Is inflation a fallacy for corporate greed?

I am not the sharpest tool in the shed, though is inflation just another way to screw us all over?

By this I mean for example if a loaf of bread cost $3.00 and inflation increased due to the conflict in Ukraine.

Now bread costs $5.00 per loaf, and it is essential for most people, now the Ukrainian conflict has been settled.

Inflation drops a bit though now manufacturers see people are reluctantly happy to pay $5.00 for a loaf of bread, this becomes the NEW NORMAL cost.

This would apply for most other produce and products, and prices will never reduce, it’s all greed!



www.google.com.au...

a reply to: robsmith

Inflation just like interest is build into the system robsmith.

Its a house of cards really that at some point has to fall.

A grandesque pyramid scheme of epic proportions really apt to end in tears.

a reply to: andy06shake

It’s gonna collapse big

Here in Australia we have record low interest rates for years, average of 4 percent, lenders are happy as real estate sales are going nuts.

People are borrowing 80 of 90 percent of a now average 900 thousand mortgage.

The economy will collapse otherwise known as a recession when interest rates rise and inflation and cost of living is high, it’s a perfect storm.

I have said if Victoria, we are being set up to fail and we will be having a big fire sale of property did to mortgagee repossessions.

a reply to: robsmith
It's not exactly like that as inflation isn't planned (but is influenced, that's the central banks job). Inflation (and deflation) are natural processes in any market. It's not something invented or put in place.

Every market system experiences it, FIAT, gold backed or not.

Inflation is mostly influenced by rising production (includes harvests) and loan costs. That's why minimum wage is slippery slope. You artificial raise costs on loan and production side, leading to higher prices, leading to less buying force and end up with inflating the value of the currency used.

That's why overall inflation fluctuates constantly, you have all these markets that are differently regulated and impacted by different factors. Since oil and wheat are crude products at the beginning of so many production chains, it will have an impact up the chain. How big that impact is, depends on the single processors until it reaches the customers.

For example, oil prices made a lot of things more expensive. So my customers do not only pay more down the line for production costs, they also pay more for the substance too. If I would heat with oil, it would impact on my labor costs and I would have to charge more per hour or raise material prices to make that up.

It's cascading effect. The central banks try to influence it (for good or bad is up to anyone's opinion) with different levers like dictating loan interest rates and such. Look there too, if you want an explanation.

I don't think you're understanding inflation correctly, but yes- it screws us all over.

Let's say the currency of choice was pinecones.

A loaf of bread costs three pinecones, and lets say people make 40,000 pinecones a year on average.

Now, if we stop right there... everyone is earning income, everyone can spend that income on what they need to live.
If you get ahead you can invest- or SAVE and eventually buy a house. What a concept!
But houses cost hundreds of thousands of pinecones, so the only way you can get one is to get a loan where the vast majority of your pinecones go towards the interest to the loan giver, and you wind up paying 3-5 times more for that house than it should cost, over years.

Every fall, the government combs the forrest for pinecones and introduces them into the market via government projects, stimulus packages, "donations", bribes, what have you. Because of this, there's more pinecones to go around- EVERY YEAR. That's inflation. The US government just decided to throw another 1.5 trillion pinecones into circulation.

If you own property, or have debt, this could be good for you in the long run, because each one of YOUR pinecones is worth LESS when there are more to go around. If you're trying to save money to get ahead, or just scraping by, this is BAD for you- because your average income is still 40,000 pinecones a year, but suddenly there's 20% more pinecones to go around so the cost of food, heat, electricity, rent, and building materials are all guaranteed to go up at least 20% more, other factors not accounted for. So unless you got a 20% pay raise this year, and last year, and next year... that inflation is giving you a pay cut every year.

Now- when you said inflation "goes back down", this is where I don't think you're following along. Inflation never went back down- it might have slowed, but the only way for it to go down would be to remove money from the money supply, and cause deflation.
The cost of your bread might drop back down to four pinecones, but that's not deflation- your money is worth less still, but the supply/demand/transport/raw material costs all also factor into that given product.

There's a neat little cartoon series (15 minutes in total?) that isn't covering inflation directly, but does a fantastic job explaining what's going on here:
Common Sense Soapbox

a reply to: robsmith

I lost a house worth about 1/4 million quid when they had to bail out the bankers in 2008 and the building trade went breast up just down to not being able to make the mortgagee repayments in 2009.

Easy come easy go eh?

If only that was the case.

Us plebs are all but doomed robsmith, may as well make hay whilst there is a glimmer of sunlight left to be had all the same, because this world is going to hell in a hand basket.

Inflation is another term for greed. It sounds better when those lying crooks deceive others into paying $40,000 a year in tuition to be a pawn of the satanic corporate world.

You guys talk about corporations as if they're some evil entity.

Newsflash: corporations are made up of people.

Those people buy things.

The things they want to buy are now much more expensive because of inflation.

They may have a lot of dollars, but the purchasing power of their dollars has gone down, along with everyone else's.

This kind of mentality is the same that causes people to brag about how Californians make more money than people in other states. They also have higher cost of living. The value of a dollar in California is one of the lowest in the nation. But that's too complicated for some folks.

originally posted by: Randomname2
Inflation is another term for greed....

No it's not. If you think about the loaf of bread analogy, it's pretty easy to understand.

Suppose you're the baker. You make bread out of certain materials and sell the bread for a profit so you can earn a living. Your supplier raises the rate of the flour because it costs more money to transport the material to you. Now your profit shrinks. How long can you maintain that? You decide that it's cutting into your ability to pay your bills so you raise the rate of the bread.

There's nothing evil about this business model. What's evil is our government's inability to manage inflation. They should have a plan to control the cost of fuel for example. They should have done something a year ago to let business get back to normal and let people get back to work. Instead, they just don't give a crap because Nancy, Joe and he people we elect have all they need (plenty of ice cream in their freezer). Life isn't a struggle for them. They don't have to earn their paycheck. It just comes in all the time because the law says you have to pay the government.