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Comment by cratermoon | Hacker News Reader

"sticky" inflation? Is that really what they're calling it now? https://robertreich.substack.com/p/its-greedflation-stupid

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This is kind of what I tell people: the egg sellers were greedy a few months ago and now they're not greedy. Same with oil. From 2014 to like 2020 we managed to convince them to be kind and generous, but they forgot it in 2020. Unfortunately, our oil priests died of COVID so the oil merchants started being greedy again. We need more oil priests.

'oil priests'?

if oil goes up they are greedy, so when it goes down are they priests? that's the joke

I don't understand the joke. Is the premise that priests are the opposite of greed?

It doesn't have to be a good joke to understand the joke. those are separate qualities.

> It doesn't have to be a good joke to understand the joke.

Agreed. It's possible to understand some bad, unfunny jokes.

> those are separate qualities.

They're related qualities. A good joke depends on its being understood.

You both are being pedantic and disingenuous .

Haha thank you for understanding. I meant oil saints but couldn't remember in the moment.

Ahh, thank you!

True, but I don't think I understand the joke. That's why I asked. It's not terribly important, though.

It's probably a counterpoint to all the previous "transitory inflation" comments.

It's actually the successor to the "inflation is solved" narrative. "Transitory" was before that.

The reason greed has been ignored is that it lacks explanatory power. No one has established the mechanism by which greed varies over time, therefore affecting prices. Firms having greater pricing power - and reaping the benefits of that via higher profit margins - does not prove that greed has increased.

Capitalists are greedy is a basically accurate but also obvious observation that doesn't really teach us anything about the world.

It's not greed that has varied. It was an inflationary shock. Greed explains why it hasn't gone back down once the shocks are gone. It's basically price collusion - nobody wants to be the first to decrease prices, so nobody does.

Before the inflation, there wasn't an opportunity to collude in this manner.

> Before the inflation

The time before inflation? When was that? The middle ages?

> an inflationary shock

There has been a recent marked increase in inflation. That is the inflation I refer to.

Learn to read maybe.

did greed magically appear in 2019?

I think they realized that customers are not as sensitive to price as they thought. So they push it, because why not? It's food. People eat. And they'll just keep pushing it until it stops working.

Until they hit demand destruction and their whole endeavor goes bankrupt.

ok but that is not informative. What was magically discovered around 2021 that helped them realize customers were not price sensitive? why did customers become that way?

What I'm trying to say is that greed is the default. sometimes they lose 5% . sometimes they earn 5,10,20% . All of those years they are greedy. It's not 3x greedy one year and -3x greedy another

I'll try to be constructive here. We're looking at a single data point and saying "greed".

There are many motions across the fast food industry. it's likely customers are trading down from high status (now unaffordable) restaurants into mcdonalds, and now mcDs can charge those customers a bit more.

this has much more explanatory power and is more plausible than "greedy" . It's also verifiable.

"greedy" can't be observed , or verified. it's not empirical.

If you want to remove all agency from it, we can go there. They're seeing they can raise prices and not suffer (immediate) harm. So they do.

It's that simple. Maybe they can successfully pawn off blame for the price increases elsewhere (OPEC, inflation, whatever). But it tends to fall flat when you see record profits. We're getting squeezed for whatever they can get from us.

what changed?

The FTC findings show that the high prices were (and are) because of excessive profiteering by the grocery stores. It's not a mystery or a debate anymore. And it is not "inflation", sticky or otherwise. https://www.ftc.gov/news-events/news/press-releases/2024/03/...

> Grocery retailer profits rose & remain elevated: Food and beverage retailer revenues increased to more than 6% over total costs in 2021, higher than their most recent peak in 2015 of 5.6%. In the first three-quarters of 2023, retailer profits rose even more, with revenue reaching 7% over total costs, casting doubt on the assertions of some companies that rising prices at the grocery store are the result of retailers’ own rising costs.

Maybe some of you downvoters can provide some research studies that support your perception instead of just trying to bury the only hard evidence in this thread.

If that's true, it should be pretty straightforward to prove collusion.

Why do they say "Food and beverage retailer revenues increased to more than 6% over total costs in 2021" instead of an accepted term like gross margins or net income or something I can go look up myself easily

Assuming those statistics are accurate - I'm a little suspicious that they're using non-GAAP metrics - it doesn't prove (or even define) "excessive".

Even if I take your premise the non-GAAP metrics don't count (we'll ignore the revenue aspects) and excessive is underdefined there is one solid take away: the megacorps like Nash Finch the like said that higher material costs drove their price increases. This is shown to be false (https://www.ftc.gov/system/files/ftc_gov/pdf/p162318supplych...). So they lied. Which group will you believe given that? The megacorps like Nash Finch or the FTC?

That report does not show it to be false. Imagine if someone was selling a widget for $10 and their cost of materials is $8. Then, let's say their cost of materials increases to $10 and they raise their price to $13. Their gross profit margin has gone from 20% to 23% even as two thirds - the majority - of the price increase was driven by higher material costs.

"Excessive" without further qualification is a qualitative assessment. It's how people feel: "too much!"

It's not a quantitative assessment even though it's about numbers.

Out of curiosity I found the Federal Reserve's official definition of inflation which is "A general, sustained upward movement of prices for goods and services in an economy." https://www.stlouisfed.org/education/glossary#sr_glossary%20...

This is interesting when applied to the early pandemic because you could argue that price increases were not general and in many cases they were not sustained either (e.g. sharp spikes in eggs and lumber were just as sharply reversed). In recent times it seems like we are seeing "true" inflation though.

I reassembled (using their original report: https://www.ftc.gov/system/files/ftc_gov/pdf/p162318supplych...) the data they used to create those numbers here: https://fred.stlouisfed.org/graph/?g=1lR3j. I'm really not convinced we're seeing anything significant.

Any article that argues for a particular cause of inflation that doesn't highlight the actual inflation of the money supply by politicians and bureaucrats on both sides of the aisle is disingenuous at best, and purposefully deceitful at worst.

Money supply is not the only, or even not necessarily the majority cause for inflation. Velocity of money matters, consider how for over a decade after the 2008 crisis North America & Europe struggled with low interest rates, high deficits, and nearly no inflation. Inflation is simply a more complex phenomenon then what it is framed as politically.

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