I don't understand why everyone hates the rich. Without them who would...*checks notes*...trash the economy repeatedly with no consequences?
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Tell me you dont understand how economies work without telling me you dont understand.
@freemo @geekysteven The common leftie line is that companies are unnecessarily inflating prices so that they can make record profits. I can’t deny that they are making record profits but I suspect that this isn’t the only reason why they’re raising their prices.
@freemo @geekysteven Are they entirely wrong? All I know is that while companies are making record profits, gas prices have been rising for most of #JoeBiden’s presidency, so that makes it more expensive to transport goods, and therefore raises the prices for those goods. I would presume.
Mostly wrong. Inflation isnt caused by a desire for profits and cant cause that in and of itself. Where they show a hint of truth is it **can** cause inflation in the scenario you have a monopoly. I have mentioned before we need strong monopoly enforcement.
In fact I already mentioned the inflation was about to happen right before it happened. Anyone who understands economic models knew this was coming and we knew exactly why, and it isnt the large companies.
We had the entire economy shut down, we were about to have an economic crash. We traded an economic crash for inflation by engaging in Quantitative Easing. Anything other than QE as an excuse for why it is happening is severely disconnected with the reality.
@freemo @geekysteven So are record profits a side effect of inflation?
Depends, are we talking inflation adjusted profits, or non-inflation adjusted?
If they are at record profits after adjusting for inflation then that is an indication of a healthy economy despite inflation.
You have to remember inflation is **not** an indication of an unhealthy economy in the present, though if it is excessively high it will produce an unhealthy economy in the future of course.
You can have inflation and still have a thriving economy, making inflation adjusted profits is largely unrelated to any inflation.
By the way here you can see a chart showing the relationship bertween corporate profits and inflation. You can see in the past there is very little relationship between them: https://randomterrabytes.net/2022/05/22/inflation-and-corporate-profits/
Now the real question is why did we have those huge corporate profits seemingly out of nowhere during a downturn in the economy... I answered this already, it was QE.
So again it is **not** the profits thats is to blame, it is something totally unrelated (QE) that happened to have the side effect of **artificially** increasing corporate profits. This injection of free money caused inflation, not the profits themselves.
Now for comparison check out this article showing the relationship of QE and inflation. Not only does QE very closely match the inflation rate but youll notice this continued inflation spike was well predicted and expected before it even took off 3 years ago. No corporate profits needed nor matters:
https://www.cfr.org/blog/why-fed-bond-binge-will-boost-inflation-1
Then the next step is to check expenses vs revenues. You can increase your margins by reducing costs just as easily as raising prices. Then you need to ensure that the revenue came from actual product sales and not, say, asset sales.
The term “record profits” doesn’t mean much without a lot of context. Most articles don’t go into the real depth. And even if they did, most people and media don’t look much past the headline.
@freemo @geekysteven I think the claim is that adjusted for inflation, the big companies are at record profits