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I get the sense that people increase prices just because everyone else is increasing prices. Even if nothing increased for you since "everything" is increasing
by lfmunoz4 3y ago
I get the sense that people increase prices just because everyone else is increasing prices. Even if nothing increased for you since "everything" is increasing might as well increase because now is when you can get away with it.
- castlecrasher2 3y agoIt's not really a "get away with it" when you need more to afford the other increasing prices, though.
- chongli 3y agoPrices increase when costs go up. If you’re selling widgets and your wholesale price goes up, you have to increase the retail price or your margins drop.
- kcatskcolbdi 3y ago> Prices increase when costs go up I'd contend that costs going up is _a_ cause of price increases. The reason a soda costs more from a movie theater than a supermarket is not because a soda costs more to make in the movie theater, for instance.
- Naijoko 3y agoFor example the price of Art is judged by the buyer. There is no production cost or whatever.
- burkaman 3y agoPrices increase when a seller increases them. That could be because their costs went up, but it also could just be because they felt like people would pay more.
- chii 3y ago> because they felt like people would pay more. but if that was true, why did it happen only during the pandemic and not before? At any point in time, if a business felt like their customer could've paid more, the business should be increasing that price. So the recent price rises cannot be explained with this train of argument. Unless, of course, the pandemic somehow made it so that people could pay more.
- burkaman 3y agoIt happened all the time before the pandemic, I'm not sure what you mean.
- creer 3y agoSure, sure but why did the costs go up? You can blame a price increase on everyone else but that does not answer the question.
- kranke155 3y agoYou are mostly right. Joseph Stiglitz, Nobel Prize winning economist, has said that most of the inflation we saw was markups - ie firms raising their prices due to inadequate amount of competition. Here is an 50 min long talk on the subject https://www.youtube.com/watch?v=4BAsZIHp9HI&t=1217s https://www.youtube.com/watch?v=4BAsZIHp9HI&t=1217s The idea that the expansion of money supply led to the price increases seems to be mostly a media narrative. Many people believe it however.
- WalterBright 3y agoInflation correlates with the deficit spending.
- nerdponx 3y agoIn this case it also correlates with corporate profits. Edit: it actually does correlate with deficit spending, but only because the last two major deficit spending increases were 2008-2010 and Covid. So it's pretty hard to say deficit spending in particular was causal (as opposed to, say, near-zero interest rates combined with industry consolidation).
- WalterBright 3y agoAny other explanation for inflation has to explain where the extra money comes from. A price increase doesn't create more money.
- nerdponx 3y agoWhat extra money? You're talking about CPI inflation, not money supply.
- WalterBright 3y agoPrices have doubled in the last 20 years. Where did the extra money to pay those prices come from?
- balderdash 3y agoI have the same sense - but they can only get away with it because a) people have excess savings b) people are willing to spend those excess savings. When consumers start reducing demand, or substituting other products things will change - I’ve already started changing my behaviour - but it takes a little while, you buy a $7 jar of mustard, $12 bag of granola, or a $30 hotel margarita - and you’re f** that never doing that again, but it feels like it takes a while for that to work its way through the system.