This line of argument is utter nonsense and propaganda.
Review the history of what happened.
Covid landed. Then the federal reserve printed tons of money (shows up clearly in the percentage of government spending as share of US GDP and M2 money supply).
Then there was a delay and then inflation began to increase.
Inflation is always and everywhere a result of printing.
And yet the dollar is stronger than its ever been.
And the inflation is global. In fact? The U.S. is faring better than most other countries.
And inflation is even worse if you were using a deflationary currency like Bitcoin.
The fact that someone can go through the last few years and see inflation clearly driven by war, inflation clearly driven by supply chain problems due to COVID, inflation clearly driven by Brexit when looking at the UK, and comment “inflation is always and everywhere a result of printing” is just ideological blinkerism at its finest.
I can't tell what this article is saying. The first paragraph says "The continued drop in labor costs", but the Fed data says it hasn't dropped, it's been going up continuously.[1]
The a later paragraph says "Since the labor share [of inflation] is declining" which entirely different than "drop in labor costs".
So what's actually happening is labor costs are going up. They just aren't going up as fast as profits. Why can't they just write that?
And the examples given "oil and gas" is an odd one, since profits vary wildly. When oil costs are down, profits are down. When oil costs go up, profits go way up. It's a capital intensive industry, and that's how it's paid for. Oil is never sold at some small profit margin.
It is _unit_ labor costs that are decreasing. In this case, because the price companies are getting for their goods is increasing faster than wages are growing.
If every business decides to arbitrarily double their profit margin, then prices will rise, but none of that price rise goes to salaries, nor cost of materials, or anything else but a corporate bank account.
This effectively drains money from consumers, without returning anything to them via salaries.
The article states plainly they mean margin expansion.
Comments like this always perplex me. Did you read the article? If yes, what other possible interpretation is there? If no, why comment a question like this that would most likely be clarified in the article?
[+] [-] colechristensen|3 years ago|reply
Competition is inadequate and incentives don’t exist to price well.
[+] [-] anonreeeeplor|3 years ago|reply
Review the history of what happened.
Covid landed. Then the federal reserve printed tons of money (shows up clearly in the percentage of government spending as share of US GDP and M2 money supply).
Then there was a delay and then inflation began to increase.
Inflation is always and everywhere a result of printing.
[+] [-] rhaway84773|3 years ago|reply
And the inflation is global. In fact? The U.S. is faring better than most other countries.
And inflation is even worse if you were using a deflationary currency like Bitcoin.
The fact that someone can go through the last few years and see inflation clearly driven by war, inflation clearly driven by supply chain problems due to COVID, inflation clearly driven by Brexit when looking at the UK, and comment “inflation is always and everywhere a result of printing” is just ideological blinkerism at its finest.
[+] [-] refurb|3 years ago|reply
The a later paragraph says "Since the labor share [of inflation] is declining" which entirely different than "drop in labor costs".
So what's actually happening is labor costs are going up. They just aren't going up as fast as profits. Why can't they just write that?
And the examples given "oil and gas" is an odd one, since profits vary wildly. When oil costs are down, profits are down. When oil costs go up, profits go way up. It's a capital intensive industry, and that's how it's paid for. Oil is never sold at some small profit margin.
[1]https://fred.stlouisfed.org/graph/?id=ULCNFB,
[+] [-] dehrmann|3 years ago|reply
Odd way to start the article when later on
> Earlier this week, Donavan said the slowing labor cost growth underscored “how little of the current inflation is labor related.”
Not arguing with the overall premise, but labor costs are still going up.
[+] [-] ydlr|3 years ago|reply
[+] [-] rahimnathwani|3 years ago|reply
How can profits drive inflation. Profits have no form. They're just an accounting thing, a calculated value: the difference between revenue and costs.
[+] [-] vineyardmike|3 years ago|reply
If every business decides to arbitrarily double their profit margin, then prices will rise, but none of that price rise goes to salaries, nor cost of materials, or anything else but a corporate bank account.
This effectively drains money from consumers, without returning anything to them via salaries.
[+] [-] maria2|3 years ago|reply
Comments like this always perplex me. Did you read the article? If yes, what other possible interpretation is there? If no, why comment a question like this that would most likely be clarified in the article?