Psst: You want to know the truth about inflation? (It's not what the Fed thinks it is.)

[RandomGuy]

Orig piece by Robert Reich.

Will try to put in the links in the original article at some point.


Yesterday, the Fed’s policy committee announced it would both end its bond-buying program and likely raise interest rates sooner than had been expected. “Inflation is more persistent and higher, and that the risk of it remaining higher for longer has grown,” Fed chair Jerome Powell explained. Translated: Powell and the Fed are about to slow the economy — even though we’re still at least 4 million jobs short of where we were before the pandemic. And even though, as a result, millions of American workers won’t get the raises they deserve.

I think that’s a big mistake. Powell’s medicine has nothing to do with the real reason for inflation: the increasing concentration of the American economy into the hands of a relative few corporate giants with the power to raise prices.

If markets were competitive, companies would keep their prices down in order to prevent competitors from grabbing away customers. But they’re raising prices even as they rake in record profits. How can this be? The answer is they have so much market power they can raise prices with impunity.

The underlying problem is not inflation. It’s lack of competition. Corporations are using the excuse of inflation to raise prices and make fatter profits.

In April, Procter & Gamble announced it would start charging more for consumer staples ranging from diapers to toilet paper, citing “rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods.”

That was rubbish. P&G continues to rake in huge profits. In the quarter ending September 30 (after its price increases went into effect) it reported a whopping 24.7 percent profit margin. It even spent $3 billion during the quarter buying back its own stock.

The reason it could raise prices and rake in more money is P&G faces almost no competition. The lion’s share of the market for diapers (to take one example) is controlled by just two companies – P&G and Kimberly-Clark – which coordinate their prices and production. It was hardly a coincidence that Kimberly-Clark announced price increases similar to P&G’s at the same time P&G announced its own price increases.

Or consider another consumer product duopoly – PepsiCo (the parent company of Frito-Lay, Gatorade, Quaker, Tropicana, and other brands), and Coca-Cola. In April, PepsiCo announced it was increasing prices, blaming “higher costs for some ingredients, freight and labor.” That was pure baloney. The company didn’t have to raise prices. It recorded $3 billion in operating profits through September.

If PepsiCo faced tough competition it could never have gotten away with it. Consumers would have deserted it for lower-priced competitors. But PepsiCo clearly colluded with its only major competitor, Coca-Cola – which announced similar price increases at about the same time as PepsiCo, and has increased its profit margins to 28.9 percent.

Half of the recent rise in grocery prices is from meat products — beef, pork, and poultry. Just four large conglomerates control most meat processing. They’re raising their prices — and coordinating their price increases — even as they’re scoring record profits. Here again, they’re using “inflation” as an excuse.

You see the same pattern all over the American economy.

Since the 1980s, two-thirds of all American industries have become more concentrated. Monsanto now sets the prices for most of the nation’s seed corn. Wall Street has consolidated into five giant banks. Airlines have merged from 12 carriers in 1980 to four today, which now control 80 percent of domestic seating capacity. The merger of Boeing and McDonnell Douglas has left the US with just one large producer of civilian aircraft — Boeing. Three giant cable companies dominate broadband: Comcast, AT&T and Verizon. A handful of drug companies control the pharmaceutical industry: Pfizer, Eli Lilly, Johnson & Johnson, Bristol-Myers Squibb and Merck.

All this concentration gives corporations the power to raise prices, because it makes it easy for them to coordinate price increases with the handful of other companies in their same industry — without risking the possibility of losing customers, who have no other choice.

In sum, inflation isn’t driving these price increases. Corporate power is driving them.

So what’s the appropriate government response? Not slowing down the economy. This will only hurt millions of workers, who are just beginning to get the raises they deserve. The problem at the heart of the economy is amenable to only one thing: the aggressive use of antitrust laws to bust up monopolies.

This will take time — perhaps years. In the meantime, Biden and the Democrats could do something with a more immediate effect: Enact a windfall profits tax applicable to any large corporation that raises its prices during the same quarter its profits have risen.

What do you think?

--------------------

https://robertreich.substack.com/p/truth-about-inflation

[Thread]

It's $2.29 a gallon gas under President Trump. It's $3.95 a gallon under MF Biden.
It's $3.00 a gallon bleach under President Trump. It's $5.00 a gallon under MF Biden.

Let us proceed...

[DMC]

psst... OP doesn't have a clue either.

[RandomGuy]

psst... OP doesn't have a clue either.

He does.

You don't.

deal.

[koriwhat]

He does.

You don't.

deal.

Lmao Of course you're sucking off REICH! :lmao

[SnakeBoy]

Reich's guide to economics:

Spend more, tax the rich

The End

[Millennial_Messiah]

It's $2.29 a gallon gas under President Trump. It's $3.95 a gallon under MF Biden.
It's $3.00 a gallon bleach under President Trump. It's $5.00 a gallon under MF Biden.

Let us proceed...

Time for Biden to drink the bleach already so we can have President Madame Harris already... that would be a barrel rollin' fuckin' fun.... to watch her lose 400 electoral college votes in 2024, that is :tu


Reich's guide to economics:

Spend more, tax the rich

The End
To use the welfare of niggеrs as bait to turn the U.S. into post-Bolshevik Russia or modern-day Venezuela.

[RandomGuy]

Reich's guide to economics:

Spend more, tax the rich

The End

Not too far off.

[RandomGuy]

Time for Biden to drink the bleach already so we can have President Madame Harris already... that would be a barrel rollin' fuckin' fun.... to watch her lose 400 electoral college votes in 2024, that is :tu


To use the welfare of niggеrs as bait to turn the U.S. into post-Bolshevik Russia or modern-day Venezuela.

:lmao

Troll fail.

[Chucho]

Why do people think "Tax the Rich" works? It works like tanking in the NBA works.

Apple, one of the largest slave plantations and most profitable companies doesn't pay more than a few bucks tax and every party gives enough loopholes where the rich basically never pay their fair share. Biden's plan gives the rich $70 billion in tax breaks.

Amazing that 1st worlders, in the highest quality of life ever recorded, still pipe dream this kind of nonsense and that the "rich", almost completely enabled by the 1st worlders who cry victim, are the golden ticket to relief from the horrible 1st world, high quality, entitlement-laden lives we lead.

That's a relic in belief. The rich continually get richer because the average 1st worlder is fiscally irresponsible and can't stop themselves from making the rich richer.

[Th'Pusher]

Why do people think "Tax the Rich" works?

Then proceeds to explain how taxing the rich isn’t happening.

Was there a point in US history where the rich were being taxed (effectively) and if so, what was the outcome?

[DMC]

Then proceeds to explain how taxing the rich isn’t happening.

Was there a point in US history where the rich were being taxed (effectively) and if so, what was the outcome?

I'd say now. The outcome is you sit up all night talking about stupid shit instead of wondering where you will get food and shelter tomorrow.

[Winehole23]

https://pbs.twimg.com/media/FBjGS0OUUAEGD8e?format=jpg&name=medium

[Winehole23]

https://i.imgur.com/xhYCQh4.gif?noredirect

[Winehole23]

1441814515788693509

[Winehole23]

Those taxes are really keeping the rich down

https://fred.stlouisfed.org/graph/fredgraph.png?width=880&height=440&id=WFRBST01134

[Winehole23]

Which way is redistribution going?

That little blue line is barely visible.

https://pbs.twimg.com/media/EqsKHuvXEAA6FFp?format=png&name=900x900

[CosmicCowboy]

Your tax charts suck. Actual federal tax rates were never as high as you guys keep claiming because deductions and shelters were much more generous. That changed in 86 when rates were lowered and lots of deductions were eliminated.

[Th'Pusher]

Your tax charts suck. Actual federal tax rates were never as high as you guys keep claiming because deductions and shelters were much more generous. That changed in 86 when rates were lowered and lots of deductions were eliminated.

Not speaking for WH’s charts, but I explicitly indicated effective tax rate which would be the tax rate after deductions.

[RandomGuy]

Your tax charts suck. Actual federal tax rates were never as high as you guys keep claiming because deductions and shelters were much more generous. That changed in 86 when rates were lowered and lots of deductions were eliminated.

How do you know deductions and shelters were much more generous?

and

Does that really entirely negate the comparison? Or just make is slightly distorted, but still accurate?



or...


Are you talking out your ass again, assuming stupid shit because you don't like the message?

[ElNono]

There’s a bit of everything, tbh… there’s also the recouping of losses from the pandemic, despite some of these companies received substantial bailouts (ie airlines), while offering much worse services.

That said, lack of competition and market concentration largely predate COVID. The pandemic did expose a worrisome fragility on the global supply chain, which will need to be addressed in the long term.

[CosmicCowboy]

How do you know deductions and shelters were much more generous?

and

Does that really entirely negate the comparison? Or just make is slightly distorted, but still accurate?



or...


Are you talking out your ass again, assuming stupid shit because you don't like the message?

Yes, it totally negates the comparison. You keep pulling the same shit and using stated rate instead of effective rate. As an example, prior to 86 you could deduct every penny of interest paid including car payments and credit card interest. There were tons of legal oil and gas shelters, raw land shelters, etc. You could finance farm and ranch land, deduct the interest, deduct all operating expenses and then depreciate the dirt. If you had enough income to make the note you could basically buy land with money that would have gone to taxes.

[Thanos]

Reich's guide to economics:

Spend more, tax the rich

The End
:tu

[boutons_deux]

The "globalist" Capitalists amass more Capital buying stuff abroad, putting American workers, even with their suppressed wages, in losing competition with Asian/Mexican workers, rather than making in USA.

That's why they did it, and will keep doing it.

China has so much economic power now that it is intimidating US companies in China to conform to Chinese policies on politics, human rights.

Of course, US companies value their Chinese profits above human rights.

[ChumpDumper]

Your tax charts suck. Actual federal tax rates were never as high as you guys keep claiming because deductions and shelters were much more generous. That changed in 86 when rates were lowered and lots of deductions were eliminated.

Post the REAL charts.

[CosmicCowboy]

Post the REAL charts.

You can start by researching the '86 tax changes if it really interests you. If it isn't worth your effort its not worth mine.

[ChumpDumper]

You can start by researching the '86 tax changes if it really interests you. If it isn't worth your effort its not worth mine.

CC folds

[CosmicCowboy]

CC folds

No. Chump is just too lazy and uninterested in the answer. Just being his usual argue bitch.

[ChumpDumper]

No. Chump is just too lazy and uninterested in the answer. Just being his usual argue bitch.

My question was do you have the REAL charts that back up your claim.

I have my answer: You folded.

[Winehole23]

CC is correct that otherwise, the US tax system is progressive, as it should be.


https://arc-anglerfish-washpost-prod-washpost.s3.amazonaws.com/public/JA2PZ6DJBFC57D5HWYGFCIA57Q.png

[CosmicCowboy]

My question was do you have the REAL charts that back up your claim.

I have my answer: You folded.

Like I said, if you are interested in the topic you need to go a lot deeper than a random chart in Google images. I pointed you in the right direction. You are too lazy to research it and I am under no obligation to spoon feed you.

[Winehole23]

https://www.gailfosler.com/wp-content/uploads/Slide19.png

[ChumpDumper]

Like I said, if you are interestedI was interested to see if you could/would back up your claim.

Like I said, you folded.

It's not a big deal. People do it here all the time.

Don't whine about your folding. It's unmanly.

[CosmicCowboy]

I was interested to see if you could/would back up your claim.

Like I said, you folded.

It's not a big deal. People do it here all the time.

Don't whine about your folding. It's unmanly.

You would be the forum expert on unmanly. Intellectually lazy too.

[CosmicCowboy]

The 1986 tax changes weren't a "claim". They are a documented fact.

[ChumpDumper]

You would be the forum expert on unmanly. Intellectually lazy too.
You're the one who folded.

The 1986 tax changes weren't a "claim". They are a documented fact.
Then show us the REAL charts based on those changes so we can see how they differ from the ones already posted.

Or fold.

It's only a big deal if you want to whine about it.

[CosmicCowboy]

:lmao

refusing to be bullied by an intellectually lazy piece of shit is hardly "folding"

If you are interested in learning about the tax changes 1n 1986 then read about it. It's not my obligation to furnish you a "picture" like some 4 year old.

[ChumpDumper]

:lmao

refusing to be bullied by an intellectually lazy piece of shit is hardly "folding"

If you are interested in learning about the tax changes 1n 1986 then read about it. It's not my obligation to furnish you a "picture" like some 4 year old.I'm not bullying.

I asked you to post the real charts based on your claim.

All you had to do was nothing.

You chose to cry like a little girl.

All you have to do now is nothing.

You will choose to continue crying like a little girl.

[Winehole23]

CC, content with pointing and hand waving, zips his lip.

[ChumpDumper]

I don't mind his folding so much as his whining about his folding.

[DMC]

:tu

Signed - The Poor

FIFY

[CosmicCowboy]

I don't mind his folding so much as his whining about his folding.

:lol

Refusing to comply with your demands is not folding. I am under no fucking obligation to look up shit for you since you are too lazy to do it yourself.

[Winehole23]

CC refuses to make his own point.

Would have taken less time to make it than he's spent refusing to, tbh.

[Th'Pusher]

:lol

Refusing to comply with your demands is not folding. I am under no fucking obligation to look up shit for you since you are too lazy to do it yourself.

Sure. But it would be nice if you would back up your claim with something more than do your own research. Since you made your claim there have been multiple charts posted demonstrating the effective tax rate paid. Not sure they support your claim tbh.

[ChumpDumper]

:lol

Refusing to comply with your demands is not folding. I am under no fucking obligation to look up shit for you since you are too lazy to do it yourself.Really, stop whining.

You don't want to back up your claim.

It's fine.

No need for you to try to spin it. You're putting more energy into whining than you ever would into backing up your claim.

[Winehole23]

Judging from the prices at supermarkets and restaurants (https://www.nytimes.com/2021/06/23/business/beef-prices.html), this would appear to be a lucrative moment for cattle ranchers like Steve Charter.


America is consuming more beef than ever, while prices have climbed by one-fifth over the past year — a primary driver for the growing alarm over inflation (https://www.nytimes.com/2021/11/16/briefing/inflation-biden-approval.html).


But somewhere between American dinner plates and his 8,000-acre ranch on the high plains of Montana, Mr. Charter’s share of the $66 billion beef cattle industry has gone missing.


A third-generation cattle rancher, Mr. Charter, 69, is accustomed to working seven days a week, 365 days a year — in winter temperatures descending to minus 40, and in summer swelter reaching 110 degrees.






On a recent morning, he rumbled up a snow-crusted dirt road in his feed truck, delivering a mixture of grains to his herd of mother cows and calves. They roam a landscape that seems unbounded — grassland dotted by sagebrush, the horizons stretching beyond distant buttes.


Mr. Charter has long imagined his six grandchildren continuing his way of life. But with no profits in five years, he is pondering the fate that has befallen more than half a million other American ranchers in recent decades: selling off his herd.


https://www.nytimes.com/2021/12/27/business/beef-prices-cattle-ranchers.html

[Winehole23]

Wall Street is explicit that margin expansion (https://www.bloomberg.com/news/articles/2021-12-28/big-s-p-500-bull-case-lives-on-in-unwavering-profit-forecasts) is the big story of the pandemic. “What we really want to find are companies with pricing power,” said Giorgio Caputo, senior portfolio manager at J O Hambro Capital Management told Bloomberg. “In an inflationary environment, that’s the gift that keeps on giving because companies can pass along their pricing on the way up, and don’t necessarily need to get it back on the way down.”


Margin expansion is one factor that has pushed the stock market to an all-time high, with large firms doing much better than small ones. Bloomberg has noted (https://www.bloomberg.com/news/articles/2021-11-30/fattest-profits-since-1950-debunk-inflation-story-spun-by-ceos) that behind this are corporate profit margins, which are at a 70-year record. All of which leads to an interesting question. How much of inflation is a result of market power, and how much is due to some other set of causes such as government spending or thin supply chains? Let’s do some rough numbers.
https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation

[Winehole23]

Just before the pandemic, in 2019, American non-financial corporations made about a trillion dollars a year in profit (https://fred.stlouisfed.org/series/NFCPATAX), give or take. This amount had remained constant since 2012. Today, these same firms are making about $1.73 trillion a year. That means that for every American man, woman and child in the U.S., corporate America used to make about $3,081, and today corporate America makes about $5,207. That’s an increase of $2,126 per person.



https://cdn.substack.com/image/fetch/w_1100,c_limit,f_auto,q_auto:good,fl_progressive:s teep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F 7f9c6117-63ef-4aa6-ba3b-de788f9a999c_962x439.png (https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F 7f9c6117-63ef-4aa6-ba3b-de788f9a999c_962x439.png)

Still, in order to know just how significant that amount is relative to inflation, we have to figure out how much inflation is costing the average American. A rough way to get that would be to take the total amount America produces annually, which is the Gross Domestic Product, and multiply that by the inflation rate. That’s $23 trillion of GDP times the 6.8% inflation rate, which comes out to $1.577 trillion, or $4,752 per American.


Taking all of this together, it means that increased profits from corporate America comprise 44.7% of the inflationary increase in costs. That means corporate profits alone are absorbing a 3% inflation rate on all goods and services in America (44.7% of 6.8% annual inflation), with all other factors causing the remaining 3.8%, for a total inflation rate of 6.8%. In other words, had corporate America kept the same average annual level of profits in 2021 as it did from 2012-2019 and passed on today’s excess to consumers, the inflation rate would be 3.8%, not 6.8%. And that’s a big difference, indeed it is the difference between Americans getting a raise, and seeing real wages decline.

[Winehole23]

tl;dr

Greedy companies with pricing power are fucking us.

[RandomGuy]

:lmao

refusing to be bullied by an intellectually lazy piece of shit is hardly "folding"

If you are interested in learning about the tax changes 1n 1986 then read about it. It's not my obligation to furnish you a "picture" like some 4 year old.

Bullshit has been called.

You claimed something, then refused to provide anything at all to back it up.

That is folding.

You are smarter than that, but choose lazy. smh

[RandomGuy]

https://mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation

So basically Robert Reich is right. muh inflation is due to a free market failure, and not anything else.

:tu

[Winehole23]

So basically Robert Reich is right. muh inflation is due to a free market failure, and not anything else.

:tuIt's a both/and for me. I don't rule out 13 years of zero bound interest-rates and Federal Reserve QE, it's the main cause of the run up in housing costs.

"Demand pull"

[Winehole23]

Also, excessive emphasis on short term profits has hollowed out resiliency, the lack of which provides opportunity for companies with pricing power to screw customers when the supply chain breaks down.


In my opinion, what’s caused all the supply chain bottlenecks is modern finance’s obsession with Return on Equity (ROE). To show great ROE, almost every CEO stripped their company of all but the bare minimum of assets. “Just-in-time” everything with no excess capacity, no strategic reserves, no cash on the balance sheet and minimal investment in R&D. We stripped the shock absorbers out of the economy in pursuit of better short-term metrics. Large businesses are supposed to be more stable and resilient than small ones, and an economy built around giant corporations like America’s should be more resilient to shocks. However, the obsession with ROE means that no company was prepared for the inevitable hundred-year storms. Now as we’re facing a hundred-year storm of demand, our infrastructure simply can’t keep up.https://noahpinion.substack.com/p/interview-ryan-petersen-ceo-of-flexport

[RandomGuy]

Also, excessive emphasis on short term profits has hollowed out resiliency, the lack of which provides opportunity for companies with pricing power to screw customers when the supply chain breaks down.

https://noahpinion.substack.com/p/interview-ryan-petersen-ceo-of-flexport

I foresee a bit of a slinky effect. We are going to stretch out, the companies are going to leverage to meet demand, then when that happens we will likely over-adjust and hit a slowpocket of growth, as everything struggles towards equilibrium.