That sounds like a bad case of greed-flation.
The city is nearly doubling their tax rate which mean their portion of my taxes is increasing by nearly 154%.
The last time the city increased their property taxes, I was on the council, more than 15 years ago. They proposed a 50% increase at that time. I worked to negotiate it down to ONLY 25% and then promptly voted against it, though it did pass. I didnât win reelection and they idiotically havenât raised the taxes since then.
WOW.
https://www.abc4.com/news/inflation-hits-utahns-harder-than-most-states/
According to the U.S. Congressional Joint Economic Committee, Utahâs inflation is up 14.9% from last year, tied with Colorado for the highest percent increase meaning Utahns are paying $881 more every month.
I expect a lot of that is gas (regular still over $5/gallon) and rent (see house value increase). Luckily, my mortgage isnât going up but my escrow will be increasing next year.
Always wondered what you called someone from Utah. I figured it would be âUtahansâ rather than âUtahnsâ but I guess the silent âhâ makes it like Iowa and Iowans. âUtahnâ sounds like a physics particle.
Sorry for the digression.
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Sounds wrong, economically.
I mean, they could do this ANYTIME, yet they donât. They are doing this right now because they can. Why can they? People are now spending that extra money they were given the past two years, the money given out by the government, which increased the money supply, which is a MAJOR if not the ONLY reason inflation occurs, according to Economic Theory.
Are you also assuming that producer prices are not going up? Supply of employees dropping (truckers, for example)?
People are buying now, supply is tight, so prices go up. Simple Econ Textbook Page 1 Supply and Demand Curve drawing, in which demand has increased due to an externality . Supply should be working to keep up, cuz more profits with more supply. You think any one company is keeping supply constant in order to increase profits? No, theyâll try to increase their supply before their competitor does.
Iâd argue that this right now is not a general increase in consumer prices. It is a temporary one, based on a very limited time frame. People will eventually temporarily stop buying certain things (when they run out of that teat), and buy only needed things.
Here is wiki, if anyone is interested:
The 2021â2022 inflation surge is the elevated economic inflation throughout much of the world that began in early 2021. It has been attributed primarily to supply shortages (including chip shortages and energy shortages) caused by the COVID-19 pandemic and the Russian invasion of Ukraine, coupled with strong consumer demand,[2] driven by historically robust job and wage growth as the pandemic receded.[3] As a result, many countries have seen their highest rates of inflation in decades.[4][5][6]
I see no indication of corporate greed as one of the factors.
Oh, here, bold mine:
Some analysts and left-leaning politicians argued that price gouging could play a role. They noted that in recent decades major industries, notably retailing, had concentrated into oligopolies that dominated markets and consequently wielded higher pricing power. The analysts argued that in an inflationary environment, consumers know prices are increasing but do not have good knowledge of what reasonable prices should be, giving retailers an opportunity to raise consumer prices beyond the inflation they were seeing in their costs, thereby permanently locking in higher prices. There was anecdotal but inconclusive evidence this was happening, and most economists generally did not see gouging as a significant contributor to inflation at the time.[16][17][18]
Yes I think Indy is wrong when saying:
Why can they charge higher prices now than they could last year? Because something changed in the ratio between âmoney consumers are willing to spendâ and âsupply of consumer goodsâ. Profit seeking firms take advantage of the demand/supply change to increase profits.
I donât think this explanation really holds. Weâve also seen huge increases in values of things where thereâs no firm to set prices, like housing or Pokemon cards or sometimes no anyone to set prices like ETH, BTC, or DOGE.
And just as a tangible example, what exactly is the profit per gallon of gas? Like $0.05 to $0.10? Refiners could suddenly become non-profit and it barely even touches the increases weâve seen.
I think itâs also worth noting that expansion of the money supply doesnât itself cause inflation. The Treasury could print $1 trillion in bills and just park them in the Treasury and no price inflation would result. The money supply can also be increased to target only specific inflation as with QE and MBS. The troubles really begin when the money supply is increased and the extra money is released directly to consumers. Then, surprise surprise, the general price level of consumer goods inflates.
That isnât exactly where the problem started, it was when we gave ourselves a tax cut without lowering spending. A couple years prior to COVID and the relief money. In a pretty good economy, a lot of us questioned the timing. In a hot economy, you raise taxes if you are worried about inflation.
Lowering taxes has the same effect as handing out tax rebates or emergency cash distributions. By taking out less from the private sector, the private sector has more. Itâs not rocket surgery.
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Retail gas prices here are now back to March 1, 2022 levels. It was a shocker when they hit C$2 per litre in March (approx US$6 per US gallon) but now people are relieved it is âonlyâ $2 and are filling up.
This isnât correct practically speaking. Only in some narrow set of hypothetical circumstances is this true. Practically speaking, taxes have been lowered for years with most impact accruing to the wealthy. Asset inflation seemed to result, but not widespread inflation in general consumer goods. Emergency cash distributions accrued more to the lower and middle class and as soon as those emergency distributions were not really replacing a forcibly shuttered economy, consumer inflation exploded beginning around April of last year.
Your position is a bit tough to defend given the reality. Decades of tax cuts for the wealthy never fueled major consumer inflation. But one too many direct cash payments to consumers managed to contribute significantly to the worst inflation in decades.
Canât use your conclusion as one of your premises and have a convincing argument.
The above is true enough, but basically just a restatement of " inflation is a monetary phenomenon". Weâve tried that brand of economics since Reagan. It hasnât proven useful in that period. Perhaps we should try a new framework?
Iâm simply using some algebra and looking at the change in money supply. And the asset inflation is all about the zero interest rate environment, in my framework. Anything that gets priced as discounted cash flows will go up in value as the discount rate goes lower.
I think Iâve made it clear that inflation is not purely a monetary phenomenon. The differences in how the money supply is injected into the economy greatly impact the effects on price level.
Iâve been seeing it under $5 in the last few days.
I remember when I lived in Oregon your homeâs assessed value could only increase to the lower of the market value or 103% of last yearâs assessed value. No adjustment for when it sells, although I think certain improvements, such as an addition or adding a guest house could be added to the value.
So basically all the homes were way under-valued and the older the home the greater the undervaluing. But they could at least go up 3% each year, which of course they always did even in years when the market value fell.
And from my POV, it isnât so much a function of how it was injected, but rather where did it get deployed.
So when people use it to shore up their balance sheet, like savings or paying down debt, then there is no affect on prices. They didnât use the funds to bid on goods and services. When a corporation uses it in a stock buy back, then the stock price goes up. Again, no impact on price levels. Iâm sure we agree on that much.
There is a lot to unpack here. The root cause of consumer price inflation is that the ratio of (money consumers want to spend on consumer goods) to (total goods available) goes up.
Yep, in the modern world, increasing money supply is usually the cause. But, decreased supply is possible. Imagine a drought followed by crop failure. Or a war.
I was responding to something that I interpreted as firms not having any agency. They do. US auto dealers in 2021 had fewer cars to sell than they did in 2019. They made more money selling fewer cars. They did it with higher prices, natural profit-maximizing response. Theoretically, they could have managed the reduced supply with waiting lists or lotteries.
I think there have been some actual supply reductions that have impacted US consumers, oil, natural gas, computer chips used in cars. There was also some prior consumer saving, people had money but didnât buy cars or take expensive vacations. So, the timing of the helicopter money hitting consumer spending was unusual.
When I imagine a single dose of helicopter money, with no corresponding increase in production, it seems to me that the extra money all ends up in producers hands, in the US that generally means firms.
By âgeneralized increase in pricesâ, I mean the weighted average across all consumer goods. It (the increase) may be temporary, we hope prices stabilize at some new, higher level.
New car prices are an example of retailers raising prices beyond the increase in their costs.
Canadaâs June 2022 CPI came in today lower than expected. Bank of Canada now predicting 7.2% inflation for the whole of 2022 (but BOC had predicted 1.9% for 2022 in April 2021âŚ..). As in the US, the July numbers should show some easing.
Discounts are a coming. This along with gas dropping, expect a couple months of moderating inflation. I expect July to be relatively level, slightly up or down but close to zero. Then August will be down.
O frabjous day! Only 8% inflation soon.
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Probably take a couple months to get down to 8%, but I could see it down to around, possibly even below 6%. Not going to put money on that. I would put money on it being less than 8% y/y by December.
This could be why people think corporations are greedy.