Profit not inflation

[colfax_m]

How is that relevant to what causes inflation?

You're just trying to make businesses into the bad guy rather than the government.

Inflation is simply the cost of goods going up. That's how it's defined.

 

[g5000]

During the pandemic, trillions and trillions of dollars were printed. A gush of money.

Now that consumer demand is also rising, we have a speedup of the velocity of money.

 

[bendog]

I wasn't sure about putting this in the political section but it does all come back to this. For over 12 years we have had economic policies that piled trillions of dollars into the markets. Now with talk of pulling back on that, the record increases are addictive and must be supported it would seem.

This article (not from a highly biased site) is noting that much of the increase in prices is simply business chasing yearly record profits.

Fattest Profits Since 1950 Debunk Inflation Story Spun by CEOs

While PH lied about your post, I am going to "weigh in" (-: with a non-progressive comment. I am very opposed to child tax credit expansion. Paying people with deficit dollars to stay home and not work IS inflationary because it means having fewer workers, which causes wages to rise, and unless a biz is earning more profit than before, it has to raise prices to pay wages. Wage push inflation has not been a favored theory in decades. I would prefer it stayed that way.

I'm certainly NOT against raises because a company is making more profit. That was after all the central point of Reaganomics. I'm not a fan of unions simply because of personal experiences, but I won't cross a picket line if I think workers are being screwed. And Reagan himself had been a union man. But he entered politics after he saw what taxes took from his biggest paycheck. Simply handing out tax (or deficit) money so workers have more is not doing anyone any good.

 

[bendog]

During the pandemic, trillions and trillions of dollars were printed. A gush of money.

Now that consumer demand is also rising, we have a speedup of the velocity of money.

I can't open the graphic. Can u post a link to the website? Thanks

 

[progressive hunter]

But they were taught in school that making a profit was evil.

no school I ever went too,,

 

[g5000]

In short, it's because the government is printing money.

End of story.

Nope. If I gave you a trillion dollars, and you buried it in your back yard, it would have ZERO effect on inflation. It isn't until you start spending that inflation kicks in.

That's what happened after the 2008 crash. All the money the Fed was printing was not being spent. All the cries of inflation worries were for nought because money just wasn't moving around.

This is why we have QE-forever. The Fed has been printing and printing and printing, trying to infuse so much cash into the economy that people would start spending it.

Now consumers are spending in a big way. And the velocity of money has picked up.

 

[pknopp]

While PH lied about your post, I am going to "weigh in" (-: with a non-progressive comment. I am very opposed to child tax credit expansion. Paying people with deficit dollars to stay home and not work IS inflationary because it means having fewer workers, which causes wages to rise, and unless a biz is earning more profit than before, it has to raise prices to pay wages.

True. It's all done by creating money, something I noted has been a problem.

I'm certainly NOT against raises because a company is making more profit. That was after all the central point of Reaganomics. I'm not a fan of unions simply because of personal experiences, but I won't cross a picket line if I think workers are being screwed. And Reagan himself had been a union man. But he entered politics after he saw what taxes took from his biggest paycheck. Simply handing out tax (or deficit) money so workers have more is not doing anyone any good.

While I do not disagree, far more as a percentage has been handed to corporations in the form of inflating the markets with all this created money.

The waitress might get a $1000 but the corporation gets millions.

 

[HappyJoy]

Two things.

1. Yahoo absolutely IS a highly biased site.

2. Wall Street is using the same metric they have always used. Companies forecast their expected earnings and then Wall Street rewards or punish them based upon meeting that expectation.

You guys really need to learn what Yahoo is and isn't.

 

[pknopp]

Nope. If I gave you a trillion dollars, and you buried it in your back yard, it would have ZERO effect on inflation. It isn't until you start spending that inflation kicks in.

That's what happened after the 2008 crash. All the money the Fed was printing was not being spent. All the cries of inflation worries were for nought because money just wasn't moving around.

This is why we have QE-forever. The Fed has been printing and printing and printing, trying to infuse so much cash into the economy that people would start spending it.

Now consumers are spending in a big way. And the velocity of money has picked up.

The "trickle down" never trickled down.

 

[colfax_m]

Nope. If I gave you a trillion dollars, and you buried it in your back yard, it would have ZERO effect on inflation. It isn't until you start spending that inflation kicks in.

That's what happened after the 2008 crash. All the money the Fed was printing was not being spent. All the cries of inflation worries were for nought because money just wasn't moving around.

This is why we have QE-forever. The Fed has been printing and printing and printing, trying to infuse so much cash into the economy that people would start spending it.

Now consumers are spending in a big way. And the velocity of money has picked up.

We've had massive quantitative easing 10 years ago, didn't cause inflation. The relationship is not quite that clear.

I'm rather sure we'd have significant inflation now regardless of QE. We went from a "shut down" economy to full speed (or are trying to) quickly. The whole world did.

 

[bendog]

The "trickle down" never trickled down.

It did trickle a trickle. But then the top rate was still 50% and the debt smaller.

 

[g5000]

The Fed is terrified to contract the money supply now.

I wrote about this years ago: The Fed's Bond Bubble Doomsday Machine

Contracting the money supply will cause a recession. A very bad one.

That's why they are letting inflation continue.

Here's one of the things I wrote in that topic:

Now, back to our inflation problem.

The economy starts moving, which means the velocity of money starts picking up. And just like that, inflation begins to take off.

So now the Fed needs to start soaking up all that cash it had injected into the economy.

It does this by selling its assets and destroying the proceeds.


When you start flooding the market with a product ($3 trillion worth), what happens to the price of that product?

That's right. It drops.

Yields being to climb. The interest rate on bonds begins to go up.

Which means a 2.83% interest bond is now a piece of crap. No one wants a 2.83% interest bond when there are 5% interest bonds on the market.

Which means the Fed is upside down on its assets. Which means they have to sell them at a loss.


Why doesn't the Fed just hold them until maturity, you may be asking.

Because the whole point of selling those bonds was to soak up excess liquidity to keep inflation down.

Except now that bonds are suddenly cheaper, the Fed is pulling less cash out for each bond it buys than it put in when it bought that same bond.

Which means it cannot possibly soak up all the liquidity it put into the market.

Which means inflation is inevitable.

Not only that, who's to say there will be $3 trillion worth of demand for US Treasuries and MBS?



And (cue conspiracy music)...inflation is the most favored method for heavily indebted countries to get out of debt.


So there you go. The Fed's Bond Bubble Doomsday Machine.

Coming to a neighborhood near you.

Keep your eye on the Fed interest rate!

 

[LordBrownTrout]

By "one" I assume you mean businesses. Yes, when there is more money in circulation, businesses do have to raise prices. They have to pay more for labor, more for supplies, etc., etc..

Yep, thats why germany crashed. They thought they would create a utopia and printed gazillions that went into circulation. A loaf of bread cost 40 trillion marks. Many people would steal the shopping cart and leave the money behind.

 

[g5000]

We've had massive quantitative easing 10 years ago, didn't cause inflation.

Exactly my point! It didn't cause inflation because the velocity of money plunged.

Now the velocity of money is picking up dramatically. Consumer demand is surging.

Presto, inflation.

 

[bendog]

We've had massive quantitative easing 10 years ago, didn't cause inflation. The relationship is not quite that clear.

I'm rather sure we'd have significant inflation now regardless of QE. We went from a "shut down" economy to full speed (or are trying to) quickly. The whole world did.

Perhaps the QE goosed corp profits (based on gaining profit from moving money and not increasing production) and the stock market. Consumer demand may be a result of direct monetary stimulus by congress and the fed keeping interest on credit low. (Blessed be the Bernanke.)

 

[bripat9643]

Inflation is simply the cost of goods going up. That's how it's defined.

What a ******* dumbass. The sun is just a bright thing in the sky. That's your quality analysis.

Inflation is a form of robbery where government steals the value of your savings. That's what prog NAZIs like you don't want people to learn.

 

[bripat9643]

Exactly my point! It didn't cause inflation because the velocity of money plunged.

Now the velocity of money is picking up dramatically. Consumer demand is surging.

Presto, inflation.

There was inflation the whole time, dumbass.

 

[Harpy Eagle]

What a ******* dumbass. The sun is just a bright thing in the sky. That's your quality analysis.

Inflation is a form of robbery where government steals the value of your savings. That's what prog NAZIs like you don't want people to learn.

It is sort of cool how you make up your own definitions of words so you can call everyone else names.

 

[22lcidw]

Creating money is a big driver. I've condemned that for years and years and I get called out for that also. But we have all this "created" money floating around which is what allows a business to raise and raise and raise prices.

If you want to argue it all starts with "creating" money, I won't disagree and I have argued forever to stop it.

The printing of money and the inflation has been here in the stock market and housing for many years. Inflation can be exported also as we are the reserve currency of the world although the percentage of it used continues to decline as we decline as a nation.

 

[bripat9643]

We've had massive quantitative easing 10 years ago, didn't cause inflation. The relationship is not quite that clear.

I'm rather sure we'd have significant inflation now regardless of QE. We went from a "shut down" economy to full speed (or are trying to) quickly. The whole world did.

Just look at the value of the dollar since the creation of the Federal Reserve. That makes the relationship quit clear. It has fluctuations because of changes in the propensity to save or spend money. That's all.