10 ms·
One of the world’s largest investment banks: ‘Greedflation’ has gone too far
- RickJWagner 4y ago[flagged]
- was_a_dev 4y agoIsn't "greedflation" just an euphemism for unchecked late-stage capitalism. So while it might be the "end of capitalism" it is not a mistake, but the final goal
- peepeepoopoo3 4y agoThe M1 money supply increased by ~600% in the last five years, due to no-reserve banking and enormous money printing during covid, and people still act shocked when there's inflation. It's not because of wage growth, it's not because of "late stage capitalism", it's because of basic supply and demand. Nobody wants to address the elephant in the room that all of this is due to the botched response during covid. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- bremac 4y agoI think you may have linked to the wrong graph — while that graph does have a spike on it, the spike happens when the index was broadened in May 2020 to include savings and money market accounts.
- deleted 4y ago[deleted]
- slushh 4y agoHow much is M1 linked to the amount of money that is circulating? If that money is parked and not circulating, it cannot drive inflation.
- okeuro49 4y agoCovid money creation is part of it. But in Europe inflation is also being driven by high energy prices due to the war in Ukraine.
- luckylion 4y agoto a lesser degree though, it was > 6% already at the end of 2021, before the Russian invasion began.
- machina_ex_deus 4y agoI could've lived with the COVID printing if the Fed was more careful. There were inflation indications in early 2021 but the Fed used completely nonsense theory of "transitory inflation" which was obviously a lie to nearly every single economist but it somehow went on with it for a whole year. After the biggest money supply growth in recent history the Fed somehow forgot basic economic concepts and its mandate for a full year. This is simply unbelievable. QE printing was still going on - in massive amounts - while inflation is showing up and the Fed is speaking nonsense about transitory inflation. This game is rigged. The Fed is malicious, unpredictable and intentionally lying. It doesn't feel like the Fed is doing the best decision, it feels like the Fed is making intentionally unpredictable and even irrational decisions so that insiders, most likely big banks, could get to unravel their investment positions at the expense of the whole economy.
- rhaway84773 4y agoOk, basic supply and demand says the more supply you have of something the cheaper it should get. And yet, despite the 600% increase in supply of dollars, the dollar is stronger than ever. Whether the money supply is responsible for the inflation or not, this is not basic supply and demand. It’s the exact opposite of basic supply and demand.
- peepeepoopoo3 4y agoThe dollar is not "stronger than ever" if we're experiencing above-target inflation.
- ben_w 4y ago> late-stage capitalism Fun fact: the phrase "late-stage capitalism" was coined about 30 years before "woke" was used by American folk and blues singer Lead Belly. On the plus side, while the latter has only recently drifted from a specific meaning into popular flag waving, the latter has always been used by literal communists (e.g. Lenin) as a member of wishful thinking about why this time it will be different, this time capitalism really will come crashing down, this time we can all just be nice to each other and nobody needs to be nailed to anything. At this rate, a Vogon Construction Fleet is about as likely as capitalism eating itself.
- jongjong 4y agoIf some people are getting handouts or bailouts, it's not capitalism. Capitalism requires an even monetary playing field.
- ben_w 4y ago> Capitalism requires an even monetary playing field. Almost everyone — capitalist, communist, anarchist — believes in an even playing field. Half the disagreement is about what "even" (or "fair") means. This is also why people throw the exact same criticisms in the opposite direction, at all the attempts at communism over the years: "it's not real communism because $foo, it was really just state-capitalism", which often seems to me to be a criticism of governments taking the "wrong" idea of fairness rather than connecting with the underlying social/economic presumptions backed into The Communist Manifesto. (Personal opinion: would be nice if someone can take the points that Adam Smith and Karl Marx were observing about human nature, update with John Nash game theory, and make a new economic system that doesn't turn humans into Spherical Socio-Economic Units in a vacuum like Capitalism and Communism both ended up doing: neither money nor community are the be-all and end-all of human motivation).
- ClumsyPilot 4y ago> wishful thinking about why this time it will be different, this time capitalism really will come crashing down Did you like miss the entire financialisation? Today is not like 30 years ago. The amountof moneu invested in 3rd order financial derivatives dwarfs the amount of money we invest in real physical cool like infrastructure. The amount of concentration in supply chains has also never been seen in the entire world history- many high tech good like hard disks are only made in 1 or 2 locations in the world. Finally, crash of current capitalism does not mean we will have communism, we will just have another capitalism that is less retarded. Kind of like how we replaced the gold standard. https://en.m.wikipedia.org/wiki/Financialization https://en.m.wikipedia.org/wiki/Financialization
- refurb 4y agoI remember when they said 2008 was the “end of capitalism”, last i checked its still here.
- okeuro49 4y agoIt was the end of capitalism. But perhaps not in a way you were expecting. The bailouts were state socialism. We need to separate our payments system and money supply from banking investments and loans so that banks are no longer "too big to fail".
- deleted 4y ago[deleted]
- 5350-uiop-1130 4y agoit was end of capitalism, and start of clown capitalism. when all bad news is considered bullish, it shows how rotten and warped the system has become.
- tonyedgecombe 4y agoAs if corporations suddenly became greedy over the last couple of years but haven't been over the previous four decades. Corporations purpose is to maximise profits. To expect otherwise is a fools errand.
- mhoad 4y agoDo you have anything at all you want to propose in the way of a solution here? We don’t have to just accept that you know.
- jabradoodle 4y agoNo one is arguing to the contrary. A functioning market based economy shouldn't tolerate massive inflation fuelled by greed, as your competitors should undercut you.
- tonyedgecombe 4y ago>No one is arguing to the contrary. The original article is. The whole thing is presented as if it's some moral failure on the part of CEO's. Their only solution is price controls. There isn't one mention of breaking up the huge number of monopolies which dominate nearly every area of commerce.
- uncfrj 4y agoWhat is preventing you from opening a non greedy supermarket?
- 4y ago
- ClumsyPilot 4y ago'markup growth”—the increase in the ratio between the price a firm charges and its cost of production—was a far more important factor driving inflation in 2021 than it has been throughout economic history.' So the government tracks wages and unemployment, and sharply reacts when wages grow too fast. But when it comes to profits, they can't even tax them correctly, let alone react to profits driving inflation. Wouldn't agressive taxation be an alternative to raising interest rates in tackling inflation? Both reduce avaliability of capital. Is there any reason why raising interest rate is 'fair' but a temporary 'inflation tax' is unfair?
- gumballindie 4y ago> they can't even tax them correctly They can, but corruption is getting in the way of doing so.
- uncfrj 4y ago[flagged]
- _9vpl 4y agoTaxes don’t decrease the availability of capital, it simply re-distributes it to the politically-connected.
- eternalban 4y agoAha. So it's not the politically-connected who manage to keep IRS at arms-length. No. It is 'something but not political connections' that manages to frustrate the unjust greed of the "plitically connected" to tax rightfully earned profits of these corporations. Must be the "hand of God" ..
- amrocha 4y agoAvailability of capital is not a problem that needs to be fixed
- HPsquared 4y ago
- himinlomax 4y agoPrice control, rent control, capital flow controls and generally any policy that try to hamfistedly go against the invisible hand of the market have indeed failed repeatedly and catastrophically when used over a long period. However, as Keynes pointed out, in the long run we're all dead and yet the free market works its magic over the long run. In the short term, there's panics and opportunists that destructively exploit crisis situations. I think it was Stiglitz who pointed out that a few countries that temporarily blocked capital flight during the 90s Asian crisis recovered much more quickly than the rest.
- xwdv 4y agoThe problem is the consumer. Consumers are ultimately enablers for this behavior. They just keep buying shit, no matter how expensive it gets. And there’s often cheaper alternatives, but no, the consumer keeps buying grossly inflated things. As long as we’re discussing ridiculous things like price controls, let’s perhaps discuss consumption controls where consumers can only be allowed to purchase certain things at specified amounts and frequencies. In a society that eventually transitions entirely to digital payments, this kind of control should be easy to implement through a centralized authority.
- irdc 4y agoThings like food?
- luckylion 4y agoThings like branded food (and other branded items). It's insanely expensive and I absolutely don't see or taste a difference that's big enough to warrant x2 or x3 the price.
- bsagdiyev 4y agoYep, $2 for Food Lion brand shredded wheat or $5 for name brand shredded wheat. Not only that but the name brand has had an issue lately with having a lot of burnt tasting pieces. It's only $3 difference but the different in quality (not burnt vs burnt) is crazy.
- irdc 4y agoI guess it's easier to blame greedflation on other people being stupid than admitting that you yourself are being fleeced.
- xwdv 4y agoNo one is obligated to price things affordably and you are not obligated to buy things you can’t afford.
- krona 4y agoMeanwhile, Goldman strategists are predicting this quarters earning season will be the worst for profits/EPS since the start of the pandemic. > Earnings per share are expected to decline 7% year-over-year, according to a note from the bank published this week, along with a "significant deterioration" from the -1% year-over-year growth posted in the last three months of 2022. https://www.businessinsider.in/stock-market/news/investors-should-brace-for-corporate-profits-to-see-their-biggest-drop-since-the-start-of-the-pandemic-goldman-sachs-says/articleshow/99306146.cms https://www.businessinsider.in/stock-market/news/investors-s...
- capybara_2020 4y agoNumbers like this are really confusing. Ok there is an year on year decline of 7%. But how does that compare to previous years? Did they grow dramatically and now they are losing some steam? Or has it been declining for the last few years? One of the biggest losers is supposed to be healthcare(20%). Is that because they had a huge spurt because of the pandemic and now there is a reduction? I am not sure what the other industries are so I am not sure what to make of it.
- rhaway84773 4y agoYour statement is factually wrong. The article doesn’t claim Goldman strategists are predicting the worst quarter for profits/EPS since the start of the pandemic. They are predicting the steepest YoY decline in profits/EPS. By about 7%. There’s a huge difference. What they’re predicting probably means profits will still be a lot higher than many quarters in the pandemic, and much higher than Pre-pandemic profits. https://ycharts.com/indicators/sp_500_eps https://ycharts.com/indicators/sp_500_eps Most of the 2010s had EPS in the 20s. The late 2010s (2018 onwards…right after the massive tax break incidentally) has an EPS in the 30s. It drops to the teens in the beginning of the pandemic, rising to peak above 50, and is still in the mid 40s. A 7% drop would still keep EPS in the 40s, well above anything it touched Pre-pandemic. What’s worst is that this is with the backdrop of a much stronger dollar than ever, which means that these dollar earnings are increasing after compensating for conversion losses from the RoW, which indicates American consumers are being charged a lot more money.
- 5350-uiop-1130 4y ago- lockdown: some people are able to save money. - lockdown ends: everything is 30-100% more expensive. as george carlin said, "they want it back".
- jndcmjdjcmdmj 4y agoYou forgot the part where they were given massive amounts of cash.
- swiftcoder 4y agoI'm not sure one can characterise a couple of months rent payments (over the course of 2+ years) as "massive amounts of cash" The vast majority of government handouts during covid went not to consumers, but to the very corporations now raising prices - $400 billion in PPP loan forgiveness alone is a hell of a handout to corporate america.
- rhaway84773 4y agoThe “massive amounts of cash” was a fraction of the tax cuts that were given to corporations and the richest prior to the pandemic for no reason at all. At least these massive amounts of cash came in response to a disproportionately more massive world event. And yet I don’t see complaints about that massive handover of cash which wasnt even in response to a problem.
- effingwewt 4y agoYes, you are correct- businesses were given tons of cash in the form of PPP 'loans'.
- deleted 4y ago[deleted]
- machina_ex_deus 4y agoThere's no such thing as greedflation. This inflation was caused by massive money printing by the Fed of unprecedented proportions, used to fund the Treasury which went on with massive money giving helicopter money. Blaming capitalism when the reason this all blew up was practically the biggest socialistic experiment is ridiculous. It really is the death of capitalism, but not because of capitalism but because the single point of failure of central banks and central control are enough to bring this whole thing down. This is actually infuriating seeing a bank trying to deflect the blame. This is the results of decades of banks getting breastfed by the Fed, and then the Fed finally exploding it all in COVID printing and failing to raise interest rates for a whole year of rising inflation with nonsense of "transitory inflation". So much lies. If there should be social unrest, it's at the Fed and the banks.
- rhaway84773 4y agoAnd yet the dollar is stronger than ever. How is that supposed to work?
- rhaway84773 4y agoI recently visited Italy and was shocked at just how much cheaper it was for everything. Wasn’t Europe supposed to be facing massive inflation due to extremely high energy prices? Sure, the cost of gas was high. And yeah, the dollar is extremely strong (although a strong dollar should have made things cheaper in the US with net imports), but even using a dollar/Euro conversion rate at its historical peak (about 1.6 dollars to the Euro), had things way cheaper. Eating at the finest fine dining restaurant in Milan was as expensive as a sit down meal at a regular restaurant in the US. And that’s before adjusting for the fact that the US sticker prices did not include tax and you needed to pay 20% tip. I’ve been to Italy before and while it was never expensive, this was the first time I felt it was cheap. The U.S. feels poor. Italy feels so much more advanced. Despite the fact that the latter has a fraction of the per capita income of the former.
- candiodari 4y agoItaly is in a prolonged economic crisis. Things are cheap because locals can't pay for them, even at these prices.
- quantumwannabe 4y agoWhat are you talking about? There are plenty of €100+ per person fine dining restaurants in Milan while the average sit down restaurant in the US charges around $20-30 per person. Whatever restaurant you went to wasn’t fine dining or you are used to prices in a very expensive (and outlier) part of the US.
- bublyboi 4y agoShouldn’t this partly be addressed with rising interest rates? Depress the economy so the consumer is more frugal and unwilling to pay these marked up prices
- RickJWagner 4y agoThe classic cause for inflation is too much money chasing too few goods. We've just had a period of extraordinarily low interest rates, government checks going directly to citizens, and constrained supply chains. Why blame inflation on anything but the obvious?