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What’s happening: The idea that corporate greed, or “greedflation,” is the cause of persistent inflation is making the rounds again, so it’s worth reiterating the obvious: there is no such thing as “greedflation.”
The facts: Inflation is caused by clear and well-understood economic factors that stem from supply and demand. Prices rise when we have too many dollars chasing too few goods and services. There is nothing more complicated to the story than that.
During the pandemic, we had a limited supply of goods and services coupled with an increase in demand. Prices rose as a result, but that effect was short-lived. It faded once the economy began reopening.
The Fed’s role: The more long-lasting effect of inflation is the Federal Reserve’s (the Fed) expansion of the money supply. This expansion of the money supply was well above any increase in the size of the economy, hence too many dollars facing too tew goods and services. The persistent inflation we are experiencing now is from that expansion. The slow reduction of inflation coincides with a declining money supply, which takes time to achieve.
This is not to criticize the Fed’s COVID-era monetary policy. It had to do what was necessary to stop a financial crisis while the world dealt with a pandemic.
Unfortunately, the timing for unwinding those actions got away from the Fed for a variety of reasons, including how long the virus lingered and the size and timing of the fiscal response to COVID.
Which is why everyone’s wages increased perfectly to keep up. Inflation is just a number and though a house costs $500,000 today, wages are at $240 an hour, keeping pace with the real purchase power of a dollar in the 1950s.
Edit: sorry for the confusion. I just checked my numbers and I was a little off. Apparently we’re living in a housefire, except the fire also is alive and violates children and is laughing.
Chamber of Corporate Greed says “Corporate greed is not to blame”!
Quick! Everyone believe the government department!
You can argue a case that the current inflation is not specifically or even mostly due to corporate greed. Inflation has many factors to it, and covid supply chain interruption was a major factor as was the Fed’s necessary reaction to it. But you lose me at ‘there is no such thing as “greedflation.”’ That is obviously bullshit.
Corporations can and did use the temporary inflation from supply chain interruptions causing empty shelves as an excuse to raise prices, arguably justifiably to a degree to keep your business afloat. But when the entire market has uniformly raised prices, when production and supply chains return to normal, they have no incentive and no competitive pressure to return prices to pre-interruption levels. The higher prices have been normalized, the consumer has already adapted to that expectation and no vaible alternative options, and businesses have no reason to provide substantive releif to their consumers when they are making bigger margins and profits than ever.
Corporations, and in fact all capitalistic structures, are powered fundamentally by greed, by desire to maximize profit. If they were not profit-driven they would be non-profits/charities. In fact they are, to some extent, legally required to be greedy, to prioritize maximal return for their shareholders. The idea that profit-driven corporations that must, at all times, continually grow, lest they die completely, that must get the maximum price with the minimal overhead (including labor) does not materially contribute to inflation… that is a fucking fantasy.
No, don’t you understand? A small company will jump in and more efficiently produce GPU to undercut the big players and steal market share. That will return the market to normal. Yup, any day now.
No, I don’t know what “barrier to entry” is, why do you ask?
Foxes in the henhouse
If there is no such thing as greedflation then there should be no problem with implementing a cap on profits. Corporations aren’t greedy, right?
Or raising the minimum wage and instituting a wealth tax
there is nothing more going on than the simple facts of the economy
Yes, human greed.
So are they saying (admitting) that their economic model is, by its very nature, doomed to turn out this shitty?
What’s an economic model that wouldn’t suffer severe consequences after a massive pandemic restricted economic activity, and a huge war led to sanctions on a resource that is required for almost all economic activity?
Because, to be clear, we had significant inflation because of a huge injection of cash to buoy up economies during a time when people weren’t working, and due to a huge increase in oil prices due to sanctions on Russia.
We could have not done quantitative easing, furlough schemes and so on, but that would have carried other negative consequences!
It’s so truuuue!! Just think of those poor RAM manufacturers who used to be able to charge $20 for a RAM stick. Now they have to charge $400 for the exact same stick!! Their costs are exactly the same, but those nasty economic factors are forcing them to raise their prices to the maximum amount people will pay. Oh, those poor poor rich people. 😭
Oh ok, so then what your saying is that the system is designed to fuck people over
Yes, quite literally. 2 percent target inflation has nothing to do with greedy companies or some kind of actual facts. It’s also to suppress wages.
Greedy companies can also exist in a 0 inflation environment, as long as other stuff is getting cheaper.
Always has been.
This might be semantic, but it’s not by design. There is no design.
The purpose is to fuck people over, because the purpose of a system is what the system does, regardless of what it was designed to do.
Isnt a purpose a construct though? I feel it’s more correct to say the nature of the system fucks people over.
Being that the system was contrived by humans, and actively perpetuated by them, its nature has been co-opted as its purpose.
As they say, the system isn’t broken, its working exactly as it was intended to.
So what’s the difference between ‘corporate greed’ and ‘the economy’ exactly?
one of them is a term used to mislead people
Dude, who would fall for this? I feel like you’d only believe this if you literally didn’t go to school worth a… damn… and… scroll algorithmic timelines… all day… fuck…
That was 5 years ago. Currently there’s not enough money and an ample supply, and yet inflation and prices continue to rise. I call bullshit.
At least they admit corporate greed is real.
There is no war in Ba Sing Se
Everyone who dares to claim something different will immediately become a part of the prison-industrial complex!
