3 ms·
To the economists out there: how much is inflation a self-fulfilling prophecy? Are people who set prices known to think: "hey, we're in an inflationary market,
by d--b 4y ago
To the economists out there: how much is inflation a self-fulfilling prophecy? Are people who set prices known to think: "hey, we're in an inflationary market, let's jump our prices too!"?
- blantonl 4y agoThe "open" markets will tend to fix this issue, over time - the problem is that the markets can stay irrational longer than you can stay solvent.
- hnrodey 4y agoYes, has already been happening. Companies have been increasing prices just because they know consumer sentiment expects prices to be increased.
- lotsofpulp 4y agoThat alone does not allow them to increase prices and maintain market share. Lack of competitors able and willing to sell at lower prices is also necessary, i.e. low supply.
- Inhibit 4y agoUnfortunately people who set prices are known to have to eat and seek shelter too. They're not some formless bogeyman. People is the important word in the question.
- shmatt 4y agoThis is exactly whats happening. No one (private citizens seeking raises, nor corporations setting prices) is willing to be the one to take the hit. Everyone wants a 9% raise, everyone wants more for their products because operations cost more, inflation rises even more next month, rinse repeat
- npteljes 4y agoIn Hungary the gov uses similar reasoning for not raising the wages of public workers too much, in order to avoid this feedback loop. https://en.wikipedia.org/wiki/Wage-price_spiral https://en.wikipedia.org/wiki/Wage-price_spiral