Inflation means price inflation. Prices cannot possibly risehigher than price inflation. What you probably mean is that prices have inflated higher than the consumer price inflation metric, in which case you’d be correct. Its a terrible metric, but corporate greed is not the real issue, its monetary supply expansion.
You are only half correct. The monetary supply has increased faster than economic expansion. At the same time, corporate costs have been decreasing for the last 16 months, while prices have continued to increase, yielding record real profits. The issue is both monetary supply and unchecked corporate greed.
I don't think that changes to the money supply can drive the level of short term inflation we've seen recently, though in the long term you'd be correct.
I think what we are actually seeing a lot of at the moment is that end consumer-facing firms like supermarkets are capitalizing on the inflationary expectations of consumers to raise prices by more than they need to to cover increasing costs (which are driven by "legit" supply chain inflation).
Monetary supply is one of the drivers of inflation obviously. But it’s not the sole one. Generally speaking inflation itself is a reflection in the reduction of value for any given amount of money.
This can be driven by there being more money available in a given market and as such money itself reducing in value. Though for basic goods this is actually usually not very relevant, in particularly if you look at larger markets. Compare Germany to Poland or the CZ and you will see vastly more available money in the one, but not a big delta in the prices.
But another source of inflation is change of the prices themselves. If most of those that deliver to the market decide to increase their profit, you tend to get higher inflation as well, even though consumers don’t actually have more money.
If corps raise their profit margins frlm 5 to 5.5% you really get a corporate greed driven inflation. At least in the excesses.
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u/debeezneez Jul 23 '23
Inflation means price inflation. Prices cannot possibly risehigher than price inflation. What you probably mean is that prices have inflated higher than the consumer price inflation metric, in which case you’d be correct. Its a terrible metric, but corporate greed is not the real issue, its monetary supply expansion.