prices go up?
Why.
Help.
Why is government printing more money and giving it to me a bad thing. I need it to live.
I’d like both the econ101 (fake, lib, propaganda) and the marxist (real, truth, based) answer pls.
prices go up?
Why.
Help.
Why is government printing more money and giving it to me a bad thing. I need it to live.
I’d like both the econ101 (fake, lib, propaganda) and the marxist (real, truth, based) answer pls.
Inflation is when shit costs more. It can cost more because money supply goes up and devalues the money. It can cost more because of supply or transportation issues inducing scarcity. It can cost more because of capitalist restrained production output. It can cost more because capitalists know they can get away with charging more
The last 2 years have basically just been supply chain issues setting up the expectation for inflation, allowing capitalists to gouge prices and pretend they have no influence. But all you need to see is how they're posting record profits over and over to see that isn't the case.
Also huge consolidation during Covid. A lot of smaller fossil fuel producers were acquired during Covid, giving big oil companies even more control. Of course, they had to somewhat follow what OPEC was doing, but OPEC was just doing the same thing (pushing up prices), since they are a cartel by definition.
My favourite thing about opec is they'll have a production quota X and they'll produce some Y which is acrually below the quota X, then they'll decrease their quota Z, which is less than X but still more than they produced. Somehow the markets respond by increasing prices even though the supply uasn't decreased and there isn't even a potential for a decrease based on the new information. Very rational system.
You more specifically want to look at profit margins (profit as a percentage of revenue) and not total profit. When there is inflation, total profit will go up by nature of things costing more. However, when companies are using their market power to specifically extract more profit by raising prices, that will be reflected in profit margin.
Everything costs more and people have to take debt till they can’t pay anything anymore. That leads to recession, right? When the govt bails out the banks and causes another inflation because they’re printing more money? So now everything costs more etc etc etc.
But can’t the govt, at the bailout stage, bail out the people and tell the companies to not increase price, thus not causing inflation?
Not necessarily. If owners of big banks (rich people) lose all their money and the government prints money to make them whole, this shouldn't create any inflation. Printing by itself is not what creates inflation, you can print $100B and hand it to Bill Gates and this won't cause inflation since it won't increase demand. Of course doing that is unfair and a total waste of money, but that is capitalism...
yes https://en.wikipedia.org/wiki/Nixon_shock
but :porky-happy: didn't like that so they don't do it anymore