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All of this is true is a company rises prices without affecting the behavior of others. When suppliers notice their customers raising prices, they raise prices

by ydlr 4y ago

All of this is true is a company rises prices without affecting the behavior of others. When suppliers notice their customers raising prices, they raise prices to capture some of that increase. Likewise, workers will try to increase wages. The result is a profit-price spiral that gets misdiagnosed as wage-price spiral.

finspeech 4y ago
I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely
- vineyardmike 4y ago
  > ultimately no group is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers Except that wages tend to change less fluidly than prices so there’s usually a lag resulting in less purchasing power for consumers.
  - finspeech 4y ago
    Yes that is true, but under the assumption that prices are only raising due to corporations increasing them, then my original post comes into play where for everyone that is worse off, there is someone necessarily better off. Thus the consumer as a whole is unaffected. Because again, if that money is hoarded then that means the hoarder is consuming less and thus supplies are increased for everyone else. Or they are investing and just spending that money into the hands of a different group
- ydlr 4y ago
  > I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers In the long-term, yes. In the moment, the experience of rapidly rising prices really sucks. It doesn't occur smoothly or evenly. > What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely You are absolutely right. And inadequate competition in many sectors is definitely a contributor to current inflation.

by ydlr 4y ago

finspeech 4y ago

I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely

vineyardmike 4y ago
> ultimately no group is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers Except that wages tend to change less fluidly than prices so there’s usually a lag resulting in less purchasing power for consumers.
- finspeech 4y ago
  Yes that is true, but under the assumption that prices are only raising due to corporations increasing them, then my original post comes into play where for everyone that is worse off, there is someone necessarily better off. Thus the consumer as a whole is unaffected. Because again, if that money is hoarded then that means the hoarder is consuming less and thus supplies are increased for everyone else. Or they are investing and just spending that money into the hands of a different group
ydlr 4y ago
> I’ll grant this, but no matter what it’s called, ultimately no group (consumer vs. business) is better or worse off. In such a spiral it’s just the nominal numbers that are changing and not the ‘real’ numbers In the long-term, yes. In the moment, the experience of rapidly rising prices really sucks. It doesn't occur smoothly or evenly. > What keeps this from happening, I think, is the presence of competition which would stop both cohorts, workers and businesses, from increasing their prices indefinitely You are absolutely right. And inadequate competition in many sectors is definitely a contributor to current inflation.