Republicans and Libertarians don’t believe that taxing corporations is a good social justice move because they don’t believe in taxing corporations or social justice (or more specifically - social services funded by taxes).
12 billion extra dollars in a $12 trillion GDP economy is a rounding error. The government doesn’t actually print more money to increase the money supply.
Also I think the Federal government pretty much always pays its financial obligations. Where it gets “noticed” is that the Federal government issues more debt in the form of Treasury Bonds, Bills, Notes, etc)
One main way the Fed (Federal Reserve System or “central bank” of the USA) increases or decreases the money supply is through setting interest rates. I’m going to greatly simplify everything, but lower interest rates makes it easier to borrow money, buy homes, basically speed up the economy. Increasing interest rates makes it more costly to borrow and tends to slow down the economy.
No one really has to get together to discuss it. That information is conveyed in the market through prices.
The rapid rise in inflation this time as opposed to QE is that during Covid trillions of dollars were sent directly to individuals to spend. In QE, the money goes to the banks to shore up their reserves, and that money may not move. In fact, during QE, every time the quantity of money was goosed it seemed like the velocity fell to keep the overall quantity of money in circulation relatively stable.
The money supply is determined by the quantity of money multiplied by its velocity. So one way to goose the money supply is to lower interest rates to encourage people to borrow and spend. But a more direct way is to just send everyone a check and tell them to go spend.
But that money sent to them didn’t exist before the checks were cut. Anyone who spent that money added to demand for goods and services over and above what there would have been without the money printing. This was almost a textbook case of Milton Friedman’s ‘helicopter drop of money’. That causes inflation.
What also causes inflation is governments borrowing and spending money during a time of low unemployment and constrained supply chains. We are now doing the opposite of Keynesianism. This bids up the prices of construction goods for everyone else - like homebuilders. And since the money is borrowed, all that spending adds to the money supply as well.
And here in Canada, we get a triple whammy from ever-ratcheting carbon taxes that do nothing except distort the economy and raise costs on everyone, rapidly increasing property taxes and fees to pay for bicycle lanes and ‘15 minute city’ nonsense in one of the coldest major cities in the world, and an endless stream of new environmental regulations that make everything more expensive.
Unchecked immigration is also causing ‘demand pull’ inflation. Bringing millions of people into a country with a relatively fixed housing stock will absolutely drive up home prices, or if they can’t afford homes, taxes to help house and care for them. In Canada it’s worse because we are bringing in ten times as many immigrants as a percentage of our population. Trudeau also plans to add 3 million more people in the next five years - 1/10 of our entire population or so. But don’t worry: they’re going to build 40,000 homes for them.
Inflation has many causes. Almost all of them are avoidable.
I seem to remember people on the Dope claiming the same thing back when inflation was under 2%. Nothing new about this.
Don’t forget greed and consumer psychology. If you have inflation at, say, 3%, but the public is convinced inflation is at 10%, you can raise prices over 3% without consumers revolting and build your margins. Which is happening today - look at some statements by CEO during quarterly results reports and you’ll see this, if not put so blatantly.
That’s why we as consumers should revolt and only buy things on sale or the cheapest alternative.
You forgot a possibility - stock repurchase. This is done when the company can’t figure out productive investments to make with the money. It tends to raise share prices, but probably isn’t as good for shareholders as dividend, but it mostly helps the top execs meet their bonus criteria. Since this is often done when the stock price is high (from good profits) odds are the stock will fall and the company will take a loss on stock repurchases.
I read a book on GE recently. Excessive stock repurchases at high prices on not very solid cash flow helped destroy the company.
GE: Yeah, that and incredibly bad management.
Do that, and CEOs will never invest long-term.
CEO performance affects a lot of things, not all of which result in immediate profit. A good CEO can be parachuted into a failing company and enact a turnaround plan that won’t show a profit for years. That doesn’t make him a bad CEO.
There’s no simple metric for what makes a good or bad CEO. Sometimes a great CEO can only stanch the bleeding but is still more valuable than one that lets the compamy go bankrupt.
The people who decide how much a CEO should br paid are people with skin in the game. They are also the people who know the company and what it needs. And CEOs are like sports stars: great ones are in high demand and their price gets bidded up.
Greed has nothing to do with it. People were just as greedy two years ago or five years ago, but they didn’t inflate prices. Prices are emergent and out of the hands of the players in the market. Assuming an efficient market, prices will find their own level based on current circumstances.
What you are seeing is the shift when people decide that inflation isn’t transitory: it starts to feed on itself because sellers bake next year’s inflated inventory coats into today’s prices. And also because they assume that to fix inflation will require higher interest rates, so they hoard cash in preparation for the upcoming liquidity crunch.
Let’s say you bring in an inventory of fasteners. Because of inflation, they went up 5% in cost, so you push that to your customers. But wait: if inflation is permanent, that means your replacement cost will be another 5% higher next year, meaining you’d be selling your product at replacement cost. Therefore, you raise the price by more than 5%. Perhaps not to a full 10%, because your inventory doesn’t take a year to turn over (hopefully), but by some extra amount to account for higher replaepcement cost.
But then you also have to consider that the interest rate on your line of credit is going to go up to beat inflation, raising your inventory costs even more in the future. So you raise prices now, because you don’t want to sell a product and then find out it costs more to restock it than what you sold it for.
That’s why you should ignore central bankers and politicians when they tell you inflation is temporary: They will ALWAYS say that until the truth can’t be ignored, because to say otherwise will actually feed inflation.
As the saying goes, if you know what someone is going to say before they say it, and then they say it, no new information was gained and you can ignore what they said.
There were three- two by trump, one by Biden, so if those payments caused any inflation- doubtful at best- then 2/3 of it is trumps fault.
The total of all three payments was $814B the budget is $6130 billion.
So wrong.
Yes, it is. The Treasury cant just print money. Every dollar comes from taxes or borrowing.
wrong again
There is no such thing. The borders are not open. Immigrants have to follow all the laws, etc.
ding ding ding- three in a row.
In the 2023–2025 Immigration Levels Plan, Canada aims to welcome from 410,000 to 505,000 new permanent residents in 2023, from 430,000 to 542,000 in 2024, and 442,500 to 550,000 in 2025.
Close, looks more like 2,5M, and Canada has nearly 40 M (38.4 or so). But I wont call those numbers wrong, just exaggerations.
What do you mean here the government does not actually print money?
The people on a company’s board of directors are often CEOs of other companies. As a board member, they can increase what they pay to their CEO. They can then go to the board that pays them and ask for a raise to keep pace with the market of what CEOs are being paid.
The US Government has a real budget- yes, it does borrow quite a bit, but it spends what it takes in vai taxes and loans.
It does NOT just run off a few 100 billion in bills when they want to buy something.
Nit: Canada crossed 40M last June.
Sorry, looks Like I had old info. Thanks
Whatr really causes inflation?
According to a piece in the Daily Kos, it’s Bird Poop
Fiat money always has inflation
we tend to mearure it with consumer goods
Let me clarify. Yes, the government physically prints currency (about $2 trillion worth of bills in circulation). But when they want to increase the money supply, they don’t just call the Treasury Dept to throw a lever to crank out more Benjamins.
That makes no sense as I thought that is the point of money printing to increase the money supply? How else can they increase the money supply will out printing more money.
“Printing Money” is not meant to be taken literally. The government needs money, so it offers bonds. Typically, those bonds would be purchased by other people using existing momey, and thr money supply wouldn’t change.
But when the fed wants to goose the money supply, or when there are no buyers for the bonds, the Fed can swoop in and buy them. The fed doesn’t have money, so,it makes a bookkeeping entry in the IOU column and tranfers the money to the feds who then cut cheques and all the rest.
Here is the Fed’s balance sheet. Have a look at what happened starting in 2020:
And here is the M2 money supply:
By the way, that encouragement to run out and borrow and spend when interest rates were super low? Yeah, the Fed wound up holding a whole lot of low interest bonds in a rising interest rate environment. So in 2022 for the first time in history, the Fedral Reserve Bank lost money. A LOT of money. $100 billion, so far, and going mich higher. TANSTAAFL.
Ah, a Gold bug weighs in? No, you can have inflation even with Gold. Look at the prices of items during the California Gold rush- huge inflation.
The gold pans that miners needed cost 20 cents before 1849, but soon were sold for $8 each . The cost of eggs rose from $1.00, to $2.00, to $3.00 per egg.
Gold Standard and Inflation | St. Louis Fed.
In other words, the government was able to expand its supply of paper bills by 60% without changing its reserve of gold. This single act resulted in a significant decline in the purchasing power of paper money and shows how it is possible to generate inflation even under a gold standard .
The other thing that the gold bugs get wrong, is that the USA does not simply print money to spend . Every dollar the Feds spend comes from either taxes or borrowing.
Since inflation in the United States has already gone down significantly, I don’t know what you are talking about. I remember the 1980s, and while the right wing press is braying about permanent high inflation, I think it is beginning to sink in that price increases have moderated. If companies are acting on the premise that prices will increase 8% next year, they should get new economists.
I’m involved with a conference, and we’ve raised our prices not because our expenses have gone up, but because everyone is so we can get away with it.
I don’t know how it is in Canada, but here I’ve been seeing significant price moderation, not in the form of lower base prices but in more and better sales on grocery items.