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High inflation will have knock on effects in which consumers will eventually stop buying items, instead focusing on the bare essentials either out of fear or ac
by peytoncasper 4y ago
High inflation will have knock on effects in which consumers will eventually stop buying items, instead focusing on the bare essentials either out of fear or actual cost cutting needs.
This reduction in spending will largely affect non core spending like services and luxury-ish/luxury goods like electronics, cars, houses, etc. This happens to be where the bulk of the US economy is focused which means a slow down in spending there will effect workers in those industries.
Couple that with higher core good costs and just natural momentum in regards to spending. You're left with large parts of the economy that experience a flywheel effect that make it harder to purchase things and further reduce the ability to spend on other non-essential goods and even when things start to change, peoples mindset on spending takes years to shift with it.
All of this leads to reduced demand and ultimately a recession.
- MisterBastahrd 4y agoIt doesn't help that companies have been gouging customers in order to get ahead of the curve.
- ChrisLomont 4y agoPeople keep claiming this, but SEC filings don't show these inflated profits across any sector I have checked in to. Which sector(s) do you claim is gouging people for higher than normal profits? Have evidence in the form of profit/loss records?
- aaomidi 4y agoInflated revenues would be the thing to look for, not inflated profits.
- ChrisLomont 4y agoInflated revenues do not show gouging - they show increased costs to sellers. Inflation alone will increase the numerical value of revenues and profits. Gouging implies sellers are making significantly more than they used per same amount of sales. So to demonstrate gouging you should demonstrate increased profit/revenue. I have looked at multiple industries main players, and find no evidence of this (as has many economists). Again, does anyone have solid evidence for this claimed "gouging" in some sector other than opinions?
- aaomidi 4y agoYou're just using words to justify stuff. You realize the creative accounting companies do to make their profit as close to zero right? For example, look at the number of stock buybacks. This is money that you're spending with these companies for them to go buy their own stocks, reducing their tax burden. Theres a ton more. Do you have evidence price gouging isn't happening? Other than looking at the most basic thing of profits?
- ChrisLomont 4y ago>This is money that you're spending with these companies for them to go buy their own stocks, reducing their tax burden. No. Companies pay tax on profit, then use post tax profit to buy back stocks. Learn tax law before making up stuff. > You realize the creative accounting companies do to make their profit as close to zero right? Anything they do illegal under tax law should (and is) prosecuted. There is no need for any entity, whether it be a person, a company, a non-profit, a charity, any entity, should pay more in taxes than the laws states. >Do you have evidence price gouging isn't happening? Yes, it does not show up in economic analyses of companies. Economists who also study such things have written they also don't fund evidence. So, now do you have evidence there is any sector wide gouging, other than hand wavy pop culture feelings and rambling? I told you really solid evidence that the allows checking the pop ignorance on the issue. Now provide the solid evidence to the contrary. Invoking wizards and magic and conspiracies is not evidence.