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> The report casts serious doubt on the need for further interest rate hikes, and instead calls for stronger policies to rein in “corporate profiteering”. Let'

> The report casts serious doubt on the need for further interest rate hikes, and instead calls for stronger policies to rein in “corporate profiteering”. Let's make money artificially cheap again and involve the government more in price controls. What could possibly go wrong there? I'd rather they just enforce existing antitrust laws and enjoy market forces working in their favor. > Still, prices remain high. Consumers are still paying about 25% more for groceries, the report notes as an example. By coincidence, the PPI for food manufacturers are about 25% higher than pre-pandemic[0]. > Diaper prices have increased by more than 30% since 2019 from The M2 money supply is up over 40% since 2019[1], compared to ~1.5% in population growth. The available dollars per person in the system is up a lot more than 30%. Absent commensurate increases in productive capacity, things are going to cost more. And speaking of productive capacity: policymakers have been discouraging, if not outright hostile, to such endeavors, with all this rhetoric against profits. [0]: https://fred.stlouisfed.org/series/PCU311311 https://fred.stlouisfed.org/series/PCU311311 [1]: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

exabrial 3y ago
> I'd rather they just enforce existing antitrust laws and enjoy market forces working in their favor. Amen. This has worked out over and over again best for the consumer. Literally every problem we have is caused by monopolies.
- bediger4000 3y ago
  I do not disagree at all, but we've got 40+ years of lax anti-trust enforcement complete with backing doctrine and underpinning philosophy to overcome to get there. If Microsoft in 1998 wasn't a monopoly deserving of breakup, I don't think anything except a strict 100% of the market, with precisely 0 competitors, owned by a single, comically scarre and universally loathed tycoon will count.
  - gottorf 3y ago
    Yes, antitrust enforcement has really been lacking for decades; though it seems as of late, big mergers have been struck down, so perhaps there's a counterswing in the works.
wolverine876 3y ago
I don't support those policies, but the US economy had its best ever during a period of price controls, etc. in the post-WWII era (edit: I mean, from then until the late-1970s / early-1980s). The idea that it's anathema for the American people to take control of their economy, that they must be subject to a wealthy few and the 'free market' forces, seems odd, and a bit too convenient for the power, pocketbooks, and egos of wealthy few.
- legitster 3y ago
  Most of the price controls post-WWII were holdovers from the great depression - if anything, the post WWII boom was stimulated by the end of New Deal Price schemes. It's also important to note that a lot of the price controls of this era were minimum prices. You couldn't make or sell steel below a certain price, etc.
  - wolverine876 3y ago
    I wasn't clear and I updated the GP: I meant the regulation, controls, etc. until the 1980s.
- hackerlight 3y ago
  Almost anything is better. Wealth tax, regulations, minimum wage, anti trust laws, land tax, whatever. Just don't do price controls unless you're correcting for market failure. They're objectively bad.
  - wolverine876 3y ago
    Why do you think that? Give us reason to believe! Also, don't many of the solutions you name exist to 'correct for market failure'? Why are price controls different?
    - hackerlight 3y ago
      Because it means the market can't find equilibrium which leads to deadweight loss and problems like shortages. Allocation becomes inefficient and it's a matter of who can stand in line the longest to buy the bananas that are mispriced. Better to have correct prices so you don't get shortages, and rely on welfare or UBI to fill the same need. Minimum wage is a form of price control but it's one that's quite well studied empirically to have not super negative consequences as would be predicted by basic theory, perhaps because monopsony leads to mispricing of labor so minimum wage is fixing a market failure. Regarding wealth and land tax. Whatever your view on taxation it's a necessary evil so may as well pick the least bad taxes. Regulations can be a positive because they correct market failure. For example tragedy of the commons. Price controls that don't correct specific well defined market failure will add dead weight loss for no benefit. My view on this isn't fringe. It's mainstream among Keynesian economists that price controls are uniquely bad as a general rule.
ProllyInfamous 3y ago
>Diaper prices have increased by more than 30% since 2019 One of the greater correlations on maternal happiness is whether she has access to supportive childcare (whether self or govt funded). A single mother, literally "doing it on her own" without any outside help is perhaps more likely to be most-miserable. It would make sense to me that if our Oligarchies want to increase population replacement (fertility) rates, perhaps they ought'a consider excess profit-seeking outside of child-rearing products; an increase to publicly-funded daycares would definitely help. ¢¢
- mrguyorama 3y ago
  But women with no access to affordable child care or sex education or birth control or proper reproductive rights and health care tend to get knocked up all the time. On average, they have more children too. If you don't value the lives of Women, that's a much easier, cheaper, and more effective "solution" to birth rates. It's also popular enough to enough Americans to be the explicit plan/goal/effort of the Republican party in many states. It's much easier to exploit a worker that grew up in a poor family too.
milesvp 3y ago
Yeah. I’m disappointed that the fed has such assymmetric ability to deal with the money supply. The velocity of money went way down at the start of lockdowns. The correct move is to inject huge amounts of M1 to conpensate. The fed did this mostly with direct lending, I’m not even sure if they still buy government bonds the way I was taught in school. But the fed also greatly encouraged all the stimulus spending as well. Unfortunately, what we know quite well from video game economies, is that for every money source you need an “equivalent” money sink to avoid inflation (it can get quite difficult determining equivalency, since inflation is not uniform, and there may be hidden multipliers). Basically there needed to be massive taxes once the velocity of money rebounded, and that is a much harder bill to pass. What we really needed as part of the stimulus package was new taxation built in, something that directly taxed profits and per unit price increases might be something I’d try to include next time we have such a need. The fed was truly surprised at how well direct stimulus to consumers worked, they’d always been of the mind that you want to make money available to business. But it somehow makes sense to me that you’d want to put the money in at one end and pull it out the other. I very much recognize the dysfunction that price controls can have, and their contribution to the great depression, but there needs to be some way to claw back money, and some kind of targeted taxation I suspect would be better than just general tax increases.
- wolverine876 3y ago
  How does that account for inflation dropping in the last year?
  - milesvp 3y ago
    The fed has been slowly draining money with higher interest rates (or maybe more precisely have slowed the increase in the money supply). That part is potentially symmetrical. It’s the inability for the fed to effectively convince congress to increase taxes and pay off debt with it that is the impossible problem. What drives inflation is the expansion of the money supply, which didn’t happen when spending happened, the expansion essentially happened when the velocity of money rebounded (I am grossly over simplying BTW, since inflation can never be uniform). The fed needed to be able to pull money out at a fast rate as velocity started to rise, by doing the reverse of what happened when velocity fell, which was, for all intents and purposes, spending money. Taxing is generally the way to take money out of ciculation. Selling stockpiles of assets is also how the fed historically dealt with this, but if congress spends “on the fed’s behalf”. They need to also tax “on the fed’s behalf”.
StreetChief 3y ago
That PPI price increase includes a profit margin... From the article: "Prices for consumers rose by 3.4% over the past year, but input costs for producers increased by just 1%." [edit: clarity, tone, and added the below] 3.4 - 1 = 2.4% increase in profits/revenue for corporations while consumers see a 3.4% increase in costs...
rfwhyte 3y ago
Typical corporatist hand-wavey economics bullshit. "Market forces" and a lack of regulation are precisely why we've ended up in this situation in the first place, so yeah, great idea, let's just double down on letting corporations do whatever they want, I'm sure that will go great for... the corporations. The increase of the M2 money supply is also completely irrelevant. Sure there's more "Money" floating around out there, but as with all other forms of wealth, the vast majority of it is concentrated in the pockets of relatively few wealthy individuals, not in the pockets of the many millions of regular folks who are actually buying diapers. Talking averages in the context of individual wealth and consumer spending is also utterly useless, as it would be far more useful to talk about the wealth and spending habits of the median consumer, but that would obviously show that the typical regular person living out here in the real world does not in fact have "40% more money" in their pockets to spend on diapers or groceries. If anything they have LESS money now than before all that new money flooded into the system, as the rich have gobbled up damn near the entirety of all that "New money" yet are still putting the screws the the masses with their shameless, greedy profiteering.
dragonwriter 3y ago
> Let's make money artificially cheap Money is artificial, and whatever its price is is artificial.

exabrial 3y ago

> I'd rather they just enforce existing antitrust laws and enjoy market forces working in their favor. Amen. This has worked out over and over again best for the consumer. Literally every problem we have is caused by monopolies.

bediger4000 3y ago
I do not disagree at all, but we've got 40+ years of lax anti-trust enforcement complete with backing doctrine and underpinning philosophy to overcome to get there. If Microsoft in 1998 wasn't a monopoly deserving of breakup, I don't think anything except a strict 100% of the market, with precisely 0 competitors, owned by a single, comically scarre and universally loathed tycoon will count.
- gottorf 3y ago
  Yes, antitrust enforcement has really been lacking for decades; though it seems as of late, big mergers have been struck down, so perhaps there's a counterswing in the works.

wolverine876 3y ago

I don't support those policies, but the US economy had its best ever during a period of price controls, etc. in the post-WWII era (edit: I mean, from then until the late-1970s / early-1980s). The idea that it's anathema for the American people to take control of their economy, that they must be subject to a wealthy few and the 'free market' forces, seems odd, and a bit too convenient for the power, pocketbooks, and egos of wealthy few.

legitster 3y ago
Most of the price controls post-WWII were holdovers from the great depression - if anything, the post WWII boom was stimulated by the end of New Deal Price schemes. It's also important to note that a lot of the price controls of this era were minimum prices. You couldn't make or sell steel below a certain price, etc.
- wolverine876 3y ago
  I wasn't clear and I updated the GP: I meant the regulation, controls, etc. until the 1980s.
hackerlight 3y ago
Almost anything is better. Wealth tax, regulations, minimum wage, anti trust laws, land tax, whatever. Just don't do price controls unless you're correcting for market failure. They're objectively bad.
- wolverine876 3y ago
  Why do you think that? Give us reason to believe! Also, don't many of the solutions you name exist to 'correct for market failure'? Why are price controls different?
  - hackerlight 3y ago
    Because it means the market can't find equilibrium which leads to deadweight loss and problems like shortages. Allocation becomes inefficient and it's a matter of who can stand in line the longest to buy the bananas that are mispriced. Better to have correct prices so you don't get shortages, and rely on welfare or UBI to fill the same need. Minimum wage is a form of price control but it's one that's quite well studied empirically to have not super negative consequences as would be predicted by basic theory, perhaps because monopsony leads to mispricing of labor so minimum wage is fixing a market failure. Regarding wealth and land tax. Whatever your view on taxation it's a necessary evil so may as well pick the least bad taxes. Regulations can be a positive because they correct market failure. For example tragedy of the commons. Price controls that don't correct specific well defined market failure will add dead weight loss for no benefit. My view on this isn't fringe. It's mainstream among Keynesian economists that price controls are uniquely bad as a general rule.

ProllyInfamous 3y ago

>Diaper prices have increased by more than 30% since 2019 One of the greater correlations on maternal happiness is whether she has access to supportive childcare (whether self or govt funded). A single mother, literally "doing it on her own" without any outside help is perhaps more likely to be most-miserable. It would make sense to me that if our Oligarchies want to increase population replacement (fertility) rates, perhaps they ought'a consider excess profit-seeking outside of child-rearing products; an increase to publicly-funded daycares would definitely help. ¢¢

mrguyorama 3y ago
But women with no access to affordable child care or sex education or birth control or proper reproductive rights and health care tend to get knocked up all the time. On average, they have more children too. If you don't value the lives of Women, that's a much easier, cheaper, and more effective "solution" to birth rates. It's also popular enough to enough Americans to be the explicit plan/goal/effort of the Republican party in many states. It's much easier to exploit a worker that grew up in a poor family too.

milesvp 3y ago

Yeah. I’m disappointed that the fed has such assymmetric ability to deal with the money supply. The velocity of money went way down at the start of lockdowns. The correct move is to inject huge amounts of M1 to conpensate. The fed did this mostly with direct lending, I’m not even sure if they still buy government bonds the way I was taught in school. But the fed also greatly encouraged all the stimulus spending as well. Unfortunately, what we know quite well from video game economies, is that for every money source you need an “equivalent” money sink to avoid inflation (it can get quite difficult determining equivalency, since inflation is not uniform, and there may be hidden multipliers). Basically there needed to be massive taxes once the velocity of money rebounded, and that is a much harder bill to pass. What we really needed as part of the stimulus package was new taxation built in, something that directly taxed profits and per unit price increases might be something I’d try to include next time we have such a need. The fed was truly surprised at how well direct stimulus to consumers worked, they’d always been of the mind that you want to make money available to business. But it somehow makes sense to me that you’d want to put the money in at one end and pull it out the other. I very much recognize the dysfunction that price controls can have, and their contribution to the great depression, but there needs to be some way to claw back money, and some kind of targeted taxation I suspect would be better than just general tax increases.

wolverine876 3y ago
How does that account for inflation dropping in the last year?
- milesvp 3y ago
  The fed has been slowly draining money with higher interest rates (or maybe more precisely have slowed the increase in the money supply). That part is potentially symmetrical. It’s the inability for the fed to effectively convince congress to increase taxes and pay off debt with it that is the impossible problem. What drives inflation is the expansion of the money supply, which didn’t happen when spending happened, the expansion essentially happened when the velocity of money rebounded (I am grossly over simplying BTW, since inflation can never be uniform). The fed needed to be able to pull money out at a fast rate as velocity started to rise, by doing the reverse of what happened when velocity fell, which was, for all intents and purposes, spending money. Taxing is generally the way to take money out of ciculation. Selling stockpiles of assets is also how the fed historically dealt with this, but if congress spends “on the fed’s behalf”. They need to also tax “on the fed’s behalf”.

StreetChief 3y ago

That PPI price increase includes a profit margin... From the article: "Prices for consumers rose by 3.4% over the past year, but input costs for producers increased by just 1%." [edit: clarity, tone, and added the below] 3.4 - 1 = 2.4% increase in profits/revenue for corporations while consumers see a 3.4% increase in costs...

rfwhyte 3y ago

Typical corporatist hand-wavey economics bullshit. "Market forces" and a lack of regulation are precisely why we've ended up in this situation in the first place, so yeah, great idea, let's just double down on letting corporations do whatever they want, I'm sure that will go great for... the corporations. The increase of the M2 money supply is also completely irrelevant. Sure there's more "Money" floating around out there, but as with all other forms of wealth, the vast majority of it is concentrated in the pockets of relatively few wealthy individuals, not in the pockets of the many millions of regular folks who are actually buying diapers. Talking averages in the context of individual wealth and consumer spending is also utterly useless, as it would be far more useful to talk about the wealth and spending habits of the median consumer, but that would obviously show that the typical regular person living out here in the real world does not in fact have "40% more money" in their pockets to spend on diapers or groceries. If anything they have LESS money now than before all that new money flooded into the system, as the rich have gobbled up damn near the entirety of all that "New money" yet are still putting the screws the the masses with their shameless, greedy profiteering.

dragonwriter 3y ago

> Let's make money artificially cheap Money is artificial, and whatever its price is is artificial.