5 ms·

>The general inflation is of course due to reckless COVID spending and rising energy prices as well as reckless and ineffective sanctions. Reckless spending pl

>The general inflation is of course due to reckless COVID spending and rising energy prices as well as reckless and ineffective sanctions. Reckless spending played a part, but a major (if not the biggest) component was every company getting it into their heads to "test the price advantage" of their products. This amounted to jacking up prices knowing people would suck it up and buy, lying that it was "supply chain" forcing their hand, and simultaneously posting record profits every quarter for three years after the vaccine dropped.

prepend 2y ago
> component was every company getting it into their heads to "test the price advantage" of their products This happens all the time. Companies are constantly maximizing greed. What allowed the price increases is the available cash (due to reckless spending). If customers hadn’t been able to pay, then companies wouldn’t have increased prices. I hear this comment a lot and it’s like saying “bob didn’t die from smoking, he died from the giant tumor.”
- nkrisc 2y ago
  Then prices will drop because without the infusion of cash consumers won’t be able to afford the inflated prices, right?
  - anonym29 2y ago
    If the inflation is strictly caused by "corporate greed", and not by an expansion of the money supply, then yes, the prices would drop. If the inflation is caused by an expansion of the money supply and "corporate greed" is merely the proximal expression of this, and central banks do not decrease the money supply as quickly and as much as they expanded it by, then no, higher prices are here to stay. Time and reality will tell, no need to argue this out here with people who've already emotionally made up their mind and cannot be reasoned with through rational conversation.
    - ryandrake 2y ago
      I agree and I think we should start ore clearly distinguishing between inflation and price gouging. Both are going on, but when we blame everything on "inflation" we're really just letting the government be the fall guy and letting corporations off the hook for whatever increase they are doing beyond the currency's actual inflation.
- dbspin 2y ago
  Strongly disagree - the price increases were possible because people are strongly resistant to decrease their quality of life. e.g.: they'll pay significantly more of their income to maintain the same level of diet and travel up to the maximum they can afford (and beyond with debt). Rather than scaling back spending and reducing social status and leisure. This isn't even irrational, as status is linked to concrete health benefits (e.g.: Whitehall studies on cardiovascular health). There's been price matching across the food and service industries, due to consolidation and oligopoly - themselves a result of financialisation. So you have the whole food industry for example, responding to the supply shocks of covid by increasing price - then realising that demand elasticity doesn't apply if they act in unison.
  - paulryanrogers 2y ago
    > ...then realising that demand elasticity doesn't apply if they act in unison. So you're not actually disagreeing?
  - datavirtue 2y ago
    You have companies like Kroger whose prices are out of control. One way to save significant money is to avoid them if you can. If they have a competing grocer it is always drastically cheaper...free tank of gas per shopping trip cheaper. They are salivating over this Albertsons merger. Easy money. Thank the gods for Walmart.
  - prepend 2y ago
    Consolidation and oligopoly aren’t new in the past 4 years. What is new is the trillions of cash injected into money supply. Greed is constant. Consolidation started in the 90s and the same 4 grocery companies have owned the market for 15-20 years. They only have ability to increase prices because consumers have more cash to spend. They would have loved to do this 5 years ago, but random $30k household income families of 4 didn’t get $16k handed out to them. (Two $2k/person stimulus rounds in 2020 and 2021)
    - deleted 2y ago
      [deleted]
- bryanlarsen 2y ago
  No, it doesn't happen all the time. Grocery prices are very sticky. Consumers notice when bread prices go up from $2.00 to $2.10, and they'll switch brands to avoid the increase. That's why you get shrinkflation, small changes in quantity aren't as easy to notice as price changes.
consp 2y ago
Wealth extraction is pretty much what I expected the real reason was, and all the profits went to shareholders and was not put into the economy in any real sense (I'm going to preemt the pension fund strawman here). You also see massive shrinkflation (e.g. you know buy 3 bags instead of 2 for a lot of products) which has the same result.
bko 2y ago
> Reckless spending played a part, but a major (if not the biggest) component was every company getting it into their heads to "test the price advantage" of their products What makes 2022 so unique that just now corporations figured out they can raise prices? Why haven't profit margins taken off in 2022 [0] ? These always struck me as bad explanation. Mostly hand waving. I think a more reasonable explanation is that increasing the money supply over 30% in a few years resulted in prices and asset levels going up ~30%. [0] https://www.gurufocus.com/economic_indicators/62/corporate-profit-margin-after-tax- https://www.gurufocus.com/economic_indicators/62/corporate-p...
- teeray 2y ago
  > What makes 2022 so unique COVID was the omni-excuse. You didn’t have to say “we’re raising prices because we want to make obscene profits.” Instead, you could shrug sympathetically with the customer and say, “well, you know, times are tough. It’s hard to get the things you need, and we’re trying to get this at a price as affordable as we can… oh, also, hit the tip button on the screen from now on because our staff are working so hard through the pandemic and it’s so hard to find help (at the price we want to pay).” Never underestimate a good story.
  - bko 2y ago
    So why didn't profit margins go up to "obscene profit" level?
    - bryanlarsen 2y ago
      The article is arguing that they did through royalty fees.
- highcountess 2y ago
  I don’t know the answer, but I have noticed something clearly rather odd going on in the grocery sector/industry, an industry that was probably the least affected by the lockdown command economy than any industry and by far margin. There is one niche but growing discount grocer that effectively has prices similar albeit elevated, from pre-lockdown prices, while other larger, mainstream general grocers have far higher prices, as measured by staple goods like eggs, milk, beef, chicken, etc.

prepend 2y ago

> component was every company getting it into their heads to "test the price advantage" of their products This happens all the time. Companies are constantly maximizing greed. What allowed the price increases is the available cash (due to reckless spending). If customers hadn’t been able to pay, then companies wouldn’t have increased prices. I hear this comment a lot and it’s like saying “bob didn’t die from smoking, he died from the giant tumor.”

nkrisc 2y ago
Then prices will drop because without the infusion of cash consumers won’t be able to afford the inflated prices, right?
- anonym29 2y ago
  If the inflation is strictly caused by "corporate greed", and not by an expansion of the money supply, then yes, the prices would drop. If the inflation is caused by an expansion of the money supply and "corporate greed" is merely the proximal expression of this, and central banks do not decrease the money supply as quickly and as much as they expanded it by, then no, higher prices are here to stay. Time and reality will tell, no need to argue this out here with people who've already emotionally made up their mind and cannot be reasoned with through rational conversation.
  - ryandrake 2y ago
    I agree and I think we should start ore clearly distinguishing between inflation and price gouging. Both are going on, but when we blame everything on "inflation" we're really just letting the government be the fall guy and letting corporations off the hook for whatever increase they are doing beyond the currency's actual inflation.
dbspin 2y ago
Strongly disagree - the price increases were possible because people are strongly resistant to decrease their quality of life. e.g.: they'll pay significantly more of their income to maintain the same level of diet and travel up to the maximum they can afford (and beyond with debt). Rather than scaling back spending and reducing social status and leisure. This isn't even irrational, as status is linked to concrete health benefits (e.g.: Whitehall studies on cardiovascular health). There's been price matching across the food and service industries, due to consolidation and oligopoly - themselves a result of financialisation. So you have the whole food industry for example, responding to the supply shocks of covid by increasing price - then realising that demand elasticity doesn't apply if they act in unison.
- paulryanrogers 2y ago
  > ...then realising that demand elasticity doesn't apply if they act in unison. So you're not actually disagreeing?
- datavirtue 2y ago
  You have companies like Kroger whose prices are out of control. One way to save significant money is to avoid them if you can. If they have a competing grocer it is always drastically cheaper...free tank of gas per shopping trip cheaper. They are salivating over this Albertsons merger. Easy money. Thank the gods for Walmart.
- prepend 2y ago
  Consolidation and oligopoly aren’t new in the past 4 years. What is new is the trillions of cash injected into money supply. Greed is constant. Consolidation started in the 90s and the same 4 grocery companies have owned the market for 15-20 years. They only have ability to increase prices because consumers have more cash to spend. They would have loved to do this 5 years ago, but random $30k household income families of 4 didn’t get $16k handed out to them. (Two $2k/person stimulus rounds in 2020 and 2021)
  - deleted 2y ago
    [deleted]
bryanlarsen 2y ago
No, it doesn't happen all the time. Grocery prices are very sticky. Consumers notice when bread prices go up from $2.00 to $2.10, and they'll switch brands to avoid the increase. That's why you get shrinkflation, small changes in quantity aren't as easy to notice as price changes.

consp 2y ago

Wealth extraction is pretty much what I expected the real reason was, and all the profits went to shareholders and was not put into the economy in any real sense (I'm going to preemt the pension fund strawman here). You also see massive shrinkflation (e.g. you know buy 3 bags instead of 2 for a lot of products) which has the same result.

bko 2y ago

> Reckless spending played a part, but a major (if not the biggest) component was every company getting it into their heads to "test the price advantage" of their products What makes 2022 so unique that just now corporations figured out they can raise prices? Why haven't profit margins taken off in 2022 [0] ? These always struck me as bad explanation. Mostly hand waving. I think a more reasonable explanation is that increasing the money supply over 30% in a few years resulted in prices and asset levels going up ~30%. [0] https://www.gurufocus.com/economic_indicators/62/corporate-profit-margin-after-tax- https://www.gurufocus.com/economic_indicators/62/corporate-p...

teeray 2y ago
> What makes 2022 so unique COVID was the omni-excuse. You didn’t have to say “we’re raising prices because we want to make obscene profits.” Instead, you could shrug sympathetically with the customer and say, “well, you know, times are tough. It’s hard to get the things you need, and we’re trying to get this at a price as affordable as we can… oh, also, hit the tip button on the screen from now on because our staff are working so hard through the pandemic and it’s so hard to find help (at the price we want to pay).” Never underestimate a good story.
- bko 2y ago
  So why didn't profit margins go up to "obscene profit" level?
  - bryanlarsen 2y ago
    The article is arguing that they did through royalty fees.
highcountess 2y ago
I don’t know the answer, but I have noticed something clearly rather odd going on in the grocery sector/industry, an industry that was probably the least affected by the lockdown command economy than any industry and by far margin. There is one niche but growing discount grocer that effectively has prices similar albeit elevated, from pre-lockdown prices, while other larger, mainstream general grocers have far higher prices, as measured by staple goods like eggs, milk, beef, chicken, etc.