General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsReal cause of inflation
Has anyone noticed that although there is high inflation, banks are still paying next to nothing in interest? Makes me wonder if the biggest cause of inflation is the Fed printing money so banks can play the stock market, buy back their own stock and hand out huge bonuses.
It also occurs to me that Republicans (and the media) touting inflation has given cover to big companies to raise their prices and rake in record profits. Or maybe its a bill in Congress that hasnt even passed I cant tell! Thank you for reading my off the cuff rant!
Sherman A1
(38,958 posts)on the part of the 1%. Milking the pandemic for everything they can get and just a bit more.
uponit7771
(90,371 posts)... short term IMHO.
There are no cars to buy
Used cars are a full THIRD of all inflation, and given the Fed doesn't want zero inflation, but prefers 2.2%, it's actually an even larger amount of what's remaining.
The administration should have acquired a shuttered facility with a white room (I'm sure there's at least a couple), and offered X millions to whichever company would immediately start manufacturing chips. It would have already been over.
lagomorph777
(30,613 posts)It takes billions of dollars in build-to-order equipment, plus tons of extremely specialized workers.
Wish it were easy.
Biden could invoke the Defense Production Act and throw a ton of money at it. You'd be surprised how quickly they could be spitting out chips.
liberal_mama
(1,495 posts)and now there are very few. Fortunately, he's an auto technician so he's been repairing a lot of the existing older cars. It's also challenging to get parts and chips, he said.
ProfessorGAC
(65,382 posts)But, the new money has a very high velocity, so the actual monetary pressure is substantially mitigated.
Also, those companies are doing buy backs with the cash made available by tax reductions. That's part of the money supply that already existed.
As others here have noted, there are long term investments, based on potential parking in the markets. There abundant examples of companies with market caps 3-6 times actual assets and up to 30x revenues. (By contrast, Walmart has a market cap that's 0.6 of revenues & 0.72 of assets.)
The low yield on cash you mentioned is a big reason for that. Banks pay next to nothing & the 30 year treasury notes, yesterday, were showing 2.1% annual.
So, investors are flowing money, including money they already had into the equity markets.
But, not sure that those events have that much leverage on inflation. Some, of course but not huge.
Most experts believe the current inflation situation is transitory. Most reputable economists are expected this to all settle down by Q3.
jimfields33
(16,098 posts)The federal reserve must do so. And from what Ive heard they are not raising interest rates yet.
Tickle
(2,616 posts)WHITT
(2,868 posts)The only manner money can be printed is to first issue the bonds to cover the debt.
The Fed merely creates digital money. It's not inflationary as it doesn't increase the debt, and it's later destroyed, like it never happened.
PoindexterOglethorpe
(25,927 posts)Where is your proof? Also, as has already been pointed out, the Fed isn't printing a lot of excess money. The inflation is because there has been a real rise in a lot of prices.
TheFarseer
(9,328 posts)Ive been undercover with the FBI for 17 years waiting to bust this story wide open on a random message board. OK, I didnt say that part accurately and you busted me- happy? Sorry for any excessive snark!
madinmaryland
(64,934 posts)Response to TheFarseer (Original post)
doc03 This message was self-deleted by its author.
doc03
(35,442 posts)less. But look at credit card interest! I made $32000 on my IRA account last year in Mutual Funds.
inthewind21
(4,616 posts)Are raking in record profits and did all through 2020, 2021 and are set to do the same in 2022. The co I work for included. We are doing record sales and it's looking like we will beat the previous 2. Supply chain issues, Supply chain issues. Is all we heard. We need to raise our prices because of supply issues. Remember all the hair on fire "order early or the kids will have nothing for Christmas because of supply chain issues?" Now, are you hearing all the horror stories about how little Timmy's and Sally's all over the world got nothing for Christmas because of supply chain issues. Yea neither am I. It's all a scam.
SharonAnn
(13,781 posts)We know it's not because they are paying their workers more or providing better benefits.
Tickle
(2,616 posts)that retailers and grocery owners all at the same time decided to raise prices because republicans touted inflation? Ok. Some things I just won't argue about.
The Feds will be raising the rates soon and not just once
TheFarseer
(9,328 posts)Every article says its definitely a thing or probably a thing. No article says its definitely not a thing and not even worth debating.
Emile
(23,151 posts)They did the same thing to Jimmy Carter.
FakeNoose
(32,884 posts)I'm a home owner myself, and I've managed to stay put for the last 25 years. Unless something big happens my mortgage should be paid off in slightly less than 5 years.
BUT ... prices of homes up for sale right now and in the last year would pop your eyes out. I don't get it. I live in Pittsburgh and we don't have a huge influx of people trying to move here. I mean people are coming in, but also people are leaving on a pretty regular basis. Most of the influx/outgo seems to be college students who live here for 4 or 5 years, graduate, and try to find a job. Mostly they give up and leave, however a few do stick around. Eventually they decide to quit renting, I guess.
Suddenly everyone around me wants to buy houses in the city, and they're bidding up prices like you wouldn't believe. My neighbor across the street just sold his house last summer for $50K higher than he bought it for, 5 years ago. I keep getting phone calls and postcards from real estate agents who want to sell my house, and I tell them it's not for sale. Somebody told me that my house is "worth" twice what I paid for it, even though I haven't done any structural improvements. This whole thing scares me a little bit.
My fellow DUers - many of you live in areas that are seeing hot real estate markets, but I assure you Pittsburgh NOT hot! I'm not sure what's driving this, but we all need to step back and take a breath.
TheFarseer
(9,328 posts)They pool all this money that comes from millionaires and billionaires and foreign investors and they buy up whatever residential real estate their algorithm tells them to and then they rent it out, raise the rent as high as possible and let the property dilapidate. They probably dont even pay any taxes because of some off shore tax avoidance scheme. Meanwhile people cant afford to buy a home because they cant complete with their cash offers of whatever it takes to be the highest bidder. Its really quite sickening and no one is even talking about what to do about it.
dwayneb
(773 posts)Can't say that I am an economist that can answer this with any veracity.
Two plausible rationales I heard today for the rise in grocery prices were that people are buying a lot more groceries and eating at home, rather than going out to restaurants. Might be some validity to that. Second factor is not enough truck drivers to distribute goods, as I hear it truck driver rolls were down about 1/3.