The M1 money supply increased by ~600% in the last five years, due to no-reserve banking and enormous money printing during covid, and people still act shocked when there's inflation. It's not because of wage growth, it's not because of "late stage capitalism", it's because of basic supply and demand. Nobody wants to address the elephant in the room that all of this is due to the botched response during covid.
I think you may have linked to the wrong graph — while that graph does have a spike on it, the spike happens when the index was broadened in May 2020 to include savings and money market accounts.
I could've lived with the COVID printing if the Fed was more careful. There were inflation indications in early 2021 but the Fed used completely nonsense theory of "transitory inflation" which was obviously a lie to nearly every single economist but it somehow went on with it for a whole year.
After the biggest money supply growth in recent history the Fed somehow forgot basic economic concepts and its mandate for a full year. This is simply unbelievable. QE printing was still going on - in massive amounts - while inflation is showing up and the Fed is speaking nonsense about transitory inflation.
This game is rigged. The Fed is malicious, unpredictable and intentionally lying. It doesn't feel like the Fed is doing the best decision, it feels like the Fed is making intentionally unpredictable and even irrational decisions so that insiders, most likely big banks, could get to unravel their investment positions at the expense of the whole economy.
Ok, basic supply and demand says the more supply you have of something the cheaper it should get.
And yet, despite the 600% increase in supply of dollars, the dollar is stronger than ever.
Whether the money supply is responsible for the inflation or not, this is not basic supply and demand. It’s the exact opposite of basic supply and demand.
Fun fact: the phrase "late-stage capitalism" was coined about 30 years before "woke" was used by American folk and blues singer Lead Belly.
On the plus side, while the latter has only recently drifted from a specific meaning into popular flag waving, the latter has always been used by literal communists (e.g. Lenin) as a member of wishful thinking about why this time it will be different, this time capitalism really will come crashing down, this time we can all just be nice to each other and nobody needs to be nailed to anything.
At this rate, a Vogon Construction Fleet is about as likely as capitalism eating itself.
> wishful thinking about why this time it will be different, this time capitalism really will come crashing down
Did you like miss the entire financialisation? Today is not like 30 years ago.
The amountof moneu invested in 3rd order financial derivatives dwarfs the amount of money we invest in real physical cool like infrastructure.
The amount of concentration in supply chains has also never been seen in the entire world history- many high tech good like hard disks are only made in 1 or 2 locations in the world.
Finally, crash of current capitalism does not mean we will have communism, we will just have another capitalism that is less retarded. Kind of like how we replaced the gold standard.
Same argument applies to someone speaking at the dawn of WW1, the great depression, Roosevelt's New Deal ending laissez-faire, WW2, the cold war, and at the fall of communism.
The first item on that list, WW1, was about 12 years after "end stage capitalism" was coined, while that blues singer singing about "woke" was around the New Deal era.
> Capitalism requires an even monetary playing field.
Almost everyone — capitalist, communist, anarchist — believes in an even playing field. Half the disagreement is about what "even" (or "fair") means.
This is also why people throw the exact same criticisms in the opposite direction, at all the attempts at communism over the years: "it's not real communism because $foo, it was really just state-capitalism", which often seems to me to be a criticism of governments taking the "wrong" idea of fairness rather than connecting with the underlying social/economic presumptions backed into The Communist Manifesto.
(Personal opinion: would be nice if someone can take the points that Adam Smith and Karl Marx were observing about human nature, update with John Nash game theory, and make a new economic system that doesn't turn humans into Spherical Socio-Economic Units in a vacuum like Capitalism and Communism both ended up doing: neither money nor community are the be-all and end-all of human motivation).
Capitalism is not a synonym for market economy. Capitalism is not the natural state of an economy. Like communism, it is a mode of political economy which emerged relatively recently, and if history is any guide it will be replaced by something else in due time.
Capitalism as characterized by permanent firms with private tradeable claims of ownership and separation of ownership from management is around 400 years old.
But other elements, such as a wage labor market and global trade not being dominated by mercantilist states, are more recent. In any case, 400 years is relatively recent in terms of economic history.
As if corporations suddenly became greedy over the last couple of years but haven't been over the previous four decades. Corporations purpose is to maximise profits. To expect otherwise is a fools errand.
No one is arguing to the contrary. A functioning market based economy shouldn't tolerate massive inflation fuelled by greed, as your competitors should undercut you.
Taking the question at face value, the answer is: massive amounts of capital. And barriers to entry like that make the 'the free market will solve this' argument less convincing.
If they represent any meaningful profit margin, they get swallowed by capital unless a government prevents it.
There are no "mom and pop" grocery stores in my area. We have "Metro" or "Express" versions of the mega chains instead. You can stand outside one and see two others and there won't be a single independent until you get into a different area that the chains don't consider sufficiently profitable.
There are quite a lot of independent supermarket brands around and they seem to struggle to even match the major companies, let alone undercut them. It just seems very unlikely that there actually are huge, unreasonable markups being had here.
The mature businesses dial up the greed when there is no competition and dial it down to crush threats. Once the threat is extinguished, up the dial goes again.
Along with all your startup costs, you will be competing against entrenched businesses willing to run at a temporary loss to bleed you dry. They can afford to do this because greed will pay after you are dead.
Capitalism does not create efficient competitive markets offering good value to consumers, government intervention does.
In my area, there are Indian, Japanese and Chinese grocery stores within a few miles of Costco and Trader Joe's. Considering these grocery stores are decades old, Costco and Trader Joe's have done a bad job at dialing up the greed.
First of all, from what I've heard, Costco and Trader Joe's are, at worst, middle of the pack among large companies as far as greed goes. And assuming incorrectly that the thesis is that all large corporations are equally greedy, then using a couple of specific examples of corporations that are less greedy to disprove it, just makes for a terrible argument.
Second, it's exactly that kind of differentiation (offering a niche product that the larger, more generic stores don't want to) that makes it easiest to avoid being undercut and run out of business by larger players.
Now, if you said you had several different small local grocery stores thriving without any specific niche, that would be somewhat more surprising.
So why can't fully greedy companies undercut half-greedy Costco and Trader Joe's? When exactly have "greedy" supermarkets driven out smaller competitors through price manipulation? Please be specific.
>The mature businesses dial up the greed when there is no competition and dial it down to crush threats. Once the threat is extinguished, up the dial goes again.
You’ve just described what is called “competition”. Having to lower prices to keep up with competitors.
Also, if there is a clear winning pattern of a single player takes all market, that’s super attractive to competitor investors because they only need to outlast your warchest.
What you’ve described is a very unstable game theoretic condition and it’s basically a non-issue everywhere in the US except for markets with regulatory capture (i.e. high government regulation).
I challenge you to point out an example of a one grocery-store city where that strategy has worked to keep competitors out.
> You’ve just described what is called “competition”. Having to lower prices to keep up with competitors.
Suppose a larger company is selling a product that competes with yours at a loss so as to undercut you due to other sources of profit. Do you think that sort of competition is fair? Does that result in the best product winning the most market share?
> I challenge you to point out an example of a one grocery-store city where that strategy has worked to keep competitors out.
Not the GP, but recommend The Wal-Mart Effect by Charles Fishman.
But you just said there is more capital than ever before! The people who ended up with this capital will be looking to invest it. So it should be easier than usual, maybe easier than ever before, to convince investors ...
I can’t see my main grocery stores margin because they are private. Kroger’s margin is said to be 1.5% in the last decade and hasn’t gone up in the last couple years.
The original article is. The whole thing is presented as if it's some moral failure on the part of CEO's. Their only solution is price controls. There isn't one mention of breaking up the huge number of monopolies which dominate nearly every area of commerce.
I assume there is some game theory and psychology going on here. You have to remain competitive and people notice a price hike, but if there is inflation maybe companies can collectively sneak more margin in.
This. There is no point in expecting capitalists to do anything different. This is a failure of regulators. If you want it to stop, you must: a) Break up monopolies, b) Go after collusion, c) Tax excess profits, d) Disallow mergers and industry consolidation. Unfortunately, in the U.S. the regulators have been sleeping for going on 50 years (with only a few exceptions), and now we have major media, broadband, electricity, gas, utilities, and many other industries consolidated to only a few corporations. Capitalism will always be a war of attrition between industrialists and regulators, and anyone expecting different needs to grow up. Further failure to act will allow a corporate state to coalesce with oligopolistic lock-in. We cannot expect Noblesse Oblige or anything like it: The 5-day 40-hour work week, vacation pay, child labor laws, pensions, were fought for and won by Unions and Labor. No greedy capitalist ever had a conscience, only their wives or children gave away money.
> If you want it to stop, you must: a) Break up monopolies, b) Go after collusion, c) Tax excess profits, d) Disallow mergers and industry consolidation.
That still allows growth to a dangerous size. A more simple solution tgat avoids worrying about details would be to limit maximum size in general, to guarantee that there is competition.
Prices are sticky. There were prices that hadn't changed for 20 years. Consumers notice when prices change. In normal times, a small increase in prices can have a massive impact on sales.
But when every other price is changing it becomes easier to change your price. And so suddenly you get 20 years of cost increases in a single jump.
Except that prices, in general, have been rising over the past 20 years.
And yes, we've noticed it, and so have people around us. My in-laws have been frequently heard complaining about price increases on products (their grumbling tends to start with how the price has increased since last year, then go on to declare what they remember paying for it in about 1965...).
We've also had rampant shrinkflation during that time. Remember, for instance, how ice cream used to be regularly sold in half-gallons? But now is instead sold in 48oz tubs, without any particular acknowledgement of the change.
But when the price increases aren't localized to one specific store, it doesn't matter that people get annoyed at it. Worst case, they'll just start buying less of the thing.
Please don't try to tell me what my experiences are.
Prices have certainly risen across the board more quickly and noticeably in the last year or so than previously. That doesn't mean that I haven't noticed prices rising broadly for the past 20 years.
Maybe you haven't. I don't know. I wouldn't presume to tell you what your experiences are.
'markup growth”—the increase in the ratio between the price a firm charges and its cost of production—was a far more important factor driving inflation in 2021 than it has been throughout economic history.'
So the government tracks wages and unemployment, and sharply reacts when wages grow too fast.
But when it comes to profits, they can't even tax them correctly, let alone react to profits driving inflation.
Wouldn't agressive taxation be an alternative to raising interest rates in tackling inflation? Both reduce avaliability of capital.
Is there any reason why raising interest rate is 'fair' but a temporary 'inflation tax' is unfair?
Aha. So it's not the politically-connected who manage to keep IRS at arms-length. No. It is 'something but not political connections' that manages to frustrate the unjust greed of the "plitically connected" to tax rightfully earned profits of these corporations. Must be the "hand of God" ..
Housing shortage, at least in the US, isn’t really a problem of capital availability. It’s mostly due to local zoning regulations that make it very difficult to actually create housing, regardless of capital availability.
For instance suppose the marginal buyer would spend $20 for a product and the producer can produce for $18 and the market price is $19, resulting in $1surplus to each party. If a $3 tax was put on the product, the transaction wouldn't take place.
So you went from $2 social surplus to nothing and no tax benefit.
Any arbitrary price distortions will result in dead weight loss or the overall social surplus to go down compared to no distortion
The market price would be floored at $21 as it costs the producer $18 to produce and a $3 tax. The prior margin was $1 so realistically the producer would eat some of the increase and charge $21.50
For the person who values the good only at $20, no transaction would take place. If eventually the producer cost went down to something like $16, maybe the price would come down to $20 or below but then there's the marginal consumer that values it at $19.
Price distortions almost always result in a dead weight loss. Only in perfectly inelastic products does it not exist
> Price distortions almost always result in a dead weight loss.
Yes, some trades will not take place take after the distortion, but the the person valuing the good at 20 and still be unwilling to pay 23 after an extended time period in which they're unable to buy it is extremely rare.
Actually the profit margin might be worth looking at.
Corporations typically are charged a flat percentage tax rate.
One could charge corporations a progressive tax rate, just like people.
You continue to tax corporations just on profits, but the higher the margin (profit/revenue) the higher tax rate.
It disincentivises gouging and could even bring in more revenue for the state (less need to over tax people).
It would also make it harder for the wealthy to dodge tax by billing what should be personal income via corporate shell structures as in most cases that revenue would appear as > 90% profit, attracting a very high tax.
And it incentivises vertical integration and conglomerates to dilute the high margins and reduce the overall tax rate. Not necessarily a good outcome - even if it’s funny to see the companies of the future in Upload or Idiocracy.
If Microsoft and Walmart pay a fixed tax rate on earnings they don't have a tax incentive to become Walsoft: if their earnings are simply added their tax won't change.
Unless I completely misunderstood your point you want Microsoft to pay a higher rate because its margin 67/205 = 33% is higher and Walmart to pay a lower rate because its margin 14/573 = 2% is lower.
How much would Walsoft pay on its $81bn profit given its 10% margin?
It depends on the link between margins and tax rates. However, one may imagine that it could be less than what Microsoft alone pays on its $67bn profit given its 33% margin.
It's up to the state what you charge at each percent.
You don't need to give a discount for lower margins, you can't simply up the rate at higher margins i.e 1% above current base for every 10% margin above 0.
Also the point is to disincentivise gouging, Walmart doesn't need to be given a lower rate just because Microsoft is charged more.
As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity.
Not to mention that Microsoft would probably prefer to reduce it's margins by just charging less (slashing revenues by 20% should more than halve the tax burden and likely strengthen it's market hold) or pour profits into R&D than to merge with a less profitable company.
And that's before you get into the mess that a giant tech/retail merger would entail.
> As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity.
It's ad-hoc regulations all the way down...
> And that's before you get into the mess that a giant tech/retail merger would entail.
Why? That seems less problematic from a regulatory point of view than a tech-tech or retail-retail merger.
If a tech-retail entity is problematic in itself maybe they should force the break up of Amazon - or at least tax each part separately, right?
That all depends on how you count initial investment. Software for instance (and most intellectual property, which is the basis for much of our economies here in the West) has basically zero marginal cost, it's all up-front development cost. The tax rate would depend on how you amortize the up-front costs, and much accounting trickery/complexity would inevitably result.
You are already doing this to determine profit (for the existing tax regimes).
All that is required is to take gross revenue (a more basic, simpler value that is already known to determine the current profit calculation), and divide profit/revenue.
There may be an incentive to amortize more evenly, but that is typically what you should be doing (amortizing is meant to spread a one-off cost over the period of the resultant benefit) ... currently the incentive is to book costs early to postpone apparent profit and the resulting tax, which is usually both trickier and less moral/honest.
This might be a good idea, but it might have an issue: Whereas people can't merge, companies can, and this might incentivize mergers. It'd have to be thought through.
The tax paid is an increasing, convex function f of some measure x of "profit". I'm not sure how to normalize by company size (or if you should). First, let's say x is per-capita profit, "capita" being the number of employees. Let's also say that the tax f(x) is also per-capita.
Now say there are two companies, 1 and 2, and for simplicity say they each has a single employee, the owner. They would pay a total tax f(x1) + f(x2) to the government, on a before-tax profit of x1 + x2.
If those companies merged, then they'd pay a tax 2 f((x1 + x2)/2), again on a before-tax profit of x1 + x2.
You can just divide both sides by 2, the total number of people involved, to get the usual statement of Jensen's inequality:
(f(x1) + f(x2))/2 > f((x1 + x2)/2)
Thus, with my choice of per-capita normalization, this tax scheme incentivizes mergers. Probably it also does so for other normalization schemes. (What are other reasonable denominators?)
This incentive goes away if the tax isn't normalized at all. In fact, then it mostly just disincentivizes largeness. Which, on the surface, might be a good thing, given that we have too many monopolies. On the other hand, it might incentivize some kind of artificial splitting of corporate structures (not that this isn't a common thing already, what with "Double-Irish Dutch sandwiches" or whatever they're called).
Possibly anything that isn't linear will be gamed in some way.
And, not to sound like an apologist for the capitalists, but it's true that when they take their profits out of their companies, then they will be hit by convex taxes which are a little harder to game (though there is still marriage and other things). And that doesn't prevent companies from amassing stockpiles of cash -- representing power for their owners -- without paying out.
I like this general direction, but it needs some "red-teaming".
All the big companies already offshore profits to a ridiculous degree to avoid the existing taxes altogether. Their effective tax rates are disgustingly low. Fix tax offshoring first and we probably wouldn’t need to do anything else.
I don't think it's about being fair or unfair... I just think it's the only pedal the Fed has. And the Fed is the only body that is able to make actions right now.
Taxes would be a great vehicle for this, because they would probably do a much better job of filling the fed's dual-mandate. But because the fed can't raise taxes, and congress can't do literally anything, we're stuck with the response that we have where a non-elected body is leaning on the only lever it has to run our economy.
Price control, rent control, capital flow controls and generally any policy that try to hamfistedly go against the invisible hand of the market have indeed failed repeatedly and catastrophically when used over a long period.
However, as Keynes pointed out, in the long run we're all dead and yet the free market works its magic over the long run. In the short term, there's panics and opportunists that destructively exploit crisis situations. I think it was Stiglitz who pointed out that a few countries that temporarily blocked capital flight during the 90s Asian crisis recovered much more quickly than the rest.
The problem is the consumer. Consumers are ultimately enablers for this behavior. They just keep buying shit, no matter how expensive it gets. And there’s often cheaper alternatives, but no, the consumer keeps buying grossly inflated things.
As long as we’re discussing ridiculous things like price controls, let’s perhaps discuss consumption controls where consumers can only be allowed to purchase certain things at specified amounts and frequencies. In a society that eventually transitions entirely to digital payments, this kind of control should be easy to implement through a centralized authority.
Things like branded food (and other branded items). It's insanely expensive and I absolutely don't see or taste a difference that's big enough to warrant x2 or x3 the price.
Yep, $2 for Food Lion brand shredded wheat or $5 for name brand shredded wheat. Not only that but the name brand has had an issue lately with having a lot of burnt tasting pieces. It's only $3 difference but the different in quality (not burnt vs burnt) is crazy.
Oh, thank you for letting me know I'm not obligated to buy food if I can't afford it.
If the price of staples like bread, eggs, milk, etc rise so much that I can't afford to feed my family for the week, it's such a relief to know I'm not obligated to do so!
I'll let them know that from now on, we'll just be eating Lack Of Obligation, which will, I'm sure, be just as tasty and filling as the food we used to be able to buy!
You don’t need to eat those specific things, there are other things to eat. Even cheaper things. Rice has always been very cheap per serving. Beans as well. Just as filling.
Ah! Right, so I should just eat cheap, unhealthy food so that big companies can have ever-increasing profit margins purely to line their execs' pockets. Got it!
Truly, you have opened my eyes. Now it is clear to me that it is right and good that the Freedom of the wealthiest people in our society to increase their dollar-denominated high scores be deemed more important than the ability of the poorest among us to feed, clothe, and shelter themselves.
The biggest lie you have swallowed from the big companies is that cheap food is unhealthy, and you have to buy their expensive food to truly live healthy and righteous. Every week you must go give up a paycheck at Whole Foods to eat healthy and save the planet.
Possibly depends on the location. I'm in Germany, rice, potatoes, pasta, bread haven't really moved, unless you're talking bread made in the local bakery, in which case it has moved because of loans being a larger chunk of the price. Cheese and milk have moved strongly, meat moderately. Of course, Germany has traditionally subsidized food prices, while in the US fuel will be cheaper and taxes are significantly lower. It usually evens out, unless you're in one of the countries where you get shafted on all sides.
But if I was to buy mostly branded food made by Nestle & friends, I'd pay 30+% more easily.
People will pay upwards of $20-$25 to have one meal made and delivered to their home, when really the total cost of the meal is probably a couple bucks.
And then people insist on buying expensive processed crap, when the same thing could be had for far less with just some simple ingredients.
People waste money daily on expensive coffees and sugared waters, when all this probably costs mere pennies to make.
The problem is a bit like climate change. If everyone is paying these prices, the prices will just keep going up. People just have to stop, but they won’t. You can think of markets as pricing engines, and prices will rise up to what the market can bear. Pretty simple.
I favor a market-based economy and I broadly favor incentivizing and rewarding effort and performance.
But you have to consider that no economy exists divorced from politics. So, in the same vein, if too many people are having too rough of a time… your political messaging will get undercut with populist appeals in the political messaging economy.
Meanwhile, Goldman strategists are predicting this quarters earning season will be the worst for profits/EPS since the start of the pandemic.
> Earnings per share are expected to decline 7% year-over-year, according to a note from the bank published this week, along with a "significant deterioration" from the -1% year-over-year growth posted in the last three months of 2022.
Numbers like this are really confusing. Ok there is an year on year decline of 7%. But how does that compare to previous years? Did they grow dramatically and now they are losing some steam? Or has it been declining for the last few years?
One of the biggest losers is supposed to be healthcare(20%). Is that because they had a huge spurt because of the pandemic and now there is a reduction? I am not sure what the other industries are so I am not sure what to make of it.
Your statement is factually wrong. The article doesn’t claim Goldman strategists are predicting the worst quarter for profits/EPS since the start of the pandemic. They are predicting the steepest YoY decline in profits/EPS. By about 7%.
There’s a huge difference. What they’re predicting probably means profits will still be a lot higher than many quarters in the pandemic, and much higher than Pre-pandemic profits.
Most of the 2010s had EPS in the 20s. The late 2010s (2018 onwards…right after the massive tax break incidentally) has an EPS in the 30s.
It drops to the teens in the beginning of the pandemic, rising to peak above 50, and is still in the mid 40s. A 7% drop would still keep EPS in the 40s, well above anything it touched Pre-pandemic.
What’s worst is that this is with the backdrop of a much stronger dollar than ever, which means that these dollar earnings are increasing after compensating for conversion losses from the RoW, which indicates American consumers are being charged a lot more money.
I'm not sure one can characterise a couple of months rent payments (over the course of 2+ years) as "massive amounts of cash"
The vast majority of government handouts during covid went not to consumers, but to the very corporations now raising prices - $400 billion in PPP loan forgiveness alone is a hell of a handout to corporate america.
The “massive amounts of cash” was a fraction of the tax cuts that were given to corporations and the richest prior to the pandemic for no reason at all.
At least these massive amounts of cash came in response to a disproportionately more massive world event.
And yet I don’t see complaints about that massive handover of cash which wasnt even in response to a problem.
There's no such thing as greedflation. This inflation was caused by massive money printing by the Fed of unprecedented proportions, used to fund the Treasury which went on with massive money giving helicopter money.
Blaming capitalism when the reason this all blew up was practically the biggest socialistic experiment is ridiculous.
It really is the death of capitalism, but not because of capitalism but because the single point of failure of central banks and central control are enough to bring this whole thing down.
This is actually infuriating seeing a bank trying to deflect the blame. This is the results of decades of banks getting breastfed by the Fed, and then the Fed finally exploding it all in COVID printing and failing to raise interest rates for a whole year of rising inflation with nonsense of "transitory inflation".
So much lies. If there should be social unrest, it's at the Fed and the banks.
I recently visited Italy and was shocked at just how much cheaper it was for everything. Wasn’t Europe supposed to be facing massive inflation due to extremely high energy prices?
Sure, the cost of gas was high. And yeah, the dollar is extremely strong (although a strong dollar should have made things cheaper in the US with net imports), but even using a dollar/Euro conversion rate at its historical peak (about 1.6 dollars to the Euro), had things way cheaper.
Eating at the finest fine dining restaurant in Milan was as expensive as a sit down meal at a regular restaurant in the US. And that’s before adjusting for the fact that the US sticker prices did not include tax and you needed to pay 20% tip.
I’ve been to Italy before and while it was never expensive, this was the first time I felt it was cheap.
The U.S. feels poor. Italy feels so much more advanced. Despite the fact that the latter has a fraction of the per capita income of the former.
What are you talking about? There are plenty of €100+ per person fine dining restaurants in Milan while the average sit down restaurant in the US charges around $20-30 per person. Whatever restaurant you went to wasn’t fine dining or you are used to prices in a very expensive (and outlier) part of the US.
Shouldn’t this partly be addressed with rising interest rates? Depress the economy so the consumer is more frugal and unwilling to pay these marked up prices
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[ 3.2 ms ] story [ 185 ms ] threadSo while it might be the "end of capitalism" it is not a mistake, but the final goal
https://fred.stlouisfed.org/series/M1SL
But in Europe inflation is also being driven by high energy prices due to the war in Ukraine.
After the biggest money supply growth in recent history the Fed somehow forgot basic economic concepts and its mandate for a full year. This is simply unbelievable. QE printing was still going on - in massive amounts - while inflation is showing up and the Fed is speaking nonsense about transitory inflation.
This game is rigged. The Fed is malicious, unpredictable and intentionally lying. It doesn't feel like the Fed is doing the best decision, it feels like the Fed is making intentionally unpredictable and even irrational decisions so that insiders, most likely big banks, could get to unravel their investment positions at the expense of the whole economy.
And yet, despite the 600% increase in supply of dollars, the dollar is stronger than ever.
Whether the money supply is responsible for the inflation or not, this is not basic supply and demand. It’s the exact opposite of basic supply and demand.
Fun fact: the phrase "late-stage capitalism" was coined about 30 years before "woke" was used by American folk and blues singer Lead Belly.
On the plus side, while the latter has only recently drifted from a specific meaning into popular flag waving, the latter has always been used by literal communists (e.g. Lenin) as a member of wishful thinking about why this time it will be different, this time capitalism really will come crashing down, this time we can all just be nice to each other and nobody needs to be nailed to anything.
At this rate, a Vogon Construction Fleet is about as likely as capitalism eating itself.
Did you like miss the entire financialisation? Today is not like 30 years ago.
The amountof moneu invested in 3rd order financial derivatives dwarfs the amount of money we invest in real physical cool like infrastructure.
The amount of concentration in supply chains has also never been seen in the entire world history- many high tech good like hard disks are only made in 1 or 2 locations in the world.
Finally, crash of current capitalism does not mean we will have communism, we will just have another capitalism that is less retarded. Kind of like how we replaced the gold standard.
https://en.m.wikipedia.org/wiki/Financialization
Same argument applies to someone speaking at the dawn of WW1, the great depression, Roosevelt's New Deal ending laissez-faire, WW2, the cold war, and at the fall of communism.
The first item on that list, WW1, was about 12 years after "end stage capitalism" was coined, while that blues singer singing about "woke" was around the New Deal era.
Capitalism requires an even monetary playing field.
Almost everyone — capitalist, communist, anarchist — believes in an even playing field. Half the disagreement is about what "even" (or "fair") means.
This is also why people throw the exact same criticisms in the opposite direction, at all the attempts at communism over the years: "it's not real communism because $foo, it was really just state-capitalism", which often seems to me to be a criticism of governments taking the "wrong" idea of fairness rather than connecting with the underlying social/economic presumptions backed into The Communist Manifesto.
(Personal opinion: would be nice if someone can take the points that Adam Smith and Karl Marx were observing about human nature, update with John Nash game theory, and make a new economic system that doesn't turn humans into Spherical Socio-Economic Units in a vacuum like Capitalism and Communism both ended up doing: neither money nor community are the be-all and end-all of human motivation).
The bailouts were state socialism.
We need to separate our payments system and money supply from banking investments and loans so that banks are no longer "too big to fail".
when all bad news is considered bullish, it shows how rotten and warped the system has become.
There are no "mom and pop" grocery stores in my area. We have "Metro" or "Express" versions of the mega chains instead. You can stand outside one and see two others and there won't be a single independent until you get into a different area that the chains don't consider sufficiently profitable.
The mature businesses dial up the greed when there is no competition and dial it down to crush threats. Once the threat is extinguished, up the dial goes again.
Along with all your startup costs, you will be competing against entrenched businesses willing to run at a temporary loss to bleed you dry. They can afford to do this because greed will pay after you are dead.
Capitalism does not create efficient competitive markets offering good value to consumers, government intervention does.
Second, it's exactly that kind of differentiation (offering a niche product that the larger, more generic stores don't want to) that makes it easiest to avoid being undercut and run out of business by larger players.
Now, if you said you had several different small local grocery stores thriving without any specific niche, that would be somewhat more surprising.
You’ve just described what is called “competition”. Having to lower prices to keep up with competitors.
Also, if there is a clear winning pattern of a single player takes all market, that’s super attractive to competitor investors because they only need to outlast your warchest.
What you’ve described is a very unstable game theoretic condition and it’s basically a non-issue everywhere in the US except for markets with regulatory capture (i.e. high government regulation).
I challenge you to point out an example of a one grocery-store city where that strategy has worked to keep competitors out.
Suppose a larger company is selling a product that competes with yours at a loss so as to undercut you due to other sources of profit. Do you think that sort of competition is fair? Does that result in the best product winning the most market share?
> I challenge you to point out an example of a one grocery-store city where that strategy has worked to keep competitors out.
Not the GP, but recommend The Wal-Mart Effect by Charles Fishman.
That requires convincing investors the business is actually profitable (which is unrelated to the actual profitability of the venture)
https://www.macrotrends.net/stocks/charts/KR/kroger/profit-m...
Actually Publix does very well at 7-8% and it’s the largest employee owned company in the US.
https://www.barrons.com/visual-stories/what-publix-can-teach...
The original article is. The whole thing is presented as if it's some moral failure on the part of CEO's. Their only solution is price controls. There isn't one mention of breaking up the huge number of monopolies which dominate nearly every area of commerce.
All of those stimmy checks had to end up somewhere. Classical economics predicted the consequences of the Covid monetary response. It’s been textbook.
And yet we want to blame everything else except the actual causes.
That still allows growth to a dangerous size. A more simple solution tgat avoids worrying about details would be to limit maximum size in general, to guarantee that there is competition.
But when every other price is changing it becomes easier to change your price. And so suddenly you get 20 years of cost increases in a single jump.
And yes, we've noticed it, and so have people around us. My in-laws have been frequently heard complaining about price increases on products (their grumbling tends to start with how the price has increased since last year, then go on to declare what they remember paying for it in about 1965...).
We've also had rampant shrinkflation during that time. Remember, for instance, how ice cream used to be regularly sold in half-gallons? But now is instead sold in 48oz tubs, without any particular acknowledgement of the change.
But when the price increases aren't localized to one specific store, it doesn't matter that people get annoyed at it. Worst case, they'll just start buying less of the thing.
In 2022 you complain about everything going up in price.
Prices have certainly risen across the board more quickly and noticeably in the last year or so than previously. That doesn't mean that I haven't noticed prices rising broadly for the past 20 years.
Maybe you haven't. I don't know. I wouldn't presume to tell you what your experiences are.
So the government tracks wages and unemployment, and sharply reacts when wages grow too fast.
But when it comes to profits, they can't even tax them correctly, let alone react to profits driving inflation.
Wouldn't agressive taxation be an alternative to raising interest rates in tackling inflation? Both reduce avaliability of capital.
Is there any reason why raising interest rate is 'fair' but a temporary 'inflation tax' is unfair?
They can, but corruption is getting in the way of doing so.
For instance suppose the marginal buyer would spend $20 for a product and the producer can produce for $18 and the market price is $19, resulting in $1surplus to each party. If a $3 tax was put on the product, the transaction wouldn't take place.
So you went from $2 social surplus to nothing and no tax benefit.
Any arbitrary price distortions will result in dead weight loss or the overall social surplus to go down compared to no distortion
The market price would be floored at $21 as it costs the producer $18 to produce and a $3 tax. The prior margin was $1 so realistically the producer would eat some of the increase and charge $21.50
For the person who values the good only at $20, no transaction would take place. If eventually the producer cost went down to something like $16, maybe the price would come down to $20 or below but then there's the marginal consumer that values it at $19.
Price distortions almost always result in a dead weight loss. Only in perfectly inelastic products does it not exist
Yes, some trades will not take place take after the distortion, but the the person valuing the good at 20 and still be unwilling to pay 23 after an extended time period in which they're unable to buy it is extremely rare.
thou imho the point is that this increase in markup has to go somewhere it didn't before, which in turn suggests a decrease in efficiency.
Corporations typically are charged a flat percentage tax rate.
One could charge corporations a progressive tax rate, just like people.
You continue to tax corporations just on profits, but the higher the margin (profit/revenue) the higher tax rate.
It disincentivises gouging and could even bring in more revenue for the state (less need to over tax people).
It would also make it harder for the wealthy to dodge tax by billing what should be personal income via corporate shell structures as in most cases that revenue would appear as > 90% profit, attracting a very high tax.
They do so to the limit the law allows.
The only extra control they have here is the "revenue" part of profit/revenue.
And the only way they can change that is by charging their customers less.
Which is the objective of this entire article/thread.
Unless I completely misunderstood your point you want Microsoft to pay a higher rate because its margin 67/205 = 33% is higher and Walmart to pay a lower rate because its margin 14/573 = 2% is lower.
How much would Walsoft pay on its $81bn profit given its 10% margin?
It depends on the link between margins and tax rates. However, one may imagine that it could be less than what Microsoft alone pays on its $67bn profit given its 33% margin.
Also the point is to disincentivise gouging, Walmart doesn't need to be given a lower rate just because Microsoft is charged more.
As to corporate mergers, if the state feels it is a tax dodge it can either veto the merger, or stipulate that each part be taxed as an independent entity.
Not to mention that Microsoft would probably prefer to reduce it's margins by just charging less (slashing revenues by 20% should more than halve the tax burden and likely strengthen it's market hold) or pour profits into R&D than to merge with a less profitable company.
And that's before you get into the mess that a giant tech/retail merger would entail.
It's ad-hoc regulations all the way down...
> And that's before you get into the mess that a giant tech/retail merger would entail.
Why? That seems less problematic from a regulatory point of view than a tech-tech or retail-retail merger.
If a tech-retail entity is problematic in itself maybe they should force the break up of Amazon - or at least tax each part separately, right?
You are already doing this to determine profit (for the existing tax regimes).
All that is required is to take gross revenue (a more basic, simpler value that is already known to determine the current profit calculation), and divide profit/revenue.
There may be an incentive to amortize more evenly, but that is typically what you should be doing (amortizing is meant to spread a one-off cost over the period of the resultant benefit) ... currently the incentive is to book costs early to postpone apparent profit and the resulting tax, which is usually both trickier and less moral/honest.
The tax paid is an increasing, convex function f of some measure x of "profit". I'm not sure how to normalize by company size (or if you should). First, let's say x is per-capita profit, "capita" being the number of employees. Let's also say that the tax f(x) is also per-capita.
Now say there are two companies, 1 and 2, and for simplicity say they each has a single employee, the owner. They would pay a total tax f(x1) + f(x2) to the government, on a before-tax profit of x1 + x2.
If those companies merged, then they'd pay a tax 2 f((x1 + x2)/2), again on a before-tax profit of x1 + x2.
You can just divide both sides by 2, the total number of people involved, to get the usual statement of Jensen's inequality:
(f(x1) + f(x2))/2 > f((x1 + x2)/2)
Thus, with my choice of per-capita normalization, this tax scheme incentivizes mergers. Probably it also does so for other normalization schemes. (What are other reasonable denominators?)
This incentive goes away if the tax isn't normalized at all. In fact, then it mostly just disincentivizes largeness. Which, on the surface, might be a good thing, given that we have too many monopolies. On the other hand, it might incentivize some kind of artificial splitting of corporate structures (not that this isn't a common thing already, what with "Double-Irish Dutch sandwiches" or whatever they're called).
Possibly anything that isn't linear will be gamed in some way.
And, not to sound like an apologist for the capitalists, but it's true that when they take their profits out of their companies, then they will be hit by convex taxes which are a little harder to game (though there is still marriage and other things). And that doesn't prevent companies from amassing stockpiles of cash -- representing power for their owners -- without paying out.
I like this general direction, but it needs some "red-teaming".
"Any parody of extreme views can be mistaken by some readers for a sincere expression of the views being parodied."
Because the former puts more burden on average citizens and the latter would hurt the ruling class.
Taxes would be a great vehicle for this, because they would probably do a much better job of filling the fed's dual-mandate. But because the fed can't raise taxes, and congress can't do literally anything, we're stuck with the response that we have where a non-elected body is leaning on the only lever it has to run our economy.
However, as Keynes pointed out, in the long run we're all dead and yet the free market works its magic over the long run. In the short term, there's panics and opportunists that destructively exploit crisis situations. I think it was Stiglitz who pointed out that a few countries that temporarily blocked capital flight during the 90s Asian crisis recovered much more quickly than the rest.
As long as we’re discussing ridiculous things like price controls, let’s perhaps discuss consumption controls where consumers can only be allowed to purchase certain things at specified amounts and frequencies. In a society that eventually transitions entirely to digital payments, this kind of control should be easy to implement through a centralized authority.
If the price of staples like bread, eggs, milk, etc rise so much that I can't afford to feed my family for the week, it's such a relief to know I'm not obligated to do so!
I'll let them know that from now on, we'll just be eating Lack Of Obligation, which will, I'm sure, be just as tasty and filling as the food we used to be able to buy!
Truly, you have opened my eyes. Now it is clear to me that it is right and good that the Freedom of the wealthiest people in our society to increase their dollar-denominated high scores be deemed more important than the ability of the poorest among us to feed, clothe, and shelter themselves.
Man, that's such a relief.
But if I was to buy mostly branded food made by Nestle & friends, I'd pay 30+% more easily.
People will pay upwards of $20-$25 to have one meal made and delivered to their home, when really the total cost of the meal is probably a couple bucks.
And then people insist on buying expensive processed crap, when the same thing could be had for far less with just some simple ingredients.
People waste money daily on expensive coffees and sugared waters, when all this probably costs mere pennies to make.
Gross, but people buy it. And often happily!
I wish I had a witty comeback but I'm honestly just stunned...
0. https://www.bls.gov/cpi/
It could solve a whole bunch of other problems too.
But you have to consider that no economy exists divorced from politics. So, in the same vein, if too many people are having too rough of a time… your political messaging will get undercut with populist appeals in the political messaging economy.
So, there’s a balance of concerns to be struck.
> Earnings per share are expected to decline 7% year-over-year, according to a note from the bank published this week, along with a "significant deterioration" from the -1% year-over-year growth posted in the last three months of 2022.
https://www.businessinsider.in/stock-market/news/investors-s...
One of the biggest losers is supposed to be healthcare(20%). Is that because they had a huge spurt because of the pandemic and now there is a reduction? I am not sure what the other industries are so I am not sure what to make of it.
There’s a huge difference. What they’re predicting probably means profits will still be a lot higher than many quarters in the pandemic, and much higher than Pre-pandemic profits.
https://ycharts.com/indicators/sp_500_eps
Most of the 2010s had EPS in the 20s. The late 2010s (2018 onwards…right after the massive tax break incidentally) has an EPS in the 30s.
It drops to the teens in the beginning of the pandemic, rising to peak above 50, and is still in the mid 40s. A 7% drop would still keep EPS in the 40s, well above anything it touched Pre-pandemic.
What’s worst is that this is with the backdrop of a much stronger dollar than ever, which means that these dollar earnings are increasing after compensating for conversion losses from the RoW, which indicates American consumers are being charged a lot more money.
- lockdown ends: everything is 30-100% more expensive.
as george carlin said, "they want it back".
The vast majority of government handouts during covid went not to consumers, but to the very corporations now raising prices - $400 billion in PPP loan forgiveness alone is a hell of a handout to corporate america.
At least these massive amounts of cash came in response to a disproportionately more massive world event.
And yet I don’t see complaints about that massive handover of cash which wasnt even in response to a problem.
Blaming capitalism when the reason this all blew up was practically the biggest socialistic experiment is ridiculous.
It really is the death of capitalism, but not because of capitalism but because the single point of failure of central banks and central control are enough to bring this whole thing down.
This is actually infuriating seeing a bank trying to deflect the blame. This is the results of decades of banks getting breastfed by the Fed, and then the Fed finally exploding it all in COVID printing and failing to raise interest rates for a whole year of rising inflation with nonsense of "transitory inflation".
So much lies. If there should be social unrest, it's at the Fed and the banks.
Sure, the cost of gas was high. And yeah, the dollar is extremely strong (although a strong dollar should have made things cheaper in the US with net imports), but even using a dollar/Euro conversion rate at its historical peak (about 1.6 dollars to the Euro), had things way cheaper.
Eating at the finest fine dining restaurant in Milan was as expensive as a sit down meal at a regular restaurant in the US. And that’s before adjusting for the fact that the US sticker prices did not include tax and you needed to pay 20% tip.
I’ve been to Italy before and while it was never expensive, this was the first time I felt it was cheap.
The U.S. feels poor. Italy feels so much more advanced. Despite the fact that the latter has a fraction of the per capita income of the former.
We've just had a period of extraordinarily low interest rates, government checks going directly to citizens, and constrained supply chains.
Why blame inflation on anything but the obvious?