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You hand somebody 1000 dollars, they spend it one time, and where did that money go in the end? Primarily on corporate balance sheets, paid to investors via di

You hand somebody 1000 dollars, they spend it one time, and where did that money go in the end? Primarily on corporate balance sheets, paid to investors via dividends, buybacks etc. Of course also used to hire new workers and so on. The point being handing somebody money in a one time transfer only helps them in the immediate term but the inflationary impacts actually harm them longer term. I would venture to guess most of the stimulus money ended up in pockets of already wealthy asset holders at the end of the day.

willis936 5y ago
Yes and the investor class are the rich. Profit margins should not be rising in a time of scarcity. It's profiteering and nobody is doing anything about it.
- adam_arthur 5y ago
  Blaming inflation on corporate greed is a tale as old as time. And it's largely debunked economic pseudo science. Companies and people are greedy all the time, that's the fundamental basis of capitalism. Capitalism is an acceptance of this and regulations to shape around actors working in their own self interest. Are companies more greedy now than they were in 2019? No An opt in moralism based economy will never work and has been tried and failed many times.
  - Supermancho 5y ago
    > Blaming inflation on corporate greed is a tale as old as time. And it's largely debunked economic pseudo science. That wasn't a claim. > Companies and people are greedy all the time, that's the fundamental basis of capitalism. Oversimplification. > An opt in moralism based economy will never work and has been tried and failed many times. This wasn't suggested. Your comment is vapid, in case you're wondering.
    - adam_arthur 5y ago
      It's implied. Clearly the comment above is suggesting corporate greed is partly contributing to cost pressures. I countered this thinking with my own set of thinking. And if my comment is vapid, yours seems a tier below. You've said nothing other than a personal attack. In the 70s they tried price controls to curb "corporate greed" and it led to mass shortages. How about use some brainpower to refute something I've said rather than insult? Do you have any critical thought?
      - Supermancho 5y ago
        > It's implied. > Clearly the comment above is suggesting corporate greed is partly contributing to cost pressures. Inflation is not related to greed, regardless if you want to say that astrology influences your lottery results. So no. You can be frustrated about it all you like. Good luck with that.
- collegeburner 5y ago
  How are you suggesting we "do something" about it? Lowering margins will not fix scarcity, it may even make it worse, so this seems more like a resentment of "they have more than other people" and thinking that it is wrong, not so much a concern over scarcity. There was a proposal to do something, stop increasing liquidity and raise rates, because these are some primary levers we have available to "do something" about the economy.
- makomk 5y ago
  Why wouldn't profit margins be rising in a time of scarcity? Fundamentally, prices are how we choose to allocate scarce resources, and if demand outstrips supply prices have to go up until it doesn't - if the companies don't increase prices, scalpers will gladly take the extra profit instead. Also, there seem to be a bunch of key manufactured products like commodity ICs which are only viable at the current price due to the equipment to produce them having been bought long ago, which means that it's only viable to make the investments needed to increase production if prices and profits go up in a substantial and sustained way.
fragmede 5y ago
In the end, maybe. As you noted, corporations spend money on employees but also goods and services, so it doesn't all end up in a corporation's warchest account just sitting under a mattress as cash. In the interim however, it went to things like food and gas to survive, among other things. The fact that, due to shutdowns (whatever your opinion of them) that the money was needed by some of the countries' poorest members to not go hungry (and I'm sure some did anyway), but we had no good way of determining exactly who needed that and who didn't. What it comes down to, is really which inflation numbers you believe, as the numbers really run the gamut as well as their causes if you really dig into the reports and the details. If inflation only looks high due to used cars being wildly expensive these days due to the chip shortage vs inflation causing cheap staple goods to increase in price, then that'll change your conclusion of inflation's effects. Still, if we want a stimulus to go places other than corporations and CEOs then we need to dramatically rework how the economy works, including food distribution, and de-corporatization and strict limits on CEO pay.
- adam_arthur 5y ago
  Why pay people 50% more than they made before? Why not just replace lost incomes? This whole inflationary disaster could have been avoided while still pursuing a compassionate policy response. There was no logical thinking in the level of fiscal handouts done. Larry Summers did a presentation in Feb 2021 before the ARP was even passed predicting why it would cause inflation, due to the stimulus far exceeding lost wages. You can find it on YouTube, but he empirically walks through why the magnitude of the package was a bad idea
alisonkisk 5y ago
dv_dt 5y ago
Most of the stimulus money wasn't handed to individuals, it was given to businesses and the financial sector.
- adam_arthur 5y ago
  You can see the impact on personal income to individuals here. Clearly a huge distortion to the upside. The PPP had its own set of problems and was widely abused. https://fred.stlouisfed.org/series/PI https://fred.stlouisfed.org/series/PI
  - dv_dt 5y ago
    There were also $6.3 trillion in MBS purchases, as well as other asset purchase programs. One might speculate that taking assets off the hands of financial institutions, gives them quite a bit of freedom to allocate that capital to new assets. https://www.richmondfed.org/publications/research/economic_brief/2020/eb_20-08 https://www.richmondfed.org/publications/research/economic_b...

willis936 5y ago

Yes and the investor class are the rich. Profit margins should not be rising in a time of scarcity. It's profiteering and nobody is doing anything about it.

adam_arthur 5y ago
Blaming inflation on corporate greed is a tale as old as time. And it's largely debunked economic pseudo science. Companies and people are greedy all the time, that's the fundamental basis of capitalism. Capitalism is an acceptance of this and regulations to shape around actors working in their own self interest. Are companies more greedy now than they were in 2019? No An opt in moralism based economy will never work and has been tried and failed many times.
- Supermancho 5y ago
  > Blaming inflation on corporate greed is a tale as old as time. And it's largely debunked economic pseudo science. That wasn't a claim. > Companies and people are greedy all the time, that's the fundamental basis of capitalism. Oversimplification. > An opt in moralism based economy will never work and has been tried and failed many times. This wasn't suggested. Your comment is vapid, in case you're wondering.
  - adam_arthur 5y ago
    It's implied. Clearly the comment above is suggesting corporate greed is partly contributing to cost pressures. I countered this thinking with my own set of thinking. And if my comment is vapid, yours seems a tier below. You've said nothing other than a personal attack. In the 70s they tried price controls to curb "corporate greed" and it led to mass shortages. How about use some brainpower to refute something I've said rather than insult? Do you have any critical thought?
    - Supermancho 5y ago
      > It's implied. > Clearly the comment above is suggesting corporate greed is partly contributing to cost pressures. Inflation is not related to greed, regardless if you want to say that astrology influences your lottery results. So no. You can be frustrated about it all you like. Good luck with that.
collegeburner 5y ago
How are you suggesting we "do something" about it? Lowering margins will not fix scarcity, it may even make it worse, so this seems more like a resentment of "they have more than other people" and thinking that it is wrong, not so much a concern over scarcity. There was a proposal to do something, stop increasing liquidity and raise rates, because these are some primary levers we have available to "do something" about the economy.
makomk 5y ago
Why wouldn't profit margins be rising in a time of scarcity? Fundamentally, prices are how we choose to allocate scarce resources, and if demand outstrips supply prices have to go up until it doesn't - if the companies don't increase prices, scalpers will gladly take the extra profit instead. Also, there seem to be a bunch of key manufactured products like commodity ICs which are only viable at the current price due to the equipment to produce them having been bought long ago, which means that it's only viable to make the investments needed to increase production if prices and profits go up in a substantial and sustained way.

fragmede 5y ago

In the end, maybe. As you noted, corporations spend money on employees but also goods and services, so it doesn't all end up in a corporation's warchest account just sitting under a mattress as cash. In the interim however, it went to things like food and gas to survive, among other things. The fact that, due to shutdowns (whatever your opinion of them) that the money was needed by some of the countries' poorest members to not go hungry (and I'm sure some did anyway), but we had no good way of determining exactly who needed that and who didn't. What it comes down to, is really which inflation numbers you believe, as the numbers really run the gamut as well as their causes if you really dig into the reports and the details. If inflation only looks high due to used cars being wildly expensive these days due to the chip shortage vs inflation causing cheap staple goods to increase in price, then that'll change your conclusion of inflation's effects. Still, if we want a stimulus to go places other than corporations and CEOs then we need to dramatically rework how the economy works, including food distribution, and de-corporatization and strict limits on CEO pay.

adam_arthur 5y ago
Why pay people 50% more than they made before? Why not just replace lost incomes? This whole inflationary disaster could have been avoided while still pursuing a compassionate policy response. There was no logical thinking in the level of fiscal handouts done. Larry Summers did a presentation in Feb 2021 before the ARP was even passed predicting why it would cause inflation, due to the stimulus far exceeding lost wages. You can find it on YouTube, but he empirically walks through why the magnitude of the package was a bad idea

alisonkisk 5y ago

dv_dt 5y ago

Most of the stimulus money wasn't handed to individuals, it was given to businesses and the financial sector.

adam_arthur 5y ago
You can see the impact on personal income to individuals here. Clearly a huge distortion to the upside. The PPP had its own set of problems and was widely abused. https://fred.stlouisfed.org/series/PI https://fred.stlouisfed.org/series/PI
- dv_dt 5y ago
  There were also $6.3 trillion in MBS purchases, as well as other asset purchase programs. One might speculate that taking assets off the hands of financial institutions, gives them quite a bit of freedom to allocate that capital to new assets. https://www.richmondfed.org/publications/research/economic_brief/2020/eb_20-08 https://www.richmondfed.org/publications/research/economic_b...