The Economy

That is awesome.

If the dinner had been a year ago, it probably would have been a $13.75 gift card.

 

They do. ... if you think profits are arbitrary charges that someone just adds onto the costs of producing a good or service, setting them anywhere they want while consumers just pay whatever without any say in the matter.

Profits stem from price discovery. Supply and demand. On the supply side, a producer of a good or service is motivated by profits. That part everyone seems to get. But there is also the demand side, which the populist nonsense always ignores. And when people try to buy more of a thing in an environment where supply can not keep up, that leads to a rise in prices. If that demand factor outweighs any higher costs the supply side is paying, it means bigger profit margins. Amazing, huh?

Which is why there is nothing unusual about higher price of things at the same time profit margins are rising, and one isn't causing the other.

That is exactly what has been going on and causing the rising costs of things, as it turns out. Our government went batshit when the pandemic hit, essentially helicopter dropping money and stuffing it into people's pockets. Trillions of dollars worth. And we have had a central bank furiously monetizing the debt they created to do it with unprecedented monetary inflation. All of that money stimulated a huge spike in demand, which sent people out spending. And it led to supply shortages. ... and higher profits (and growing profit margins!).

Now you get the populist blather pointing to those profits as proof of "gouging," because prices are rising, and you start hearing about the legislation that will put price controls in. Which will obviously create shortages and hurt people even more. But the more things change the more they stay the same, even though this stuff isn't a mystery.

If anyone believes that nonsense about inflation happening because of unilateral price increases, the answer would be equally as simplistic. There is still nothing in the U.S. stopping anyone else from supplying all those things people are getting gouged on for less money, and still earning a healthy profit. That would be all the incentive necessary for people to undercut all those gougers and bring prices down. And yet. ... nobody sees that opportunity except people who aren't capitalizing on it, instead they are planting nonsense in people's heads on Twitter.

 

One way to deal with high gas prices.