Scanning the comments, I'm reminded of the great playwright and philosopher, George Bernard Shaw who wrote, "If all the economists were laid end to end, they'd never reach a conclusion,"
Corporations did not suddenly get greedier, but the public's perception of inflation has offered them an excuse - it has solved a coordination problem for them. If I an a corporation and I want to raise prices, people will be angry. But if I and my competitors can all point to "inflation" and raise prices at the same time, then I can get away from it.
I didn't get greedier, but inflation expectations have had a cartelizing effect
It's not "spin," and your claim to the contrary is utterly ridiculous. Katie Porter puts the lie to the notion that corporate greed isn't the driver of inflation. 54% of inflation is greed. All you need to do is listen to those quarterly earnings reports that recognize they're gouging 'cause they can get away with it. https://www.youtube.com/watch?v=hIuA5MNs87A
I agree Joseph, I have seen some downward movement in the price of eggs for example - that’s in part because consumers are not going to pay the high prices - they will shop around, buy off- brand, do without. The market will eventually right itself. However, the perception remains that corporations are gouging consumers.
Biden's claim is wrong and so is yours. The seeds of inflation began during the pandemic but not for the reasons everyone thinks. For price levels to be stable, money in circulation must be in balance: i.e., more economic activity (GDP) requires more money in circulation (M1). Since 2000, M1 and GDP were in balance, growing on similar paths. Then in 2020, GDP stalled but the FED POURED unneeded money into the system by "quantitative easing," throwing the M1/GDP COMPLETELY out of balance. Price level changes have long lags and predictably inflation started in 2021. Now the economy has recovered and prospered with help from major new government programs. That recovery, along with a shrinking real money supply, has restored the proper balance, slowing inflation. Don't blame firms, don't blame Biden, but BLAME THE FED.
You're right to to call out blatantly political messaging when it badly distorts reality. Even so, it is the silly season and arguing sound fiscal or monetary policy on the merits isn't a winning strategy - at a time when winning is pretty important for the future of our republic, which most of us would like to keep.
I agree that Biden's explanation for the inflation is a bit over the top. Yes, corporate profits are way up but I think there are more systemic reasons for inflation.
One area that I continue to be amazed that we hear little about from economists is the impact of demographic transition on the economy. There are more people over age 65 today in the US than under age 18. The "baby boomers" are retiring in large numbers and I believe that the pandemic accelerated that decision for many people.
When people are retired, they no longer produce goods or services yet continue to spend - from their savings. This tends to be inflationary - fewer goods produced (retirees don't work so don't produce anything), stronger demand for workers and continued spending. You also see the impact of this demographic transition in various sectors of the economy. For example, consider the high demand for health care services from the aging population driving costs/inflation in that sector. Take a look at the advertising and you can see the focus on the baby boomer generation - travel (cruise offers), etc.
Our demographics have a major impact on the economy. That said, this doesn't give the Biden Administration a "pass" on inflation issues. No doubt government spending - and low taxes - have compounded the problem. There needs to be a recognition of the macroeconomic effect of our aging population combining with better management of government spending and increasing taxes (on the corporate and high net worth individuals). The ever-increasing budget deficit is not sustainable. There must be compromise.
A second Trump administration would be a disaster. He, and his minions only care about themselves and retaining power (Machiavellian in the highest sense). Increasing tax would be off the table - other than highly regressive tariffs. There is no way Trump will cut spending - he lives on debt.
Yes, it’s all of these things you list. Biden and his crew at the bully pulpit should be roaring these messages and more.
How about the ebb and flow of national debt from potus to potus. Clinton inherits Regan/Bush-1 debt and turns into a surplus. Hands Bush-2 a nice gig, who in turn, aided by Greenspan, causes epic global financial crisis. Bush l-2, he hands Obama a stinking disastrous massive toxic fiscal nightmare. Barack (best POTUS ever) works judiciously to pull us back from the brink and hands Trumpler, conman grifter and king of debt and bankruptcies, a healing economy. This vulgar, self-serving, oily orange fascist sociopath potus leans his knee on Fed head, Powel’s, neck - preventing appropriate gentle, steady, return-to-normal, interest rate hikes. Then, along comes Covid and there are no tools in FED toolbox. Only answer, gush $10 trillion into economy and amplify debt shitbag we’re handing next gens. Of course, as GOP rot, lies and corruption exponentially rise, their POTUSes continue to destroy, whilst Dem POTUSes try to repair. Ever heard of the lag effect? Much more pronounced in one term presidencies.
How about history lessons for dumb sheep who don’t understand economics 101!?!?
Corporate profits up over 30% since the start of Covid. It is a statistically significant number and a major driver of inflation. Check out the FRED graphs on Corporate Profits. Markups are not the point and is no way to track anything.
Lol, you have some points that alright.... but if you put a scale out and weigh it.... to me it doesn't necessarily add up. People were using there couple thousand dollars on luxuries yes, but most of it was on credit. And corporations paying investors so they increase value of stock and increase productions and costs, plus buybacks, then justifying profits and price points(that would be leaving money on the table)by the fact that they can't know value because it would hurt investors, future investment, need for innovation/R & D..... etc... it becomes it's own beast and really somewhat b.s. across the board....to me and my own opinion. It doenst add up in a way that is truly cause and effect etc.... I don't need to defend Biden, I don't "hate people for wanting to make money".... but it is truly contributing to the vast separation of "Moneyed" people and "regular folk" or however anyone prefers to say it. IT IS SPECIFICALLY what seems to be happening.
Biden did not create his so-called inflation spin out of thin air. Sure wages are up, but not enough to obviate the "spin." https://ritholtz.com/2022/06/inflation-blame-15/ Besides, comment in the real estate investing forum Bigger Pockets regularly advised using inflation as the cover to raise rents whether landlords needed to or not because it would be stupid to leave money on the table, right? Why would corporations be any different?
Actually, I think your argument which relies on hidebound Econ 101 is, well, ridiculous. A basic problem facing Americans is the concentration of corporate power and the collapse of antitrust enforcement. Monopolistic giants control the energy sector, consumer goods, the meat industry, you name it -- and they've been raising prices uncontrollably while earning record profits and sending CEO pay into the stratosphere. In a healthy economy, competition would keep prices law. This ain't it. Secondly, we're just emerging from the equivalent of a war economy where both the Trump and Biden administrations poured in $ to keep things from going south: https://research.stlouisfed.org/publications/review/2023/06/03/the-covid-19-pandemic-and-inflation-lessons-from-major-us-wars So Biden is largely on the mark, but he missed the last point.
All the oil companies are posting record profits... why do you think that is? Could it be related to decreased amounts pumped by OPEC, the stored surplus oil from the pandemic shutdown sold at a premium and the Russian/Ukraine war? The increased costs of fuel/power rises the cost of everything. Additionally, shipping costs have increased d/t interruption of shipping lane traffic d/t Houthi rebels.
Scanning the comments, I'm reminded of the great playwright and philosopher, George Bernard Shaw who wrote, "If all the economists were laid end to end, they'd never reach a conclusion,"
https://www.nytimes.com/2024/05/29/briefing/democrats-who-are-winning.html?unlocked_article_code=1.vk0.Cix7.m3WkM-CiqtK3&smid=nytcore-ios-share&referringSource=articleShare
Ridiculous, Right 🤔?
Corporations did not suddenly get greedier, but the public's perception of inflation has offered them an excuse - it has solved a coordination problem for them. If I an a corporation and I want to raise prices, people will be angry. But if I and my competitors can all point to "inflation" and raise prices at the same time, then I can get away from it.
I didn't get greedier, but inflation expectations have had a cartelizing effect
It's not "spin," and your claim to the contrary is utterly ridiculous. Katie Porter puts the lie to the notion that corporate greed isn't the driver of inflation. 54% of inflation is greed. All you need to do is listen to those quarterly earnings reports that recognize they're gouging 'cause they can get away with it. https://www.youtube.com/watch?v=hIuA5MNs87A
I agree Joseph, I have seen some downward movement in the price of eggs for example - that’s in part because consumers are not going to pay the high prices - they will shop around, buy off- brand, do without. The market will eventually right itself. However, the perception remains that corporations are gouging consumers.
Biden's claim is wrong and so is yours. The seeds of inflation began during the pandemic but not for the reasons everyone thinks. For price levels to be stable, money in circulation must be in balance: i.e., more economic activity (GDP) requires more money in circulation (M1). Since 2000, M1 and GDP were in balance, growing on similar paths. Then in 2020, GDP stalled but the FED POURED unneeded money into the system by "quantitative easing," throwing the M1/GDP COMPLETELY out of balance. Price level changes have long lags and predictably inflation started in 2021. Now the economy has recovered and prospered with help from major new government programs. That recovery, along with a shrinking real money supply, has restored the proper balance, slowing inflation. Don't blame firms, don't blame Biden, but BLAME THE FED.
You're right to to call out blatantly political messaging when it badly distorts reality. Even so, it is the silly season and arguing sound fiscal or monetary policy on the merits isn't a winning strategy - at a time when winning is pretty important for the future of our republic, which most of us would like to keep.
I agree that Biden's explanation for the inflation is a bit over the top. Yes, corporate profits are way up but I think there are more systemic reasons for inflation.
One area that I continue to be amazed that we hear little about from economists is the impact of demographic transition on the economy. There are more people over age 65 today in the US than under age 18. The "baby boomers" are retiring in large numbers and I believe that the pandemic accelerated that decision for many people.
When people are retired, they no longer produce goods or services yet continue to spend - from their savings. This tends to be inflationary - fewer goods produced (retirees don't work so don't produce anything), stronger demand for workers and continued spending. You also see the impact of this demographic transition in various sectors of the economy. For example, consider the high demand for health care services from the aging population driving costs/inflation in that sector. Take a look at the advertising and you can see the focus on the baby boomer generation - travel (cruise offers), etc.
Our demographics have a major impact on the economy. That said, this doesn't give the Biden Administration a "pass" on inflation issues. No doubt government spending - and low taxes - have compounded the problem. There needs to be a recognition of the macroeconomic effect of our aging population combining with better management of government spending and increasing taxes (on the corporate and high net worth individuals). The ever-increasing budget deficit is not sustainable. There must be compromise.
A second Trump administration would be a disaster. He, and his minions only care about themselves and retaining power (Machiavellian in the highest sense). Increasing tax would be off the table - other than highly regressive tariffs. There is no way Trump will cut spending - he lives on debt.
No, government spending isn't part of the problem but for the last three years has been part of the SOLUTION. Read my comment.
Yes, it’s all of these things you list. Biden and his crew at the bully pulpit should be roaring these messages and more.
How about the ebb and flow of national debt from potus to potus. Clinton inherits Regan/Bush-1 debt and turns into a surplus. Hands Bush-2 a nice gig, who in turn, aided by Greenspan, causes epic global financial crisis. Bush l-2, he hands Obama a stinking disastrous massive toxic fiscal nightmare. Barack (best POTUS ever) works judiciously to pull us back from the brink and hands Trumpler, conman grifter and king of debt and bankruptcies, a healing economy. This vulgar, self-serving, oily orange fascist sociopath potus leans his knee on Fed head, Powel’s, neck - preventing appropriate gentle, steady, return-to-normal, interest rate hikes. Then, along comes Covid and there are no tools in FED toolbox. Only answer, gush $10 trillion into economy and amplify debt shitbag we’re handing next gens. Of course, as GOP rot, lies and corruption exponentially rise, their POTUSes continue to destroy, whilst Dem POTUSes try to repair. Ever heard of the lag effect? Much more pronounced in one term presidencies.
How about history lessons for dumb sheep who don’t understand economics 101!?!?
Blurnami in November!
Corporate profits up over 30% since the start of Covid. It is a statistically significant number and a major driver of inflation. Check out the FRED graphs on Corporate Profits. Markups are not the point and is no way to track anything.
Lol, you have some points that alright.... but if you put a scale out and weigh it.... to me it doesn't necessarily add up. People were using there couple thousand dollars on luxuries yes, but most of it was on credit. And corporations paying investors so they increase value of stock and increase productions and costs, plus buybacks, then justifying profits and price points(that would be leaving money on the table)by the fact that they can't know value because it would hurt investors, future investment, need for innovation/R & D..... etc... it becomes it's own beast and really somewhat b.s. across the board....to me and my own opinion. It doenst add up in a way that is truly cause and effect etc.... I don't need to defend Biden, I don't "hate people for wanting to make money".... but it is truly contributing to the vast separation of "Moneyed" people and "regular folk" or however anyone prefers to say it. IT IS SPECIFICALLY what seems to be happening.
Biden did not create his so-called inflation spin out of thin air. Sure wages are up, but not enough to obviate the "spin." https://ritholtz.com/2022/06/inflation-blame-15/ Besides, comment in the real estate investing forum Bigger Pockets regularly advised using inflation as the cover to raise rents whether landlords needed to or not because it would be stupid to leave money on the table, right? Why would corporations be any different?
Actually, I think your argument which relies on hidebound Econ 101 is, well, ridiculous. A basic problem facing Americans is the concentration of corporate power and the collapse of antitrust enforcement. Monopolistic giants control the energy sector, consumer goods, the meat industry, you name it -- and they've been raising prices uncontrollably while earning record profits and sending CEO pay into the stratosphere. In a healthy economy, competition would keep prices law. This ain't it. Secondly, we're just emerging from the equivalent of a war economy where both the Trump and Biden administrations poured in $ to keep things from going south: https://research.stlouisfed.org/publications/review/2023/06/03/the-covid-19-pandemic-and-inflation-lessons-from-major-us-wars So Biden is largely on the mark, but he missed the last point.
I think your argument is mostly sound but coming out of a pandemic to dwell on nothing more than maximizing.profits is just greed.
And throw in a stock buy back or two !!
But yes Hammer home would you want depression or inflation.In.March of 2020 no one was.likng that prospect.
He should call out excess profits. He could call for an end to stock buybacks but his donors would have seizures if he said that out loud.
https://mavenroundtable.io/theintellectualist/news/stock-buybacks-were-once-illegal-why-are-they-legal-now
All the oil companies are posting record profits... why do you think that is? Could it be related to decreased amounts pumped by OPEC, the stored surplus oil from the pandemic shutdown sold at a premium and the Russian/Ukraine war? The increased costs of fuel/power rises the cost of everything. Additionally, shipping costs have increased d/t interruption of shipping lane traffic d/t Houthi rebels.