The Economy

First off, "monetary policy" is not a cause and effect thing on consumer prices. When you increase the money supply by 40+ percent in four years, the effects can show it in all kinds of ways (for example, asset bubbles, if the mechanism for doing it puts money into wealthy people's pockets). Supply and demand factors will play into it.

The FTC says that retailers have such pricing power that they caused inflation by raising prices. Now you are saying the opposite. They are cutting prices now. Logically think that through. ... if they have such pricing power -- the consumer prices going up wasn't caused by us debasing the dollar, it was caused by "greed," which is what the FTC ridiculously is selling (cloaked in academic language). ... why are the "cutting prices" now? They have the ability to chargve whatever they want and people will pay it. Why wouldn't this cartel of everything be making everyone take out a mortgage on their home to buy anything? Why did they wait until 2020 (when the increase in M2 money supply to monetize a trillion dollars of new debt every 100 days must have COINCIDENTALLY happened) to start exercising their magical pricing power? I mean, why weren't they charging those prices 10 years ago, 20, years ago, 30 years ago?

 

I don't get why people don't understand WHY profits would increase in an inflationary environment. If you earn $10 this year, but they expand the money supply so much that that $10 loses value over the next year, in nominal terms you need to earn a shitload more for your earnings to be the same in real terms.

It's the same for all of us. You earned $1ooK at your job this year, but the following year $100K is only what $95K was worth before they started creating more and more money to monetize debt. You need to now earn more than $100K to equal what you were earning in real terms. On top of it, nobody is in business to stay stagnant. You are constantly trying to grow, expand your market share and earn more. Look at the earnings for any successful company. They are constantly growing absent the dollar losing its value. But factor in that those dollars have been losing value in real terms rapidly, it takes a lot more dollars nomimally to account for any growth plus the inflationary effect on earnings.

It's not "greed." They are basically telling you that inflation is running rampant through everything. ... it's driving up consumer prices, it is driving up salaries (but THAT isn't greed -- no studies necessary on that one), it's driving up business profits. The inflation itself is monetary, though. It's not some magical thing that an evil cabal is causing, unless the cabal you are talking about is comprised of politicians bankrupting the country and the central bank they rely on to monetize what they are doing (which is the actual cause of the "inflation").

 

Consumers: I want to spend less, I am going to shop for the best price.

The notion that supply magically sets price and everyone just pays it is absurd.

The intersection of supply AND demand determines price.

 

Prices go up when you have too much money chasing too few goods and services. It's not a complicated concept.

This is M2 money supply. ... see what happened after 2020? There is your answer.



And @Inky_Wretch . ... the effects of "inflation" are not necessarily felt in consumer prices, or entirely in consumer prices. The sloped line in the graph above put themoney/credit it represents into the economy in varied ways (depending the scheme they were using, and fiscally how our goverment was spreading money around). The quantitative easing from 2010 on blew risk asset prices higher way more than it blew up consumer prices (even though prices rose), because of the mechanism of the asset purchases behind it. The spike on the graph after 2020 was different, because it was accompanied by fiscal "policy" that helicopter dropped a lot of money (which you see being monetized in the graph) so that not just very wealthy people were availing themselves of it to gamble (not that that still isn't happening. See NVIDIA stock). That is what set off the surge in prices of other things. You suddenly had way too much money chasing too few goods and services, and no surprise, the prices of things got bid up rapidly.