My opinion on inflation. It's not going away.

[Ferrets are Cool]

IMO, we are going to have to get used to the prices that things are now. I don't foresee them going down. Yes, gas prices may adjust to the real price of a barrel of oil, but the other commodities we use will stay where they are now, or go even higher.
WE have all championed the raising of wages in this country, as we should. But, that comes with a cost to our bank account.
Corporations live by this one axiom: WTMWB What The Market Will Bear. So, if we become accustomed to these prices, they will stay where they are.
This brings up a question. When do "these" prices stop being inflationary and instead, become the norm?

[Scrivener7]

1. This isn't because of rising wages.

[Emile]

3. +2

[ck4829]

2. Billionaires cause inflation

That's a factor too.

There's a vastly overlooked factor that's stoking record inflation: Rich people

Perhaps the most overlooked engine fueling inflation is the "wealth effect," the extra spending from Americans feeling flush as their stock portfolios and home prices jumped by trillions during a tag-team, Olympic sprint for both. By far the biggest share of the extra outlays on the likes of new cars, home improvements, and laptops comes from America's top income tiers. Besides opening their wallets as their net worth swelled, those high-earners—who own the most expensive houses—tapped the fast-rising value of their manses as ATM-style fonts for cash. The sudden spike in their nest eggs and their cash-out refis keep the cohort spending at rates far faster than before the pandemic struck. And because that elite group accounts for such a huge share of overall consumption, it's also a leading, and widely ignored, force in driving inflation that reached 7.5% in the January CPI reading, the highest level in four decades.

Put simply, the well-to-do, hugely compensated Americans contributing greatly to soaring prices is the class least damaged by the rampant inflation. So far, higher prices don't seem to bother them and have done nothing to curb their record shopping spree. If deep-pocketed families feel the inflation pinch at some point, they harbor plenty of wiggle room to trim back by shortening vacations, ordering fewer features on a new Chevy Suburban, or dining out once instead of twice a week.

https://fortune.com/2022/02/16/record-inflation-fed-outlook-wealth-effect/

Billionaires cause inflation

[durablend]

4. There was one article yesterday

And I can't find it, where the CEO was absolutely beside himself over rampant inflation, praying for more.

[Bettie]

5. This isn't because of rising wages

a small portion of it may be, but remember right now, corporations are making record profits. Record. Profits.

Their margins are at an all time high.

Why? Because there is virtually no real competition in any major industry, thus, they have us over a barrel.

We can't go to the competitor for lower prices, because, well, there isn't one, they are all working together to ensure that they receive exponentially more every quarter.

Wages being higher is a drop in the bucket.

But, you are right, prices won't be coming down. Ever. In fact, corporations that make things we need, like food will keep raising them, because, as I said before, there is no real competition, it's all owned by a few people who are making tons of money and apparently, need more than they can spend in 1,000 lifetimes instead of more than they can spend in 100 lifetimes.

They are human dragons, sitting on their piles of treasure and occasionally terrorizing the villagers.

[bucolic_frolic]

6. Prices will never go down, inflation will continue

We're looking at 5-7 years of this. The pandemic hindered production and supply of goods, governments juiced money into the system to support people and stability. We have too much money from various sources - government and social spending, higher wages, Fed largess, stock market wealth creation - and too few goods. The Fed will raise interest rates until inflation "only" goes up 5% a year, then back off, at which point we'll have more inflation. This cycle will repeat several times. Finally the Fed will have to do something serious like raise interest rates to 12%, Volcker style.

So buckle up. Inflation is here to stay for awhile.

[BootinUp]

7. There have been indications to the contrary.

Link to tweet

Link to tweet

Link to tweet

[Ferrets are Cool]

8. Several replies to this post have stated that increased wages have no effect on this

inflation cycle. Even if it does not, it is USED as an excuse. You will not sway me from that opinion.

[bucolic_frolic]

10. Anything that puts more spending power in the hands of consumers, government, or private sector

contributes to aggregate demand and therefore inflation. It's a copper-bottom Keynesian concept for almost 100 years and taught in every macro economics course.

[Ferrets are Cool]

11. Thank you for that very good contribution.

[roamer65]

9. Rinse, lather, repeat.

The Fed will again raise interest rates too high, like in 2007-2008. The housing and other bubbles will pop again and we will be right back to unlimited QE and another severe recession. This time, inflation may tame but it won’t go away due to supply chain problems.

[Samrob]

12. That's because greed and corruption will never go away. nt