5 ms·

> 1. Pandemic economic relief to offset otherwise lost wages due to restrictions is roughly equivalent to "injected money/liquidity from the sky" > 2. Subseque

by nawgz 3y ago

> 1. Pandemic economic relief to offset otherwise lost wages due to restrictions is roughly equivalent to "injected money/liquidity from the sky" > 2. Subsequent inflation I dislike this representation a LOT because I have the feeling more money was distributed to business owners under the incredibly corrupt PPP loans, and then... it turns out corporate profiteering is the real driver of inflation. People keep peddling this "giving people money in a pandemic caused all our problems" line, but it's just not true, it's not grounded in reality, and if it was a contributing factor, let's look at the other things that costed more... Citizen's tax dollars being paid back to them when you can't leave your home is not a driver of inflation Citizen's tax dollars being gifted to business owners who also proceeded to jack up their profit margins due to shocking price elasticity due to a complete lack of antitrust enforcement for 40 years is THE driver of inflation It's amazing how on an article about VC you've both managed to argue that no one should write articles about VC and then blamed citizens for corporate-driven inflation.

seizethecheese 3y ago
The mainstream economics consensus is that inflation was kicked off due to excess savings and limited supply of goods (first) then services (second). The idea that business profits are driving inflation is a partisan talking point, not at all consensus.
- nawgz 3y ago
  > The mainstream economics consensus Should be linkable from multiple sources. Care to provide some, then? > was kicked off due to excess savings That's a partisan talking point if I've ever heard one, and has largely died out in popularity in my view, since we've seen the endless lists of all-time-high corporate profits and margins > The idea that business profits are driving inflation Couldn't be more obvious. If everything costs more, and corporations are making record profit and revenue across the board, there's probably no limitation of goods or services. For instance, [0] argues my claim directly, [1] shows some details of that relationship, and there's an internet full of it. Everything supporting this "excess savings" bit is either from Republicans or 2021, care to link me something a bit more definitive? [0]: https://www.kansascityfed.org/research/economic-review/how-much-have-record-corporate-profits-contributed-to-recent-inflation/#:~:text=Firms%20raised%20markups%20during%202021,pressures%2C%20contributing%20substantially%20to%20inflation.&text=Inflation%20reached%20a%2040%2Dyear,potential%20explanation%20for%20high%20inflation https://www.kansascityfed.org/research/economic-review/how-m....
  - HDThoreaun 3y ago
    https://www.kentclarkcenter.org/surveys/inflation-market-power-and-price-controls/ https://www.kentclarkcenter.org/surveys/inflation-market-pow... Economists reject the assertion that corporate greed is the cause of inflation because corporations have always been greedy and there was no inflation in the 2 decades before covid.
    - nawgz 3y ago
      Notably from January 11, 2022 Also, the argument makes no sense > corporations have always been greedy and there was no inflation in the 2 decades before covid Corporations have clearly achieved deregulation at a greater scale than ever before, both thru devices like regulatory capture to weaken regulatory instruments, and by achieving wealth and therefore power at scales comparable to first world nations. The past did indeed happen in the past, but our past - unlike the authors of that article - includes knowledge of a full year of ludicrous financials and outsized margins being published by corp after corp. What does any writing not from 2021 say? I already addressed that point quite nicely for the audience, I thought.
      - JumpCrisscross 3y ago
        > ludicrous financials and outsized margins being published by corp after corp If you translate those financials into real terms, they're less ludicrous. Sometimes negative. Margin expansion absolutely contributed to inflation [1]. (On par with labor.) But this happened through wage suppression. > Corporations have clearly achieved deregulation at a greater scale than ever before, both thru devices like regulatory capture to weaken regulatory instruments What changed between 2021 and 2023 that gave them this power? There are solid cases made for care investments, to boost labour participation, and a variable corporate tax rate that kicks in when inflation is high. But they have to be based on sane, empirical arguments. [1] https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-...
        3y ago
icedchai 3y ago
My uncle's business got a $600K+ PPP loan. They had at least 10 million in cash and did not need the money. Why did they get it? Because they could. To be fair, they did pass it all out as employee bonuses.
gruez 3y ago
>Citizen's tax dollars being paid back to them when you can't leave your home is not a driver of inflation The pandemic relief wasn't funded by "Citizen's tax dollars". It was funded by borrowing. Lending/printing this much money in such short amount of time is going to cause inflation because demand (caused by dollars cojured out of nowhere) is chasing limited supply.
- nawgz 3y ago
  So then, we agree that because PPP loans were a larger amount of money produced in the exact same fashion, it follows that PPP loans should be assigned a larger share of the blame than stimulus cheques to citizens, and accordingly any mentioning of one without the other is a disingenuous attempt at implying governments should not spend money on their citizens livelihood. Understood.
  - bushbaba 3y ago
    The biggest joke is ppp loans had tons of fraud or non necessities. This was tax free gains pushed into housing and assets that the wealthy own. Those wealthy then speculated more leading to a lot of the inflation

by nawgz 3y ago

seizethecheese 3y ago

The mainstream economics consensus is that inflation was kicked off due to excess savings and limited supply of goods (first) then services (second). The idea that business profits are driving inflation is a partisan talking point, not at all consensus.

nawgz 3y ago
> The mainstream economics consensus Should be linkable from multiple sources. Care to provide some, then? > was kicked off due to excess savings That's a partisan talking point if I've ever heard one, and has largely died out in popularity in my view, since we've seen the endless lists of all-time-high corporate profits and margins > The idea that business profits are driving inflation Couldn't be more obvious. If everything costs more, and corporations are making record profit and revenue across the board, there's probably no limitation of goods or services. For instance, [0] argues my claim directly, [1] shows some details of that relationship, and there's an internet full of it. Everything supporting this "excess savings" bit is either from Republicans or 2021, care to link me something a bit more definitive? [0]: https://www.kansascityfed.org/research/economic-review/how-much-have-record-corporate-profits-contributed-to-recent-inflation/#:~:text=Firms%20raised%20markups%20during%202021,pressures%2C%20contributing%20substantially%20to%20inflation.&text=Inflation%20reached%20a%2040%2Dyear,potential%20explanation%20for%20high%20inflation https://www.kansascityfed.org/research/economic-review/how-m....
- HDThoreaun 3y ago
  https://www.kentclarkcenter.org/surveys/inflation-market-power-and-price-controls/ https://www.kentclarkcenter.org/surveys/inflation-market-pow... Economists reject the assertion that corporate greed is the cause of inflation because corporations have always been greedy and there was no inflation in the 2 decades before covid.
  - nawgz 3y ago
    Notably from January 11, 2022 Also, the argument makes no sense > corporations have always been greedy and there was no inflation in the 2 decades before covid Corporations have clearly achieved deregulation at a greater scale than ever before, both thru devices like regulatory capture to weaken regulatory instruments, and by achieving wealth and therefore power at scales comparable to first world nations. The past did indeed happen in the past, but our past - unlike the authors of that article - includes knowledge of a full year of ludicrous financials and outsized margins being published by corp after corp. What does any writing not from 2021 say? I already addressed that point quite nicely for the audience, I thought.
    - JumpCrisscross 3y ago
      > ludicrous financials and outsized margins being published by corp after corp If you translate those financials into real terms, they're less ludicrous. Sometimes negative. Margin expansion absolutely contributed to inflation [1]. (On par with labor.) But this happened through wage suppression. > Corporations have clearly achieved deregulation at a greater scale than ever before, both thru devices like regulatory capture to weaken regulatory instruments What changed between 2021 and 2023 that gave them this power? There are solid cases made for care investments, to boost labour participation, and a variable corporate tax rate that kicks in when inflation is high. But they have to be based on sane, empirical arguments. [1] https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/ https://www.epi.org/blog/corporate-profits-have-contributed-...
      - 3y ago

icedchai 3y ago

My uncle's business got a $600K+ PPP loan. They had at least 10 million in cash and did not need the money. Why did they get it? Because they could. To be fair, they did pass it all out as employee bonuses.

gruez 3y ago

>Citizen's tax dollars being paid back to them when you can't leave your home is not a driver of inflation The pandemic relief wasn't funded by "Citizen's tax dollars". It was funded by borrowing. Lending/printing this much money in such short amount of time is going to cause inflation because demand (caused by dollars cojured out of nowhere) is chasing limited supply.

nawgz 3y ago
So then, we agree that because PPP loans were a larger amount of money produced in the exact same fashion, it follows that PPP loans should be assigned a larger share of the blame than stimulus cheques to citizens, and accordingly any mentioning of one without the other is a disingenuous attempt at implying governments should not spend money on their citizens livelihood. Understood.
- bushbaba 3y ago
  The biggest joke is ppp loans had tons of fraud or non necessities. This was tax free gains pushed into housing and assets that the wealthy own. Those wealthy then speculated more leading to a lot of the inflation