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The problem isn't inflation. It's prices. What goes up may not come down
- jessiedarryl8 3y ago[dead]
- mensetmanusman 3y agoIn a well functioning capitalist economy prices should constantly decrease. The workaround is to get so large, that only the government could possibly compete with you, then you control prices.
- kalupa 3y agowait, so there's no profit in capitalism?
- erellsworth 3y agoIn a perfectly competitive market, yes, profits go to zero. https://www.investopedia.com/ask/answers/031815/why-are-there-no-profits-perfectly-competitive-market.asp https://www.investopedia.com/ask/answers/031815/why-are-ther... But there's no such thing as a perfectly competitive market.
- charcircuit 3y agoWhy would someone bother selling something if there was no profit to be made?
- pjmorris 3y agoOne example: A farmer might choose to sell his produce at cost so it won't rot, so he can pay his bills and so the surrounding population can eat. A profit would be nice, but there's more to it than profit, e.g. paying the bills and social stability.
- cy_hauser 3y agoTo spin the wheels. People still get paid and the economy keeps humming along. No profit doesn't mean people aren't making money, just that the company isn't making excess money.
- deleted 3y ago[deleted]
- jmopp 3y ago"Oh, what am I to do with all this wheat that grew on my field?"
- jmopp 3y agoAnd then you exclaim that it's the fault of what little regulation there is that's keeping the prices up, and that the prices will drop as soon as the government allows us to pay below minimum wage/hire children/loosen health-and-safety regulations.
- some_random 3y agoI guess this might be true if all goods are commodities but if you look at the details pretty much all goods aren't. If you make a pair of shoes that lasts twice as long and looks twice as good, you can charge twice the price and people will happily buy it and that's a good thing.
- NotYourLawyer 3y agoPrices in real terms should decrease maybe. It’s fine if the numbers go up each year in line with intentional inflation targets.
- JumpCrisscross 3y ago> well functioning capitalist economy prices should constantly decrease Most things an average American would buy in 1923 are cheaper now in real terms. We just have more categories of things we purchase.
- Detrytus 3y agoYes, most things are cheaper, except those tiny, insignificant ones, like houses, college tuition, medical bills...
- sokoloff 3y agoIt's true that there was a lot less money spent on medical bills in 1923. I'm also quite sure that I don't want to go back to 1923 medicine (or even 1923 housing; despite the bones of my house being approximately that old, the 2023 version has vastly nicer lighting, insulation, HVAC, and kitchens/baths).
- JumpCrisscross 3y ago> like houses, college tuition, medical bills These three areas of our economy are broken. Granted. But they also illustrate my point. 1920s tenements, education standards (most people didn’t go to college) and medical practices (most people didn’t have an annual physical) were objectively inferior to our standards today. Prices went up. But so did what and how much we’re consuming.
- hiddencost 3y agoI mean it's not just prices. If my income and benefits had tracked with inflation and promotions I wouldn't mind. But I got promoted and lost 20% of my purchasing power in real terms.
- _heimdall 3y agoThat's the point though, the Fed main lever to lower inflation is causing pain in the market. When they say soft landing they really just mean they believe they can break things just enough to cool down the economy and get back to the magic number of 2-3% inflation.
- dumpsterlid 3y ago[dead]
- hiddencost 3y agoThe article frames it as "the number is too high because people don't understand inflation on an emotional level", which seems condescending and wrong, to me.
- _heimdall 3y agoTotally agree with you there, I also think that framing is just flat wrong.
- blitzar 3y agoThat people do not understand very basic concepts is scary. > The root of what’s going on here can feel obvious: blame inflation, which picked up in mid-2021 and throughout 2022. But that isn’t really the issue anymore, at least not at the current rate, because inflation is coming down. The actual problem here is prices. Inflation going from 10% to 5% is "inflation is coming down" - but it means that prices are rising at 5% a year instead of 10% a year. If you want prices to go down - the inflation number would have a negative sign infront of it. Then they would be writing about how scary deflationary spirals are. The problem is inflation - and inflation like all returns compound year after year.
- rzimmerman 3y agoIt’s really disheartening to see the percentage of people that don’t understand this (and feel perfectly comfortable having an argument about it). People posting comparisons of receipts from 8 years ago and saying that prices are “really still up 30%” and “they’re lying to us”.
- Capricorn2481 3y agoI see lots of people saying something different, which is the current state of prices doesn't match the rate of inflation we had the past few years. I'm way more disheartened by people talking about inflation like it's the end all be all of prices. We know what price gouging looks like.
- merpnderp 3y agoWe've had about 20% total inflation since 2021. In some sectors it is higher and some lower. Even Amazon's recent history of price gouging is only going to add up to peanuts on their yearly gross. I think it's more people just don't understand compounding rates and if you inject more dollars into the economy than there are goods and services, you'll have more dollars chasing those same goods and services.
- soperj 3y agoThey are lying to us though. Inflation is and was higher than what they're saying it is.
- resters 3y agoThe way that official inflation numbers are calculated is a weighted average deemed useful for policymaking. However price increases are inflation, and inflation in one area of the economy can occur simultaneously to deflation in another area. The net result will be the official inflation rate. In the US, the Fed and the Treasury both do things that can impact inflation/deflation in broad AND targeted ways. However these policy instruments sometimes have effects that were not strictly intended, and sometimes non-policy-related economic factors create inflation/deflation.
- gustavus 3y agoThe problem isn't water, it's drowning. The problem isn't obesity, it's calories. The problem isn't expenses, it's income. Inflation is literally defined as prices rises in response to increase in currency....
- JumpCrisscross 3y ago> Inflation is literally defined as prices rises in response to increase in currency Just the first part. An economy with constant money supply can experience inflation if its production is knocked offline, e.g. in a war.
- HDThoreaun 3y agoInflation has multiple definitions. The layman one has nothing to do with currency supply level.
- bryanlarsen 3y ago> Inflation is literally defined as prices rises in response to increase in currency.... No it's not. When Friedman said that "inflation is always a monetary phenomenon" he was saying that inflation is caused by a mismatch of money supply and economic capacity. You fix inflation by tweaking the money supply, but the cause may have been either the supply or capacity side. And since when did an economic theory become part of the definition? Inflation is an old word that far predates Friedman or the central currency system.
- dehrmann 3y agoIt's not that, though. The problem isn't prices, it's the perception of prices. People aren't looking at prices as a percent of their income, they're looking at them compared to 2019 benchmarks. It's also very uneven. Thinks people want to do because of pent-up pandemic demand are the very things are expensive. The used gym equipment market is pretty good right now.
- exabrial 3y agoBasic macroeconomics: Inflation decreases, retailers begin lower prices to increase sales. There's a delay between all of this. This process happens over 1-2 years, much slower than prices going up. This does not happen in a market with monopolies however, which is why it is vital to lower the barrier of entry into markets (decreasing stupid regulations that get "exceptions" in the real world), or use FTC or other state agencies to break up suppliers. Or event bet, reduce our tax code / and or change it so that vertical integration stops being a thing. Oh, and it'd help if the federal reserve stopped wholesale printing worthless money to try to keep up with absolutely reckless spending by the federal government.
- SantalBlush 3y agoThat's not basic macroeconomics, it's wrong. Disinflation is not the same thing as deflation. PSA: whenever someone calls a concept "basic economics", don't just take their word for it.
- incomingpain 3y agoVox, whose bias and affiliation is with the team which caused inflation is attempting apologetics for inflation? Ok sure. The problem is inflation.
- gosub100 3y agoI cannot imagine how hard the media would have come down on Trump if prices had risen under his term.
- arcbyte 3y agoI remember in the late 90s and through the aught that Walmart had huge Rollback campaigns. Prices were constantly rolling back. Things were getting cheaper. This is still around of you look carefully but it's a scarce shell of what it used to be. I imagine it will return in a decades time as the economy sorts itself out.
- FredPret 3y agoI've seen twitter comments with more intellectual value. We should prioritize basic economics and basic mathematics in education, even for people who will go on to get humanities degrees and write for Vox (about business & economics, no less). Someone who doesn't understand how multiplication and inflation works should not be allowed anywhere near a big news publication. "Emily Stewart covers business and economics for Vox. She has written about a wide range of topics, including Elizabeth Warren’s political roots, the motivations driving the crypto space, and what’s going on these days with the Beanie Baby market. Stewart is the author of a monthly newsletter, The Big Squeeze, that examines the ways ordinary people are being squeezed under capitalism and the scams — legal and illegal — that are constantly trying to sucker us."
- friend_and_foe 3y agoWhat a title. Someone please inform the author that prices going up is canonically referred to as "inflation."
- cpr 3y agoThe problem is utterly simple. If you print dollars (created out of nothing), the value of each dollar goes down, since nothing of value has been created or destroyed. You have more dollars chasing the same value. But of course the official narrative has to shield the Fed from criticism, so they can run the dollar machine with impunity.
- senectus1 3y agothis lever on inflation is delayed though. like they print a billion today, we dont see the inflation effect for a couple of years. there are other effects that trigger inflation as well.
- iteratethis 3y agoIsn't it weird how roughly speaking, things you do not strictly require tend to get cheaper over time whilst things you absolutely need get ever more expensive or at least not cheaper? It seems the true needs of survival need to be sufficiently expensive otherwise you can't boss people around.
- tjansen 3y agoI think an underrated aspect of inflation is the need (or opportunity) of corporations to increase margins. Interest rates are going up, so the stock market expects corporations to increase earnings per share and dividends as well. Also, a lot of corporations are in debt, especially after the covid years, and need higher margins to pay it off, or at least pay higher interest rates. The craziest price increases I have seen in German supermarkets were Pepsi Corp products, Mars and Coke. They are all way higher than no-name alternatives (like 1.5l Coke bottles for 1.79, while no-name brands are 0.59 EUR; and yes, I know that's still cheap compared to many other countries). The prices of a lot of store-branded products have actually come down, but the prices of international brands keep rising.
- Reggieflanagan 3y ago[dead]