eggs altogether, but they are more likely to price at whatever the market will bear.
> Now you have only $40 to spend on eggs, and (due to the Law of Supply & Demand) the price of eggs declines.
was utter bollox
Most government failures come from denying the LofS+D exists, or trying to repeal it. It works about as well as that state that passed a law defining pi to be equal to 3.0.
Essentially it's a huge transfer of wealth and economic power to those who need it least from those have very little to begin with. I honestly don't understand any of the arguments in favor of it. Like is Johnson & Johnson using the money to make better baby powder (that doesn't give you cancer) or are they pumping their stock price, collecting bonuses, and prepping for another round of share buybacks?
Which causes price declines in those purchases. The Law of Supply & Demand.
* pandemic
* supply chain disruptions
* shifts from services to goods
* shifts back
The economy doesn't have enough major players for true perfect competition to exist in most industries. Your costs go up a bit? Why not try to get away with passing on some extra to pad your bottom line as well? Who is going to stop you or call you out on it right now?
I'm sure I'm not the only person here who's sat in a meeting for a company where there were high-level individuals talking about "how much can we get away with charging" entirely separately from "what are our raw unit costs."
This is what all rational businesses without real competition do. Using costs to set prices is throwing money away, unless your costs are higher than your prices for a strategic reason and you're calculating how long you can continue doing that before you miss payroll.
I disagree with this on two points: not all businesses do this, and this behavior is is not related to whether or not the business is "rational".
Some businesses actually do operate in a way that doesn't abuse their customers. Forgoing usurious profit margins doesn't count as "throwing money away" any more than not picking the pockets of people around you counts as "throwing money away".
High prices is only "abuse" if there is a monopoly on that good and there is no substitute. Which, yes that is bad, we should stop it. BUT even a true monopoly doesn't explain a generalized increase in prices where consumers do not react to higher prices on A by reducing spending on B.
Edit: Of course there is variance in the degree to which owners will pursue profit maximization, up to and including "I am already rich and I will operate this at a loss for the good of the public", but the median (or even 75th percentile) firm I don't think is at "pass all cost savings onto customers even if I'm leaving money on the table."
> Are the customers idiots who can't be trusted how to allocate their money?
Of course not. But you seem to be assuming that the only reasons people might pay absurd prices for something is because there is no competition or they're stupid. I don't think that's the case. There are a lot of other circumstances where people have little choice but to pay crazy high prices for things.
Personally, I regard this as an ethical thing. I think that it's not ethical to overcharge for stuff. I set prices by determining the cost to produce the thing and adding a reasonable profit margin to that, because I couldn't sleep at night doing it any other way.
> I will operate this at a loss for the good of the public
I am not advocating that any business operate at a loss.
Is that abusive to the customer? Let's say it isn't. It can still cause problems, in various subtle ways.
If we come back to this inflation scenario: agencies and governments are currently debating what interventions to take. Depending on the root cause, they'll pick different things. If something like "companies taking advantage of herd behavior and shocks to the system to raise prices even more than is necessary based on underlying factors" is completely ignored, the prescription will focus more harshly on those underlying factors and quite likely cause more total harm than is necessary (by, say, tightening up money to the point of causing much more unemployment than would be needed if we had a knob to turn on corporate price rises).
Now people can pay, at least for now.
It's absolutely true that in an inflationary environment companies hike prices preemptively. That is the phenomenon known as inflation. Missing from similar theories is any explanation of why this happens sometimes and not others.
When the media is already talking about there being inflation, especially when they've been talking about it being anticipated for a while before it showed up, that makes it much easier for companies to raise prices and just say, "It's just like everyone's saying! It's just inflation! You can't blame us!"
That's not the same as saying "inflation means companies raising prices; it's tautological."
Heck our entire payment system rests on it. Central banks that issue a floating currency rest their monetary policy implementation on being the monopoly supplier of reserves and thus able to set the price of money along the yield curve. Marginal pricing power is why their interventions usually don’t even have to be very large at all despite the overall huge size of the currency markets.
But they can't be satisfied with that. They need the stock price to rise, so they need to be able to show record profits.
So they boast loudly of their record profits to their investors, while crying crocodile tears to the media about how terrible the supply line problems are, and how the government has handed so much money to the American people in the COVID stimulus (see, $2000/household 3 years ago can totally raise prices across the board for years on end), so these must be the source of all the price increases, don't you see?
So if their normal 2.1% profit margin goes up to 2.104%, isn't that "record profits"? It's not a very interesting story, and won't much rouse the rabble on reddit.
I'm not sure that they have to be able to show "record profits" so much as they just have to spin it that way.
https://www.npr.org/2023/05/19/1177180972/economists-are-rec...
(edit: fixed link)
I buy materials for $100 and sell them for $120 for 20% profit. My costs rise to $110 so I raise the price to $135. Consumers see inflation of 12.5%. What percentage of that is corporate profit and how much is whatever else inflation is?
Your profit was $20 before, now $25 after. So you got a 25% increase in income (!) for a 10% increase in expenses. The consumer saw a 12.5% increase in price.
And that's what is being reported on corporate earning calls.
https://www.npr.org/2023/05/19/1177180972/economists-are-rec...
This directly choked off the amount of stuff that consumers could purchase, causing inflation as more money chased less goods and services. That money ended up as profits at gas producers; their costs hadn't changed, but the market price of their product increased until demand dropped down to meet the available supplies. However, this doesn't mean that inflation could be avoided if we could only stop the greedy gas companies from profiteering and force them to charge less. They cannot supply the amount the global economy would consume if everyone's wages were worth as much and they could buy as much with them as before, which means any lower prices would be fake: there'd be people and businesses who'd want to buy at those prices but couldn't despite having the money, much like how the Soviet Union or Venezuela ended up with empty shelves. For the same reason, wage increases to try and bring people's spending power back to what it was cause further inflation - this is why central banks are worried about a wage-price spiral but the idea of a profit-price spiral is just populist nonsense.
To say greed is causing inflation rather than greed is a response to a government caused supply and demand shock is really questionable to me though. It takes away from the major role of bad government policy in the root causes of this situation and puts it on companies responding as profit maximizers (as they always should be) to government created aituations.
https://scottgrannis.blogspot.com/2023/05/inflation-is-so-ov...
When a handful have the fiat currency monopoly they can buy up resources and leave less to go around.
When an industrial pipeline to make Red Bull needs machines to build machines to build machines to build cans, and the elders in charge grew up thinking in war era supply manufacturing that’s where fiat capital will be diverted.
Are these not the fundamentals principles of economics?
We’ve added so many BS layers of indirection and obscurantism via academic babble and political chicanery.
2) "Hot" economy with low unemployment
Policymakers would like to blame inflation on greedflation. Their syncophants agree with them.
What an astonishing coincidence.
It's amazing how helpless and feckless our poor ol' policymakers are. Constantly caught out flatfooted and surprised at every turn by how bad things are. Nothing is ever their fault because they're just so shocked and surprised by how things are going.
One does find oneself wondering what exactly they're good for if they're so constantly shocked by everything.
CTRL-f was sadly missing any mention of "money supply", "printing", "interest rates", "ZIRP", or, indeed, any policy intervention made, ever, in the history of man, by policymakers. How amazing all the power they have, yet they are a flat 0% responsible. It's pretty impressive to be that constantly befuddled and flummuxed, yet have all that power, and never be responsible for anything at all, not even a little. That's a pretty impressive combination of attributes.
(Bear in mind I'm open to the possibility that it isn't 100% just the money printing, currency supply, policies, etc. The real world is complicated and policymakers aren't the only actors by a long shot, no question. But if they're truly 0% responsible, fire them, because apparently they're not doing anything. 0% responsibility is impossible.)
Except the largest QE was 2008, 2010, and 2012, which caused... nothing?
Anti-QE people have been claiming that QE causes problems for a decade. Eventually COVID19 causes a problem and the QE people come out of the woodwork saying "I TOLD YA SOOOOO", ignoring COVID19 entirely and trying to pretend that they've been right for a decade all along.
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Policy makers get things wrong on occassion. That's cool. But the policy makers got it more correct than the "anti-QE" guys for the entirety of the 2008 through 2020 timespan. Being wrong once every decade is fine. Its better than being wrong for a whole decade and then pretending that your theories finally became correct due to unrelated factors later.
I don't expect perfection from our policymakers, nor consistency. I recognize that in a democracy, our policy makers change every 4 to 8 years and we contradict ourselves regularly. But overall, their ability to predict the future remains superior over the typical folk who cry about things like ZeroHedge.
I see one huge jump and it wasn't in 2008
He was talking about ZIRP and QE. Presumably 2008 QE1, 2010 QE2, and 2012 QE3. (Either talking about those, or preferring to ignore those historical moments). At least, all the online people for the last decade have been calling "QE1 / QE2 / QE3" the money printer. (You know, not the people who understand the economy. But the people who use words like ZIRP, Money Printer, and inflation in the same sentence).
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We have a complex economy with many issues. But the one thing I've learned is to never trust what the ZeroHedge doomers say.
Sometimes, the Hawks are correct. Sometimes, the doves are correct. But without a doubt, the conspiracy theorists will come out of the woodwork and complain about money printers or whatever (despite M2 declining this past year).
By that definition, the 1990s were a period of great inflation. Which is... not what that word means.
> “When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’
> ’The question is,’ said Alice, ‘whether you can make words mean so many different things.’
> ’The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.”
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When financial assets go up in value, that's normally called a "bull market" by the way. Not "inflation". Changing the definition of "inflation" to match your preconceived theories of how the economy works is... pretty much what Humpty Dumpty does in the Alice-in-Wonderland series.
Bank Of England - 'Quarterly Bulletin' 2012 Q3
" Conclusion
[...] The benefits of loose monetary policy have not been shared equally across all individuals, however. Some individuals are likely to have been adversely affected by the direct effects of QE. Many households have received lower interest income on their deposits.
But changes in Bank Rate — not asset purchases — have been the dominant influence on the interest households receive on bank deposits and pay on bank loans. By pushing up a range of asset prices, asset purchases have boosted the value of households’ financial wealth held outside pension funds, although holdings are heavily skewed with the _top_5%_of_households_holding_40%_of_these_assets." [0]
[0] https://web.archive.org/web/20150316142619/https://www.banko...
Maybe QE had an outsized effect on inequality. But that's a very different argument than what people were talking about just 2 or 3 posts above.
As I said earlier: sometimes the doves win, sometimes the hawks win. Seeing the hawks and doves argue rationally is... good... for our system. There's reasons to be against QE (even back in 2008, 2010, and 2012). And creating rational arguments backed by data is a good thing. There's a lot of details that this interest-rate policy business causes, and its well worth the debate + data to try to figure out what's best for our country.
But the "ZIRP causes inflation doomers" weren't making rational, data-backed arguments. They never have. And I think after a decade+ of them making such arguments, I can safely say that they've been wrong this whole time.
We've given this idea long enough to play out its theory. I think its safe for us to start talking about burying that argument and moving on to better arguments.
Crucially, though, the actual underlying productive capacity was still there. The factories still existed, the workers and materials they needed were still available, and if only the money was there to run them then they could pay their staff and those staff could buy stuff allowing the businesses to keep operating and making everyone better off once more. This was what QE tried to do, with mixed results and some side effects.
This was not true during Covid. Large chunks of the economy were effectively shut down, their workers forced to stay home and their customers legally barred from buying their products. All the capacity that went unused was basically lost; when factories tried to catch up on production and people went on holidays they'd missed, that came out of 2022 and 2023's capacity and had to compete for it with everything that people would normally have bought. Yet many contries tried to make it seem like people weren't actually worse off due to that long economic shutdown by printing money and handing it out as furlough or enhanced unemployment to replace what they'd have earned for the work they didn't do. That fell apart when the world reopened and they started spending the money because the actual underlying goods and services hadn't been produced.
You also seem to lack a rational, data-backed argument. I wouldn't go as far as to say you never have, since that seems like an ad hom and not something one would do in a good faith discussion. In such a complex, chaotic system, what gives you certainty that any given things are NOT related? That seems the claim that needs justification in our globalized economy, a rational argument would presume two things can effect each other in the age of information... The question that remains is: to what degree?
Russell's Teapot. (https://en.wikipedia.org/wiki/Russell%27s_teapot)
Its the ZIRP doomers who have to prove a problem. Not for me to prove a lack of a problem.
Based on what I've read over the years, things like Fed Meeting notes do a much better job at predicting the economy / future than reading up on ZeroHedge conspiracy theorist sites and worrying about ZIRP in 2012.
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As far as my "data" goes, I just point back to QE1, QE2, and QE3. The Zero-Hedge Doomers were all saying that inflation would get out of hand. Then... it didn't. QED. This doomerism is _NOT NEW_. I've been hearing it for years. Its the boy-who-cried-wolf situation.
They're still around pretending that all these decisions 10+ years ago caused things today. When the Occam's Razor argument is COVID19 changed things. So its up to the Zero-Hedge doomers to explain why their predictions over the past decade took over a decade to come into being. And if they knew it'd take a decade (or longer) for it to happen, why did it coincide with COVID19 so much (as opposed to any other situation).
As far as my opinion goes, I'm making it clear. The boy cried wolf for 10 years, and is pretending his first call for crying wolf in 2008 was relevant to the 2023 bout of inflation. As opposed to... I dunno... the Baby Boomers retiring a few years early because they're tired of dealing with COVID19 (and/or COVID19 restrictions), causing a huge slump in the number of workers in the US Economy. The likes of which we're only beginning to recover from in the past month or so.
With fewer workers, we're having fewer products made. Compounded with the War in Ukraine (a location that supplies a huge amount of grain to the world) and Avian Bird Flu, we're in a time period where we're losing resources (and productivity) due to a lack of workers. Lower supply causes higher prices. Also coinciding with the emergency slaughter of pigs/birds in 2021 as a COVID19 prevention measure (as well as due to severe economic contractions), our animal stocks are lower than otherwise. Leading to higher food prices.
You know. Data that we have that explains these situations with a bit more clarity than 10+ year old predictions of ZIRP or QE3 from the year 2012.
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Or maybe this "Greedflation" idea, being discussed in the article. Maybe its got legs to stand on too. I dunno, its interesting to think about at least. But its tiring to have every economic argument derailed by the ZeroHedge conspiracy theorists posting their favorite anti-QE hate all the time.
There's a much richer set of economic arguments that exists out there than ZIRP doomerism all the time, every day, ever year.
Nope. You massively read in what you wanted to read. My main point is that the idea that policymakers are 0% responsible is ludicrous.
The interest rates controlled by the Fed can not simultaneously be super important economic controls absolutely necessary for the steering of the economy, something so important only the best trained and most experienced people can be given this absolutely vital power, and at the same time, utterly irrelevant numbers that mean nothing and it doesn't matter what they are so you can't hold them responsible for anything.
You are doing exactly what they want you to do, which is get distracted by lots of other details until you no longer notice that you simultaneously hold both those beliefs even though there is no conceivable way they can both be true.
But you've got to at least put forth a little bit of effort into understanding our leaders arguments.
The Fed has two forces at play that meet at committee meetings. The Hawks argue for tighter policy, while the doves argue for looser policy. Many arguments are made at these meetings, and their meeting notes are public.
There are also crappy websites that push conspiracy theories that have nothing to do with real data. Your arguments are closer to these conspiracy theories than the real data that has been brought forth at these public Fed Meetings.
If you don't like the Fed process or discussion or data, sure I guess. That's fine. But you are pushing effectively disproven conspiracy theories and that's where you are misstepping IMO
I dunno if this 'Greedflation' idea is true btw. But at least it's not the same incorrect conspiracy theory I've heard for the past decade. I'm willing to give 'greedflation' some degree of thought before discarding it.
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'Greedflation' is obviously discredited by Powell (current Fed Chairman), according to the article. So maybe its a fully bunk theory too. But its extremely odd to come to this topic to push alternative theories of monetary policy without at least trying to talk or criticize the topic at hand?
Yourself ? Do you have a 58 minute lecture backed by rigorous data on why you’re so right? Or just conviction ?
I lay out my argument: 1. Joseph Stiglitz is an award winning economist 2. He has studied the situation in depth 3. His conclusion is "greedflation" type effects are real
If so, he's an idiot no matter how many Nobel Prizes he has. If, as is far more likely, that's not at all what he says in those 58 minutes, you've been conveniently distracted by what is cognitively available to you from my main point, which is, if policymakers are effective, then they are responsible to a large degree. Corporate greed is a ludicrous blame shifting operation and honestly a measure of just how much responsibility they hold for what is going on in the economy right now if they're stretching for such a self-evidently stupid defense. As others have pointed out, it isn't that companies aren't greedy, it's that they have never ever ever been not greedy.
Do we have to "All Xs Matter" every argument? I don't read this article as making a strong claim that greedflation is the ONLY cause, just that is now being taken seriously when it was derided before. If you want an article that argues against greedflation and discusses other potential causes, you don't have to read more than three sentences before the author links you to it! The piece ends with the Chair of the Fed (i.e. a policymaker) denying profits are even "a cause" of inflation!