Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Explain "excessive" profits. Where in what i stated did I ever mention "excessive profit". Just what is your definition of "excessive profit"? Any profit made by the big 5 US tech?
What you stated is just as useless as saying ....... the market cap determines the share price. Just because the market cap is ....... the share price x outstanding shares, it doesn't mean that the market cap determines the share price. One can not determine the market cap without the share price already determined.
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
Suppose to bought your home 15 years ago and now ready to sell so you can move into a better home in a better area. Do you put your home on the market for what you paid for it 15 years ago plus a reasonable profit? Or do you sell it at a price determined by the market, even if you would make "excessive profits" from the sale? Did you making an "excessive profit" from buyers bidding over your asking because of a shortage on homes for sale, cause inflation? Were you greedy for letting the market determine your sale price, instead of selling it for what you paid for it 15 years ago, plus a reasonable profit? Of course not.
Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
A lot of the price increases are coming from oil companies who are reporting record profits:
"Commodity price spikes reverberate down the supply chain, eventually hitting consumers, noted Martin Schmalz, an Oxford University economist.
The Guardian’s data, he added, objectively shows a massive “transfer of wealth” from consumers, who pay higher prices, to shareholders and investment firms that reap the benefits."
Home energy and fuel aren't luxuries but necessities and a few companies have a lot of control over this. If they raise prices, consumers and businesses can't just shut off their power or switch suppliers.
Stimulus money was around $4k per recipient over 2 years. $2k/year hardly turns people into new money hipsters that can juice the economy and the payments were one-off. If the prices go down again, that's ok but long-term price rises vs one-off payments isn't sustainable:
10% inflation on $1500/month costs is $150/m. $4k stimulus over 24 months is $166/month. Most of the small amount of stimulus money was saved or used to pay off debt though and any increase in spending was to counter the massive reduction in spending before. The price increases in fuel/energy aren't demand-driven and have had a knock-on effect for everything. This is being referred to as stagflation, stagnant economy with inflated prices and has happened before due to oil prices:
Hiking interest rates will hurt people at the bottom, they don't have 'too much money' and never did but it's the only correction the people in power are being allowed to do. They should be implementing a wealth/windfall tax to counter corporate and individual greed. Most of the stimulus money isn't currently in the hands of consumers but someone has it. The banks know who and likely the government and they need to pay it back, either put it back into the economy or tax it away from them. What they are currently doing can move further into recession as they are tackling the wrong problem. The people at the top have all the money and not spending it, not hiring more employees.
Apple isn't one of the companies who raised prices, they saw some inflation on logistics, likely due to fuel (air/sea shipping from Asia), their earnings came from growth but possibly stimulus money involved:
Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Explain "excessive" profits. Where in what i stated did I ever mention "excessive profit". Just what is your definition of "excessive profit"? Any profit made by the big 5 US tech?
What you stated is just as useless as saying ....... the market cap determines the share price. Just because the market cap is ....... the share price x outstanding shares, it doesn't mean that the market cap determines the share price. One can not determine the market cap without the share price already determined.
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
Suppose to bought your home 15 years ago and now ready to sell so you can move into a better home in a better area. Do you put your home on the market for what you paid for it 15 years ago plus a reasonable profit? Or do you sell it at a price determined by the market, even if you would make "excessive profits" from the sale? Did you making an "excessive profit" from buyers bidding over your asking because of a shortage on homes for sale, cause inflation? Were you greedy for letting the market determine your sale price, instead of selling it for what you paid for it 15 years ago, plus a reasonable profit? Of course not.
So many words, and yet the only bit that matters is the bolded bit. Companies have the opportunity to raise prices, so they do. Hence inflation is being caused by companies seeking excessive profit.
If you didn't insist on posting an essay every time you probably wouldn't trap yourself with your own words so much.
Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Explain "excessive" profits. Where in what i stated did I ever mention "excessive profit". Just what is your definition of "excessive profit"? Any profit made by the big 5 US tech?
What you stated is just as useless as saying ....... the market cap determines the share price. Just because the market cap is ....... the share price x outstanding shares, it doesn't mean that the market cap determines the share price. One can not determine the market cap without the share price already determined.
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
Suppose to bought your home 15 years ago and now ready to sell so you can move into a better home in a better area. Do you put your home on the market for what you paid for it 15 years ago plus a reasonable profit? Or do you sell it at a price determined by the market, even if you would make "excessive profits" from the sale? Did you making an "excessive profit" from buyers bidding over your asking because of a shortage on homes for sale, cause inflation? Were you greedy for letting the market determine your sale price, instead of selling it for what you paid for it 15 years ago, plus a reasonable profit? Of course not.
So many words, and yet the only bit that matters is the bolded bit. Companies have the opportunity to raise prices, so they do. Hence inflation is being caused by companies seeking excessive profit.
If you didn't insist on posting an essay every time you probably wouldn't trap yourself with your own words so much.
So little words and none support your original assertion that "excessive profits" causes inflation. Maybe if you used more words to explained why you think it does, one would not need to explain to you why it doesn't. Otherwise, your few words just seem like your obvious bias against any corporation making more profits that YOU think are "excessive". You are the one that fell into a trap by saying in so few words ...... "Inflation is caused by corporations excess profits." as though it's a set rule in Econ 101, like the affect of "supply and demand".
Explain where is the corporations "excessive profits" coming from, if consumers can not afford to pay for the price increase? Don't forget, you are the one claiming that it's corporations "excessive profits" that causes inflation, not corporations just raising prices of their consumer goods. Raising the price of their consumers good does not lead to "excessive profits, if consumers can not afford to pay for it.
So even with higher prices for goods and increase corporate revenue (even record breaking), corporate profits has fallen (not for all). But yet we're near double digit inflation now. What is causing that, if corporations "excessive profits" is what's causing inflation?
Now if you were not so bias against corporations making profits and stated that corporations excessive profits takes advantage of inflationary conditions where consumers possess a lot of spending power, that is totally different than saying it causes inflation. And in many cases, you would be right. And I would agree with you. But if corporations "excessive profits" causes inflation, then the US (and many other highly developed Nations) should had been experiencing double digit inflation for the past 15 years. But inflation only been high in the past 2 years. Gee, you think over $5T of free money the government put in the hands of consumers the last 2 years, had anything to do with "causing" inflation?
Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
A lot of the price increases are coming from oil companies who are reporting record profits:
"Commodity price spikes reverberate down the supply chain, eventually hitting consumers, noted Martin Schmalz, an Oxford University economist.
The Guardian’s data, he added, objectively shows a massive “transfer of wealth” from consumers, who pay higher prices, to shareholders and investment firms that reap the benefits."
Home energy and fuel aren't luxuries but necessities and a few companies have a lot of control over this. If they raise prices, consumers and businesses can't just shut off their power or switch suppliers.
Stimulus money was around $4k per recipient over 2 years. $2k/year hardly turns people into new money hipsters that can juice the economy and the payments were one-off. If the prices go down again, that's ok but long-term price rises vs one-off payments isn't sustainable:
10% inflation on $1500/month costs is $150/m. $4k stimulus over 24 months is $166/month. Most of the small amount of stimulus money was saved or used to pay off debt though and any increase in spending was to counter the massive reduction in spending before. The price increases in fuel/energy aren't demand-driven and have had a knock-on effect for everything. This is being referred to as stagflation, stagnant economy with inflated prices and has happened before due to oil prices:
Hiking interest rates will hurt people at the bottom, they don't have 'too much money' and never did but it's the only correction the people in power are being allowed to do. They should be implementing a wealth/windfall tax to counter corporate and individual greed. Most of the stimulus money isn't currently in the hands of consumers but someone has it. The banks know who and likely the government and they need to pay it back, either put it back into the economy or tax it away from them. What they are currently doing can move further into recession as they are tackling the wrong problem. The people at the top have all the money and not spending it, not hiring more employees.
Apple isn't one of the companies who raised prices, they saw some inflation on logistics, likely due to fuel (air/sea shipping from Asia), their earnings came from growth but possibly stimulus money involved:
But it's not the low income or consumers at the bottom that are living check to check, that was causing inflation before the stimulus checks nor after. For sure they are the one's most affected by any inflation. But high inflation starts with consumers having too much spending power. Which is why the government always try to keep inflation at around 2%. It gives the government a little wiggle room to use interest rate (providing it's not already at 0) to prevent deflation or a recession. A little inflation, adds to economic growth and lowers unemployment.
I, like most of my friends who are not low income or living from check to check or have a lot of debt (if any at all), got all the stimulus checks the government handed out. Even though we all have 6 to 7 figures in savings. The checks were handed out based on annual income, not years of built up wealth. We didn't need the checks. We couldn't spend it on travel, eating out, going to concerts or movie theaters, gym memberships, we don't rent or have a lot of debt, etc. The checks amounted to a rounding error in our savings. So where did our stimulus money go? We went shopping on Amazon. Relatives kids got more expensive toys. Upgraded to the latest smartphone. Bought indoor exercise machines, got a new computer to work from home with, expresso machines, upgraded to fiber internet, subscription to Netflix, etc.. Plus stocked up on as many cases of towels and toilet tissue as possible. We and people like us, contributed more to inflation than any corporations excessive profits.
And paying down debt, increases ones buying power. It increases the chance of getting that car loan or mortgage or that extra CC. If one were to pay down debt and decrease their monthly bill by just even $30, that's extra money that they didn't have before the stimulus checks. And by the way, most counties and cities in the US prevented landlords from raising rent or evicting tenants for non payment of rent. So stimulus checks money didn't have to go toward paying any rent increases or rent at all. It is only now that renters are seeing the affect of inflation on their rent. But a lot of it has to do with landlord making up the losses of not being able to increase rent during the years of the pandemic. Here in the SF Bay Area, rent is down. That's because the market still has the biggest impact on rent, not inflation. And even with increases, it's way less than inflation over the last two years.
Judging by the high inflation we are experiencing now, the stimulus checks that was meant to increase consumers spending power, worked better than the government expected or wanted to. But one has to take into consideration the shortages of goods caused by the shortages of the component needed to make the goods. All of the shortages of consumers goods were not caused by too much demand from consumers with too much spending power alone.
Corporate profits are driven by higher prices due to shortages, cause by too much money in the hands of consumers causing a high demand. If consumers did not have the money to spend in the first place, then raising the price would had resulted in less sales and less profit.
That's a not altogether bad explanation of why
inflation is cause by corporations excessive profits
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
A lot of the price increases are coming from oil companies who are reporting record profits:
"Commodity price spikes reverberate down the supply chain, eventually hitting consumers, noted Martin Schmalz, an Oxford University economist.
The Guardian’s data, he added, objectively shows a massive “transfer of wealth” from consumers, who pay higher prices, to shareholders and investment firms that reap the benefits."
Home energy and fuel aren't luxuries but necessities and a few companies have a lot of control over this. If they raise prices, consumers and businesses can't just shut off their power or switch suppliers.
..........
The trouble is that most consumers associate high pump prices to oil corporations "excessive profits". That is not true. Most consumers are as informed about how oil companies make their profits as politician are informed about tech.
In reality, even though most of oil companies revenue are derive from selling products refined from cruel oil, the vast majority of oil corporations profits comes from selling their cruel oil at market price, even to their own refineries.
The bigger oil corporations like Shell, Exxon and Chevron explore, drill for and extract their own oil. This might cost them $60 a barrel. Oil corporations do not dictate the price of a barrel or oil. They are at the mercy of oil future traders. If the cost of a barrel of oil is at or below what it cost them to produce a barrel of oil, they lose. However, if the price of a barrel of oil is above or vastly above what it cost them for their barrel of oil (as it is now), they profit.
The average consumer is only aware of the cost of gas at the pump, the current price of a barrel of oil in the futures market and how much oil companies are profiting from the high price of a gallon of gas. As though every extra dollar it cost them at the pump, ends up as profit in the pockets of oil companies. But the oil companies only make about $.10 per gallon of gas. And that don't change much whether the price of gas is $5 a gallon or $3 a gallon. To put that in perspective, CA gas tax on a gallon of gas is about $.54 and Fed gas tax is $.18. The increase cost of a barrel of oil is spread out across all the goods that uses by-products refined from cruel oil. It will add to the cost of bug sprays, clothing, fertilizers, plastic goods, tires, ink, paint, glue, soap, etc.. But gasoline constitute about 20% of the what is refined from oil. So gas is where oil companies makes most of their revenue.
The high price of a barrel of cruel oil is inflationary because it increases the cost of most of the products consumers buy. The price of a barrel of oil is not controlled by the oil companies. The oil company sells their barrel of oil at market rate and profit only when the market rate is above what it cost them to explore, drill for and extract a barrel of oil.
Notice that while the sale of gasoline and other by products from refining oil generated 70% of their revenue (downstream), it only account for 8% of their earnings. While selling their barrel of cruel oil generated 8% of their revenue (upstream) while accounting for 61% of their earnings.
>Yet, in the good years they are called to Congress, blamed for high prices, and threatened with windfall profit taxes. In reality, cause and effect are backwards. High prices (of oil) drove the profits, not vice versa. Likewise, when the oil companies are being blamed for inflation, cause and effect are backwards. Just as high prices (of oil) drove profits, they also drove inflation. High profits are an effect, not a cause.<
So little words and none support your original assertion that "excessive profits" causes inflation. Maybe if you used more words to explained why you think it does, one would not need to explain to you why it doesn't. Otherwise, your few words just seem like your obvious bias against any corporation making more profits that YOU think are "excessive". You are the one that fell into a trap by saying in so few words ...... "Inflation is caused by corporations excess profits." as though it's a set rule in Econ 101, like the affect of "supply and demand".
You know what, you're not totally wrong, I have been overly snippy, so I'm going to clarify something that may be causing an issue. I don't mean to say that all inflation is caused by corporations seeking excessive profits, or that the only cause of inflation is excessive corporate profits, but the current inflation that we're seeing is largely so.
Explain where is the corporations "excessive profits" coming from, if consumers can not afford to pay for the price increase? Don't forget, you are the one claiming that it's corporations "excessive profits" that causes inflation, not corporations just raising prices of their consumer goods. Raising the price of their consumers good does not lead to "excessive profits, if consumers can not afford to pay for it.
Who said anything about consumers not being able to afford to pay it? Maybe sure some are, but it doesn't seem to be a significant number given the profits being generated.
Take that out and you're back at the obvious, corporations choosing to raise prices during a time of shortage and reaping massive supernormal profits from that decision. "corporations just raising prices of their consumer goods" and "corporation's excessive profits" can be taken to be one and the same here because the price rises are what is generating the profits.
Apple has reported that it made a record-breaking $83 billion in the third quarter of 2022, coming slightly ahead of Wall Street expectations for the economically impacted fiscal period.
Apple CEO Tim Cook
The iPhone maker on Thursday announced the results ahead of its scheduled conference call with analysts. Its Q3 2022 results mark a slight 2% year-over-year increase from the $81.4 billion in revenue reported in 2021. Apple reported earnings-per-share of $1.20.
Analysts were expecting Apple to report revenue around $82 billion and earnings-per-share of $1.16 in the June quarter.
The June quarter was the first full quarter of availability for several new products, including the Mac Studio, Apple Studio Display, and third-generation iPhone SE. Apple also announced new MacBook Air and MacBook Pro models, though those releases were later in the quarter and won't have a significant impact on earnings.
Apple's Q3 2022 also saw the brunt of effects from Covid-related disruptions in China and supply chain issues. Although it did not provide formal guidance, Apple warned of a $4 billion to $8 billion revenue hit from those problems.
"This quarter's record results speak to Apple's constant efforts to innovate, to advance new possibilities, and to enrich the lives of our customers," said Apple CEO Tim Cook. "As always, we are leading with our values, and expressing them in everything we build, from new features that are designed to protect user privacy and security, to tools that will enhance accessibility, part of our longstanding commitment to create products for everyone."
The company's iPhone revenue reached $40.6 billion, up slightly from $39.6 billion in the year-ago quarter. iPad revenue is down to $7.22 billion, a decrease from $7.37 billion in Q3 2021.
Mac revenue went down to $7.38 billion, down from the year-ago revenue of $8.2 billion. Wearables, Home, and Accessories decreased slightly to $8.08 billion, down from $8.8 billion.
Services, which has long been a growth driver for Apple, brought in $19.6 billion in the June quarter, an increase from the $17.4 billion it raked in during Q3 2021.
As has been typical during the pandemic, Apple did not provide formal revenue guidance for the upcoming September quarter.
Apple's board of directors declared a cash dividend of $0.23 per share. The dividend will be payable on Aug. 11 to shareholders of record as of the close of business on Aug. 8.
"Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment. We set a June quarter revenue record and our installed base of active devices reached an all-time high in every geographic segment and product category," said Apple CFO Luca Maestri. "During the quarter, we generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans."
So little words and none support your original assertion that "excessive profits" causes inflation. Maybe if you used more words to explained why you think it does, one would not need to explain to you why it doesn't. Otherwise, your few words just seem like your obvious bias against any corporation making more profits that YOU think are "excessive". You are the one that fell into a trap by saying in so few words ...... "Inflation is caused by corporations excess profits." as though it's a set rule in Econ 101, like the affect of "supply and demand".
You know what, you're not totally wrong, I have been overly snippy, so I'm going to clarify something that may be causing an issue. I don't mean to say that all inflation is caused by corporations seeking excessive profits, or that the only cause of inflation is excessive corporate profits, but the current inflation that we're seeing is largely so.
Explain where is the corporations "excessive profits" coming from, if consumers can not afford to pay for the price increase? Don't forget, you are the one claiming that it's corporations "excessive profits" that causes inflation, not corporations just raising prices of their consumer goods. Raising the price of their consumers good does not lead to "excessive profits, if consumers can not afford to pay for it.
Who said anything about consumers not being able to afford to pay it? Maybe sure some are, but it doesn't seem to be a significant number given the profits being generated.
Take that out and you're back at the obvious, corporations choosing to raise prices during a time of shortage and reaping massive supernormal profits from that decision. "corporations just raising prices of their consumer goods" and "corporation's excessive profits" can be taken to be one and the same here because the price rises are what is generating the profits.
And just what makes you think all these corporations with "excessive profits", made those profits by "just raising their prices"? Isn't it possible that businesses like Lowes and Home Depot made "excessive profits", without having to raise prices, because more consumers were staying home and decided to fix stuff around the home? What about supermarket that saw an increase in business because consumers were now eating more meals at home, instead of having lunch at work and dining out? Health care made tons of profits for obvious reasons that had nothing to do with raising prices. Same for Amazon from all the consumers that didn't want to venture out of their homes to go shopping. Corporate fast food diners with drive thru take out remained open. While small privately own and family run restaurants had to close.
Retailers like Walmart, Target and Costco made a lot of extra profit because they were allowed to stay open during the pandemic while many of their competitors had to close down. Why? Because Walmart, Target and Costco also sell groceries and grocery stores were allowed to stay open. For the most part, there was no increase in prices for items that they could keep in stock. While their competitors like BestBuy, Macy's, Apple Stores, Nordstrom, Foot Lockers, Game Stop, jewelry stores, clothing stores, etc., had to close down. Out of the two nearby malls by my home, there were only 3 stores open, a Lucky's, Lowes and Target. (not including banks). This out of over 100 store in both malls.
So no. Excessive profits and just raising prices of goods are not one and the same. A corporation can have excessive profits by selling more of their products, without having to raise prices.
What happens if a corporation makes "excessive profits" by reducing the prices of their goods by 25% and ended up selling 10x more of their products to consumers looking for a bargain. Did that "excessive profits" cause or contribute to inflation?
It's not just the raising prices of goods or excessive profits, alone, that contribute to inflation. Consumers still have to buy the goods. Without consumers buying the goods at the higher prices, there is no "excessive profits" to be made and prices can not stay raised for long. Inflation is caused by too many consumers having the buying power to buy goods at the higher prices. Which in turn will cause corporations to keep their prices high. That buying power is the connection that results in inflation and leads to "excessive profits" (if the corporation just raised prices that is not due to shortages or rising cost of production.). And the government chosen solution is and always been, reduce the buying power of consumers by raising interest rates. I believe the POTUS still have the power of "price control" where by prices can be frozen. Which would be the solution to raising prices. But this been tried several times in the past and created more long term problems than it solves.
But you're getting there. One more piece of the puzzle. Once you add in that a lot of consumers can afford to pay the higher prices, you have the answer to what's causing inflation and contributing to "excessive profits". Without the consumers being able to afford the higher prices, there would be no "excessive profits" and corporations can not keep their prices high. Neither can exist without that connection. Now ask, why are there so many consumers that can afford to pay the higher prices for goods?
Too many in the liberal press do not want to believe that a progressive POTUS Biden is most responsible for the high inflation we're having now because of the Federal policies that put too much buying power in the hands of the consumers, to fast. If this had happened during Trump presidency, the liberal press would all be blaming Trump and his Federal policies of putting too much buying power in the hands of consumers, too fast.
Comments
What you stated is just as useless as saying ....... the market cap determines the share price. Just because the market cap is ....... the share price x outstanding shares, it doesn't mean that the market cap determines the share price. One can not determine the market cap without the share price already determined.
Here, in order to have "excessive profit", there must already be an inflationary condition where consumers have too much spending power and are willing to pay more for a product. A company raising the price of their product in order to make more profit, will not result in more consumers buying their product or a shortage of their product. But lowering the price of their product will more likely result in more consumers buying their product and maybe a shortage of their product if production can't keep up. And if lowering the price of their product resulted in more sales and thus more profit, even if each product sold generated a little less profit, did it cause inflation?
Suppose to bought your home 15 years ago and now ready to sell so you can move into a better home in a better area. Do you put your home on the market for what you paid for it 15 years ago plus a reasonable profit? Or do you sell it at a price determined by the market, even if you would make "excessive profits" from the sale? Did you making an "excessive profit" from buyers bidding over your asking because of a shortage on homes for sale, cause inflation? Were you greedy for letting the market determine your sale price, instead of selling it for what you paid for it 15 years ago, plus a reasonable profit? Of course not.
https://www.theguardian.com/business/2022/apr/27/inflation-corporate-america-increased-prices-profits
"Commodity price spikes reverberate down the supply chain, eventually hitting consumers, noted Martin Schmalz, an Oxford University economist.
Home energy and fuel aren't luxuries but necessities and a few companies have a lot of control over this. If they raise prices, consumers and businesses can't just shut off their power or switch suppliers.
Stimulus money was around $4k per recipient over 2 years. $2k/year hardly turns people into new money hipsters that can juice the economy and the payments were one-off. If the prices go down again, that's ok but long-term price rises vs one-off payments isn't sustainable:
https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html
10% inflation on $1500/month costs is $150/m. $4k stimulus over 24 months is $166/month. Most of the small amount of stimulus money was saved or used to pay off debt though and any increase in spending was to counter the massive reduction in spending before. The price increases in fuel/energy aren't demand-driven and have had a knock-on effect for everything. This is being referred to as stagflation, stagnant economy with inflated prices and has happened before due to oil prices:
https://www.youtube.com/watch?v=q_S37yjgPuo
Hiking interest rates will hurt people at the bottom, they don't have 'too much money' and never did but it's the only correction the people in power are being allowed to do. They should be implementing a wealth/windfall tax to counter corporate and individual greed. Most of the stimulus money isn't currently in the hands of consumers but someone has it. The banks know who and likely the government and they need to pay it back, either put it back into the economy or tax it away from them. What they are currently doing can move further into recession as they are tackling the wrong problem. The people at the top have all the money and not spending it, not hiring more employees.
https://www.washingtonpost.com/business/2022/07/28/gdp-q2-2022-economy-recession/
Apple isn't one of the companies who raised prices, they saw some inflation on logistics, likely due to fuel (air/sea shipping from Asia), their earnings came from growth but possibly stimulus money involved:
https://www.cnbc.com/2022/01/27/apple-ceo-tim-cook-everybodys-seeing-inflationary-pressure-.html
If you didn't insist on posting an essay every time you probably wouldn't trap yourself with your own words so much.
Explain where is the corporations "excessive profits" coming from, if consumers can not afford to pay for the price increase? Don't forget, you are the one claiming that it's corporations "excessive profits" that causes inflation, not corporations just raising prices of their consumer goods. Raising the price of their consumers good does not lead to "excessive profits, if consumers can not afford to pay for it.
Then you have this ...
https://www.bloomberg.com/news/articles/2022-05-26/us-corporate-profits-fall-while-consumer-spending-revised-up ;
So even with higher prices for goods and increase corporate revenue (even record breaking), corporate profits has fallen (not for all). But yet we're near double digit inflation now. What is causing that, if corporations "excessive profits" is what's causing inflation?
Now if you were not so bias against corporations making profits and stated that corporations excessive profits takes advantage of inflationary conditions where consumers possess a lot of spending power, that is totally different than saying it causes inflation. And in many cases, you would be right. And I would agree with you. But if corporations "excessive profits" causes inflation, then the US (and many other highly developed Nations) should had been experiencing double digit inflation for the past 15 years. But inflation only been high in the past 2 years. Gee, you think over $5T of free money the government put in the hands of consumers the last 2 years, had anything to do with "causing" inflation?
But it's not the low income or consumers at the bottom that are living check to check, that was causing inflation before the stimulus checks nor after. For sure they are the one's most affected by any inflation. But high inflation starts with consumers having too much spending power. Which is why the government always try to keep inflation at around 2%. It gives the government a little wiggle room to use interest rate (providing it's not already at 0) to prevent deflation or a recession. A little inflation, adds to economic growth and lowers unemployment.
I, like most of my friends who are not low income or living from check to check or have a lot of debt (if any at all), got all the stimulus checks the government handed out. Even though we all have 6 to 7 figures in savings. The checks were handed out based on annual income, not years of built up wealth. We didn't need the checks. We couldn't spend it on travel, eating out, going to concerts or movie theaters, gym memberships, we don't rent or have a lot of debt, etc. The checks amounted to a rounding error in our savings. So where did our stimulus money go? We went shopping on Amazon. Relatives kids got more expensive toys. Upgraded to the latest smartphone. Bought indoor exercise machines, got a new computer to work from home with, expresso machines, upgraded to fiber internet, subscription to Netflix, etc.. Plus stocked up on as many cases of towels and toilet tissue as possible. We and people like us, contributed more to inflation than any corporations excessive profits.
And paying down debt, increases ones buying power. It increases the chance of getting that car loan or mortgage or that extra CC. If one were to pay down debt and decrease their monthly bill by just even $30, that's extra money that they didn't have before the stimulus checks. And by the way, most counties and cities in the US prevented landlords from raising rent or evicting tenants for non payment of rent. So stimulus checks money didn't have to go toward paying any rent increases or rent at all. It is only now that renters are seeing the affect of inflation on their rent. But a lot of it has to do with landlord making up the losses of not being able to increase rent during the years of the pandemic. Here in the SF Bay Area, rent is down. That's because the market still has the biggest impact on rent, not inflation. And even with increases, it's way less than inflation over the last two years.
https://www.investopedia.com/terms/s/stimulus-check.asp
https://fivethirtyeight.com/features/were-the-stimulus-checks-a-mistake/
Judging by the high inflation we are experiencing now, the stimulus checks that was meant to increase consumers spending power, worked better than the government expected or wanted to. But one has to take into consideration the shortages of goods caused by the shortages of the component needed to make the goods. All of the shortages of consumers goods were not caused by too much demand from consumers with too much spending power alone.
In reality, even though most of oil companies revenue are derive from selling products refined from cruel oil, the vast majority of oil corporations profits comes from selling their cruel oil at market price, even to their own refineries.
The bigger oil corporations like Shell, Exxon and Chevron explore, drill for and extract their own oil. This might cost them $60 a barrel. Oil corporations do not dictate the price of a barrel or oil. They are at the mercy of oil future traders. If the cost of a barrel of oil is at or below what it cost them to produce a barrel of oil, they lose. However, if the price of a barrel of oil is above or vastly above what it cost them for their barrel of oil (as it is now), they profit.
The average consumer is only aware of the cost of gas at the pump, the current price of a barrel of oil in the futures market and how much oil companies are profiting from the high price of a gallon of gas. As though every extra dollar it cost them at the pump, ends up as profit in the pockets of oil companies. But the oil companies only make about $.10 per gallon of gas. And that don't change much whether the price of gas is $5 a gallon or $3 a gallon. To put that in perspective, CA gas tax on a gallon of gas is about $.54 and Fed gas tax is $.18. The increase cost of a barrel of oil is spread out across all the goods that uses by-products refined from cruel oil. It will add to the cost of bug sprays, clothing, fertilizers, plastic goods, tires, ink, paint, glue, soap, etc.. But gasoline constitute about 20% of the what is refined from oil. So gas is where oil companies makes most of their revenue.
The high price of a barrel of cruel oil is inflationary because it increases the cost of most of the products consumers buy. The price of a barrel of oil is not controlled by the oil companies. The oil company sells their barrel of oil at market rate and profit only when the market rate is above what it cost them to explore, drill for and extract a barrel of oil.
https://www.investopedia.com/how-exxonmobil-makes-money-5116766 ;
Notice that while the sale of gasoline and other by products from refining oil generated 70% of their revenue (downstream), it only account for 8% of their earnings. While selling their barrel of cruel oil generated 8% of their revenue (upstream) while accounting for 61% of their earnings.
Here's a laughable interview with POTUS Biden
https://www.npr.org/2022/06/18/1106045608/oil-companies-are-profiting-from-the-scarcity-driven-by-refineries-losing-capaci
Here's an appropriate article that compares oil companies with Apple Inc.
https://www.forbes.com/sites/rrapier/2022/04/24/if-oil-companies-control-prices-why-do-they-ever-lose-money/?sh=35c896a6cf9d
>Yet, in the good years they are called to Congress, blamed for high prices, and threatened with windfall profit taxes. In reality, cause and effect are backwards. High prices (of oil) drove the profits, not vice versa. Likewise, when the oil companies are being blamed for inflation, cause and effect are backwards. Just as high prices (of oil) drove profits, they also drove inflation. High profits are an effect, not a cause.<
Who said anything about consumers not being able to afford to pay it? Maybe sure some are, but it doesn't seem to be a significant number given the profits being generated.
Take that out and you're back at the obvious, corporations choosing to raise prices during a time of shortage and reaping massive supernormal profits from that decision. "corporations just raising prices of their consumer goods" and "corporation's excessive profits" can be taken to be one and the same here because the price rises are what is generating the profits.
Retailers like Walmart, Target and Costco made a lot of extra profit because they were allowed to stay open during the pandemic while many of their competitors had to close down. Why? Because Walmart, Target and Costco also sell groceries and grocery stores were allowed to stay open. For the most part, there was no increase in prices for items that they could keep in stock. While their competitors like BestBuy, Macy's, Apple Stores, Nordstrom, Foot Lockers, Game Stop, jewelry stores, clothing stores, etc., had to close down. Out of the two nearby malls by my home, there were only 3 stores open, a Lucky's, Lowes and Target. (not including banks). This out of over 100 store in both malls.
So no. Excessive profits and just raising prices of goods are not one and the same. A corporation can have excessive profits by selling more of their products, without having to raise prices.
What happens if a corporation makes "excessive profits" by reducing the prices of their goods by 25% and ended up selling 10x more of their products to consumers looking for a bargain. Did that "excessive profits" cause or contribute to inflation?
It's not just the raising prices of goods or excessive profits, alone, that contribute to inflation. Consumers still have to buy the goods. Without consumers buying the goods at the higher prices, there is no "excessive profits" to be made and prices can not stay raised for long. Inflation is caused by too many consumers having the buying power to buy goods at the higher prices. Which in turn will cause corporations to keep their prices high. That buying power is the connection that results in inflation and leads to "excessive profits" (if the corporation just raised prices that is not due to shortages or rising cost of production.). And the government chosen solution is and always been, reduce the buying power of consumers by raising interest rates. I believe the POTUS still have the power of "price control" where by prices can be frozen. Which would be the solution to raising prices. But this been tried several times in the past and created more long term problems than it solves.
But you're getting there. One more piece of the puzzle. Once you add in that a lot of consumers can afford to pay the higher prices, you have the answer to what's causing inflation and contributing to "excessive profits". Without the consumers being able to afford the higher prices, there would be no "excessive profits" and corporations can not keep their prices high. Neither can exist without that connection. Now ask, why are there so many consumers that can afford to pay the higher prices for goods?
Too many in the liberal press do not want to believe that a progressive POTUS Biden is most responsible for the high inflation we're having now because of the Federal policies that put too much buying power in the hands of the consumers, to fast. If this had happened during Trump presidency, the liberal press would all be blaming Trump and his Federal policies of putting too much buying power in the hands of consumers, too fast.