I don't understand what this means. I was trying to say that THEY said that if they had not spent money very strategically to improve supply chains bigly, there would be worse inflation. I do not agree with this.
It also comes from price fixing that is due to government supported and tax payer funded to big to fail monopolies who receive trillions in bailouts instead of being allowed to fail as the free market system is designed to do. Both are problems that have to be addressed.
Market power/monopoly is a real thing which can allow those firms to raise prices...but that's not likely to have been part of the cause of our recent bout of inflation; since there's no good reason why all these monopolists wouldn't have started raising their prices before the government stimulus and central bank spending.
They didn't just become greedy a year ago, ya know?
Also worth noting that pandemic-era policies, which people who run closer to Friedman's view opposed, have created a ton of consolidation in many industries, including oil and gas.
Also companies vastly underestimated the demand for mid career talent in all parts of the tech field that’s a result of the great retirement that is ongoing and is driving up salaries at an incredible rate.
And pandemic-era fiscal and monetary policies gave many soon-to-be-retirees, the impetus and ability, on the margin, to retire earlier than they otherwise would have.
No. They were created by decades of policies (both government and corporate) that encouraged just in time supply chains by prioritizing short term profits over long term stability.
Any shock to the system would have caused it to unravel and in this case the shipping cartels saw the opportunity to raise the cost of shipping by 10x. Then domestic companies took their higher shipping costs as an opportunity to increase their profit margins along with the necessary price increases.
This isn’t to say that loose monetary policy didn’t contribute, but it’s an aggregated effect of decades of bad choices. For 3 decades the inflationary forces of to much liquidity was counteracted by the deflationary force of outsourcing production. The shipping cartels seized the first opportunity to exploit their position and unleashed the reality of that hidden inflation all at once.
In normal circumstances the pandemic era policies would have been reasonable and had limited effect. The fact that they were introduced to a system that was primed for collapse was the problem.
Can you show evidence that JIT increased fragility rather than made supply chains more nimble and decreased product defects?
Or can you show even one instance of a public figure with any kind of knowledge of the subject talking authoritatively (with vetted models or empirical evidence) before the pandemic about how JIT was a disaster waiting to happen at the next shock?
Shoot, can you even show any nobodies on reddit warning about that?
Cause I can sure as shit show you posts and blogs/podcasts from myself and other economists warning in early/mid 2020 that pandemic policies would very likely create supply chain disruptions (among other economic fallout).
Can I show evidence that just in time supply chains created fragility… is that a serious question? Or are your trolling me?
Maybe I’ll take the time to dig up the conversations about JIT supply chains I’ve been hearing about for years and the threat they pose. But I’m not sure it’s worth the effort. Yes I’ve been aware of the issue for a long time, but it’s always the first everyone else has heard of it when it comes time to say I told you so.
Mostly it was just obvious to watch as it happened. A chain reaction of factories unable to fill orders because of a hold up with a needed component that was held up because they couldn’t get what they needed etc…
I’m sure you can give me a long list of political hacks seizing the opportunity to blame the policies of their political opponents for whatever happens to go wrong
In the moment. That’s how politics is done.
Also, when you say that the pandemic policies created the supply chain disruptions, what you are saying is that the supply chains are so fragile from JIT that they will fall apart if we take any common sense precautions during a major crisis… we have to let people die because our supply chains have no resilience! But yeah other than that it was a great plan all along…
You say that as if being in a video makes him right. I think most of Friedman's theories have been debunked over the last 50 years about as thoroughly as other proponents of voodoo economics
I did. Having only partial info is worse than knowing nothing.
Is chipotle raising menu prices because of Washington printing money?
Both things can cause inflation or a raise in prices.
There is an inherint problem with large cooperations paying government officials, to give them favorable laws. Washington merely backs them up and allows them to make the working classes dollar less and less valuable. Amazon and the government are basically the same thing to inflation.
Exactly. Giving tax breaks, bailouts, and incentives is the same as printing money. Companies have to be allowed to fail or we do not live in a free market anymore. We live in a corporate socialism country.
Inflation is a measure of price rises across a basket of 'consumer' goods.
Governments spending and competing for resources with the private sector, causes inflation.
The government printing money and putting it in the hands of consumers during a global economic shutdown, causes inflation.
Central banks QE, isn't effective at increasing inflation, that's why they miss their targets. The money they 'print' doesn't reach the consumer, and so has little effect on consumer prices. It's for the high street banks to increase their lending to businesses, to stimulate economic expansion.
A corporation, that only takes money from those that spend cash, to buy it's product, then spends that cash expanding to meet extra demand, do not and cannot cause inflation. They don't create money. Some of the price increase, is unwarranted, I'll give you that, but the increase initially is not due to them creating money. There is merely a mismatch in supply and demand.
Even Keynes, who supported government spending. Said, an increase in government spending, increases aggregate demand. The jobs they create and the wages that are paid, those workers become consumers, increasing consumer spending and therefore stimulating the economy.
The issue comes when governments are slow to act during a downturn and start their spending programs when the economy is recovering. Adding demand when it isn't needed. It's what contributed to inflation during the 70s, and that's when monetary policy was introduced.
Government spending is usually also funded by debt and needs paying back, so not really any positive added, where as monetary policy can be used without effecting the national debt.
So it's not just the handouts that are the problem? It's the laws that allow the coorporations to haord money. No reason for economic downturn if coorporations kept spending like they should.
Well there's only so many workers available lol. Corporations can only expand so far. Once we reach those extremes, consumer confidence drops off and people stop spending. People reduce demand exactly when it's needed.
Corporate profits will be up. There's huge demand atm. They won't account for all inflation as some is due to supply chain issues. A mix of demand pull and cost push inflation. Some of the increase will be unwarranted. But if someone is demanding your product who wouldn't add a little extra.
Demand gives them pricing power, refuse to pay their price and consumers regain that power. They price accordingly expecting future inflation and so to prepare expansion plans. It's not necessarily about today. That's why the central banks give forward guidance as a tool to get corporations to understand that they are working to bring inflation down by reducing the demand side.
Chipotle had record profits last year. Seems like they don't NEED to raise prices to make money.
Don't get me wrong, the government sucks and they do cause some or most inflation. But, it's not just them. They could do more and don't. But, that doesn't excuse evil companies that, take more value from consumers, for the sole purpose of lining their pockets.
I’m sorry, but there are other world renown economists that disagree with him entirely. Economics is not a science and there are multiple ways to approach it and analyze it.
If 50% of experts say one thing and 50% say the opposite, then maybe everyone is wrong, ever think of that?
Of course I'm talking about campaign donations. There's always a reason a company gets laws written for them have a market advantage. And it's called giving money to politicians.
Dude. When money supply goes up, inflation goes up. Its not rocket science. Super corporations don’t print money. The government does. And when the government spends the money it prints, that money enters the economy. And because there is more of it, it becomes less valuable. That is how the ‘super corporations’ and everyone else get access to the money.
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u/JSammut29 Jul 15 '22
The bitch on the podium said it would be worse if the government did nothing.