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You 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 du
by kranke155 3y ago
You 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?
- hef19898 3y agoZero interest rates after the 2008 crisis would be my bet, the post-Covid infalation was driven by a significant degree by energy prices and corporate profits. And free money, that only changes as a reaction to said inflation. Just we managed to avoid a 2008-like economic melt down post Covid still puzzles me.
- nerdponx 3y agoMy unprofessional opinion is that financial markets absolutely loved Trump, and there was enough economic activity to stave off critical revenue problems in the early days. Then after a few months people started spending as much money as before, they just shifted what they spent it on.
- WalterBright 3y agoThink of all the inflation since 1914. What is it, 40 to 1? Somehow it was all corporate profits?
- hef19898 3y agoOf course not, claiming that would be rediciulous. The last one, post Covid, seems to be driven partially by corporate profits if you believe people being much more knowledgable about those things than me.
- WalterBright 3y ago> claiming that would be rediciulous. What, then, caused the 40:1 inflation? > if you believe people being much more knowledgable about those things My father was head of the business department at a college and taught finance. He had an encyclopedic knowledge of how money worked. He had a degree in economics from MIT and an MBA from Harvard and a PhD in history from KSU. We had a lot of discussions about this. But since he has passed on, you might be interested in "Monetary History of the United States" by Milton Friedman.
- nerdponx 3y agoRobert Reich has been promoting a similar analysis on social media.
- paulddraper 3y ago> The idea that the expansion of money supply led to the price increases seems to be mostly a media narrative. Some would call it "common sense."
- kranke155 3y agoMonetary theory is not common sense.
- latency-guy2 3y agoWhy would Joseph Stiglitz, Nobel Prize winning economist be wrong?