Noted Economist Explains What Is Really Driving Inflation

[Kushinator]

No...you can't pass it off as just being partisan. It's been admitted that it's lasting longer than predicted by those who claimed it would be transitory.

It's entirely partisan. If Trump were in office you folks would be claiming this is the strongest economy in the history of the U.S.. While myself and other would counter this narrative by pointing to the data, it would be waved away in a frenzy of misinformation and attacks. This isn't the strongest economy in the history of the U.S.. However, it's the strongest economy we've seen in quite some time. Inflation has been stronger than anticipated... but so has the recovery. This is a good problem to have.

With that said, i expect inflation to come in less than 4% by the end of 2022 and at the same time nominal GDP will slow down from 12% (2021) to 7% - 8%... and that's what 4% rGDP growth looks like: higher than usual inflation and exceptionally strong job growth (averaging 300k+ per month). Unless additional fiscal policy measures are put in place, rGDP growth will fall back into it's 2% - 2.5% range, as higher current inflation will create an income effect for fixed-rate borrowers at these extremely low rates that tapers off by 2025.

 

[Kushinator]

That actually pay for it whereas the government not only does not, but literally cannot. We could not pay a single penny beyond our interest from actual money. We're actually paying our interest on our debt with more debt.

That's always been the case. Debt never get's paid down. Interest payments come from the proceeds of bond, bill, and note sales.

If you can't figure out how ****ed that is, there's no helping you.

 

[Visbek]

That actually pay for it whereas the government not only does not, but literally cannot. We could not pay a single penny beyond our interest from actual money. We're actually paying our interest on our debt with more debt.

If you can't figure out how ****ed that is, there's no helping you.

What the **** are you talking about?

Do you really not understand how federal debt is structured?

There is no question whatsoever that the federal government can retire debt using tax revenues. It simply chooses not to do so... repeatedly.

Heck, when the federal government had a surplus, what did Bush 43 and his fellow Republicans do? Use it to pay down federal debt? Nope. They sent everyone a check. Which, according to your theories, should have caused inflation... but it didn't.

Talk about being beyond hope....

 

[danielpalos]

Lack of scale economy capacity and lack of state-of-the-art infrastructure can be a source of inflationary pressure.

 

[bluesmoke]

The problem to me is tax tricks like what Bezos uses. He buys a company, spends a ton on R&D, takes losses from the purchase while incorporating it into Amazon operations then writes the losses off against his current companies profits. Its not even the tax breaks as it is gaming the system. Then when the company purchase generates profit he looks for another sector to infiltrate.

The old Robber Barons used to operate like this only they generally started companies to shore up sectors where they felt they were spending too much on their primary company. Bezos is simply buying up sectors, whereas the other retail giant, Wal-Mart simply drives all the mom and pops out of business if they can. But they have also began acquiring companies for e-commerce growth.

The largest companies don't need tax breaks but I could find an argument for smaller companies trying to compete against enormous economies of scale.

We should block loopholes the kinds of which the Bezos of the world take advantage of, and many more.

I agree with a tax system that does not favor large corps, as I've always said, over small biz. Also, that big biz has too many tax breaks it shouldn't have.

 

[ttwtt78640]

Wipe your mouth. We can see your grape Kool-Aid® mustache from here.

Your, um, "noted" economist is banking on your ignorance (pardon the pun.)

Only 3% of US businesses are publicly-traded corporations and they employ 5.6% of the work-force.

That means 97% of businesses are not corporations and they employ 94.4% of the work-force.

For those of you who still don't get it, go find your 4th Grade Math teacher on FacePuke and have them explain it to you. Again. Since you failed to grasp it the first time 'round.









No, what I think is that neither of you can understand this very simple equation:

GDP = Private Consumption + Gross Private Investment + Government Investment + Government Spending + (Exports – Imports).

That means if Private Consumption/Private Investment decreases $3 TRILLION and Government Spending/Investment increases $3 TRILLION, you have a set-off, right?

3 + (-3) = 0

Why am I teaching 5th Grade Math to adults?

Only if you believe that increasing government spending by $3T will result in decreasing private consumption (and/or investment) by an equal amount.

 

[SMTA]

Now we have Modern Monetary Theory. The central government can spend as much as it wants, because the Fed can always print whatever is needed. The only problem with MMT, according to its proponents, is it causes inflation.

MMT is a joke.

 

[bluesmoke]

Pedantic posts will fall on dead ears and blind eyes.

You don't have the hearing and sight to find the facts you fail to provide as support to back up what you say in the first place. Hence, my claims stand unrefuted while your claims are unfounded for lack of supporting evidence and thus need not be debated further. See you on another thread.

 

[Cynical]

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they'd cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.

But strange enough, this isn't happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts' earnings forecasts, according to Refinitiv. Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.

How can this be? For a simple and obvious reason: Most don't have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money. The underlying structural problem isn't that government is over-stimulating the economy. It's that big corporations are under competitive.

Noted economist explains what's 'really driving' inflation

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down...

www.rawstory.com

Maybe the little guys can't keep up with all the regulations and red tape involved in starting and running a business. Or maybe the little guys can't hire armies of lawyers, accountants and lobbyists needed to compete with the big boys. If only we had a president who had been in a position of power for 50 years and provided a level playing field for the little guys.

 

[bomberfox]

Government is over-stimulating the economy.

Nope. We have supply chain issues and are far below full employment of resources.

 

[bomberfox]

The Tea Party and Occupy Wall Street understood, I guess. But they each mistakenly aligned with existing political ideologies, and opposed each other.

Now, some conservatives and libertarians understand, but mainstream Republicans don't. And Democrats are one hundred percent on the side of the totalitarians and their "socialist" MMT.

MMT is capitalist and for capitalism. Socialism would use labor vouchers.

 

[bomberfox]

All of those are in some way related to central government control, in a one party system. They all promise some kind of utopia, but in reality they stifle freedom and run economic systems into the ground.

And we are currently heading straight for central government control, because that is what MMT is.

Nope. MMT is a descriptive theory. Some of their prescriptions are….. wonky and seem like NFTbro wizardry but still not socialism.

 

[Good4Nothin]

Nope. MMT is a descriptive theory. Some of their prescriptions are….. wonky and seem like NFTbro wizardry but still not socialism.

MMT is central planning. It leads towards Soviet style socialism, because many industries would ultimately depend on the central government.

 

[Bullseye]

MMT is central planning. It leads towards Soviet style socialism, because many industries would ultimately depend on the central government.

MMT is academic version of "how can I be out of money, I still have checks".

 

[bomberfox]

MMT is central planning. It leads towards Soviet style socialism, because many industries would ultimately depend on the central government.

All industries already depend on the federal government in some way, without the federal government there would be no dollar.

 

[Good4Nothin]

All industries already depend on the federal government in some way, without the federal government there would be no dollar.

So, because the federal government makes dollars, they should therefore have unlimited control over private businesses?

 

[bomberfox]

So, because the federal government makes dollars, they should therefore have unlimited control over private businesses?

You think in such black and white terms. It makes you incapable of seeing the world as it is.

 

[Surrealistik]

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they'd cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.

But strange enough, this isn't happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts' earnings forecasts, according to Refinitiv. Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.

How can this be? For a simple and obvious reason: Most don't have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money. The underlying structural problem isn't that government is over-stimulating the economy. It's that big corporations are under competitive.

Noted economist explains what's 'really driving' inflation

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down...

www.rawstory.com

It's a combination of the actual supply chain issues, corporate price gouging in uncompetitive/overtly consolidated industries exploiting said supply disruption and higher input costs as a convenient PR friendly smokescreen, and Chinese hoarding (regarding food prices).

Corporate Profits Drive 60% of Inflation Increases

https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation Per Matt Stoller, Research Director for the American Economic Liberties Project Margin expansion is one factor that has pushed the stock market to an all-time high, with large firms doing much better than small ones...

debatepolitics.com

BIG by Matt Stoller

The history and politics of monopoly power. Click to read BIG by Matt Stoller, a Substack publication with hundreds of thousands of subscribers.

mattstoller.substack.com

Price gouging the real cause of Inflation (Guest viewpoint)

What has gone underreported in the American press is that a significant amount of the inflation American households are experiencing is simply strategic behavior of businesses to increase prices in order to increase profits.

www.masslive.com

Companies are pocketing their fattest profits in more than 70 years, even as they complain about inflation

Companies aren't just raising prices enough to cover rising costs from inflation, they're padding their margins on top.

www.businessinsider.com

China hoards over half the world's grain, pushing up global prices

https://asia.nikkei.com/Spotlight/Datawatch/China-hoards-over-half-the-world-s-grain-pushing-up-global-prices DALIAN, China/TOKYO -- Less than 20% of the world's population has managed to stockpile more than half of the globe's maize and other grains, leading to steep price increases across the...

debatepolitics.com

China hoards over half the world's grain, pushing up global prices

Testy ties with U.S. and Australia could be prodding China to boost food reserves

asia.nikkei.com

 

[mrjurrs]

No its pretty clear that adding 8 trillion in borrowing to the economy, while production decreases, causes inflation. Its literally textbook. Robert Reich is a socialist and so his opinions are always the same, trying to justify socialism.

Then explain why the 2018 tax cut did not generate inflation. Your textbook definition comes from an old edition. Global deficits from 2001-2019 grew consistently with no real inflation.

 

[Dayton3]

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they'd cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.

But strange enough, this isn't happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts' earnings forecasts, according to Refinitiv. Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.

How can this be? For a simple and obvious reason: Most don't have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money. The underlying structural problem isn't that government is over-stimulating the economy. It's that big corporations are under competitive.

Noted economist explains what's 'really driving' inflation

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down...

www.rawstory.com

You miss the obvious: How do you know that the corporations profit reports are accurate? Companies have massive incentives to overstate profits as profit levels greatly influence stock sales and the influx of investment capital.

 

[Mircea]

Only if you believe that increasing government spending by $3T will result in decreasing private consumption (and/or investment) by an equal amount.

You have it backwards.

Private consumption/investment decreased because governors totally lacking in leadership traits, skills and abilities panicked and shut down the economies of their States resulting in a decrease from $21,481,367,000,000 to $19,477,444,000,000.

Government spending did not merely offset consumer spending (and consumers includes households and businesses) it offset money consumers didn't even have.

There's a difference between having $1 and not spending it and having $0 to spend.

Q3 2021 GDP was $23,202,344,000,000.

If we remember our 5th Grade Math, then:

Δ% = (New - Old) / Old * 100

Δ% = (23,202,344 - 21,481,367) / 21,481,367 * 100

Δ% = 1,720,977 / 21,481,367 * 100

Δ% = 0.0801 * 100

Δ% = 8.01%

Had governors not panicked like sissies, Q1 to Q2 would have increased roughly 2.5% per quarter for a total of 3 * 2.5% = 7.5%.

As everyone can see, there's no Monetary Inflation, but there is plenty of Demand-pull Inflation from shortages and Cost-push Inflation from the added costs of protecting against STUPID-19.

 

[psikeyhackr]

Q3 2021 GDP was $23,202,344,000,000.

What is NDP? Net Domestic Product

Curious how Noted Economists cannot provide such details in Seven Decades! The depreciation of all of the automobiles since Sputnik is totally irrelevant.

Did the purchase of automobiles that replaced worn out automobiles get added to GDP? The faster they wear out the better.

 

[Hamish Howl]

Amazon still has to compete against Walmart.

Not really. I can spend the same amount of money and have something delivered to my home OR go to a dump with a sticky floor and fend off crackheads.

Amazon is clearly the superior choice. Amazon is doing to Walmart what Walmart did to small stores.