The Stock Market Is Not The Economy Thread II

[Jaybar]

"Fed wants this" and refuses to explain. Why wage growth bad? Inflationary concerns? Keep money in the pockets of executives to trickle down?

[Yabby]

Correct, if wage growth goes up, that means buying power goes up. So people will spend more money and keep inflation raising. Best to keep the massive amount of money in the hands of a few people that won't spend it.

/s

[Spicyryan]

"Fed wants this" and refuses to explain. Why wage growth bad? Inflationary concerns? Keep money in the pockets of executives to trickle down?

Easier to clamp down on the working class than the fact that most inflation is not a result of them trying to survive.

Also:

https://twitter.com/alifarhat79/stat...heHBgQNUw&s=19

[Kaslo]

"Fed wants this" and refuses to explain. Why wage growth bad? Inflationary concerns? Keep money in the pockets of executives to trickle down?

The short answer is wage growth is also costs growth that will be passed on to the consumer, which "in theory" leads to inflation.

[kuronosan]

Prices keep going up anyway, so I'm not sure how that tracks in a practical way.

[Spicyryan]

Prices keep going up anyway, so I'm not sure how that tracks in a practical way.

Corporate greed. They whine loudly when they get fucked. COVID for example. Then they fuck while the fucking is good and make all of it up and more, every, single, time.

[Jaybar]

Corporate greed. They whine loudly when they get fucked. COVID for example. Then they fuck while the fucking is good and make all of it up and more, every, single, time.

Greatest example are gas companies. Prices go up in an elevator but come down on a shallow, almost horizontal, ramp.

[Mayareira]

Economic theory says wage growth has to have a reason behind it to be sustainable. If you simply double the minimum wages tomorrow in a free market economy and keep the task unchanged, costs will go up for all involved which ultimately will cause prices for goods and services to increase, eating away the any purchasing power you got from increased wage.

A sustainable wage growth example would be creating more jobs that require specialization and more people educated to meet that need. Add a zero and make the min. wage 150 tomorrow and that's a nominal wage growth, inflation will follow soonest and you may even witness a negative real wage growth. You are just giving people a paper with an extra zero printed on.

I'd say there are also extra risks of this for small business owners as well. Double the costs of a family business owner in a high interest rate environment that limits their financial options and they'll either have to increase the prices of their services higher than the real cost of increased wages or else face going out of business.

Usually the larger corporations with wider financing options benefit from high inflation the most. With a good CFO skies could be the limit for corporate profits.

Long story short when you decouple productivity from wage growth there is a problem.

[Spicyryan]

Long story short when you decouple productivity from wage growth there is a problem.

Agreed.

[zoobernut]

Greatest example are gas companies. Prices go up in an elevator but come down on a shallow, almost horizontal, ramp.

Prices go up 10x during a natural disaster because production goes down, prices drop slowly but bottom out still at 1.5x the original price which then becomes the new normal. Rinse and repeat each time something in the world happens they can blame for rising gas prices. The result is the price ratchets up slowly forever.

[kuronosan]

Yes, so don't grow wages otherwise they'll have to raise prices to prevent inflation.

[zoobernut]

Or we can realize that given absolute freedom humans are greedy fucks and corporations being run by greedy fucks behave like greedy fucks. Cap profits and compensation for businesses that are publicly traded or over a certain size and that would stop inflation even if us plebes have more buying power.

Prices don't need to go up just because regular people have more buying power. That is just an excuse.

[kuronosan]

Yes. Exactly.

[Mrbeansman]

Or we can realize that given absolute freedom humans are greedy fucks and corporations being run by greedy fucks behave like greedy fucks. Cap profits and compensation for businesses that are publicly traded or over a certain size and that would stop inflation even if us plebes have more buying power.

Prices don't need to go up just because regular people have more buying power. That is just an excuse.

A man can dream a man can dream.

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[Mrbeansman]

https://twitter.com/MorePerfectUS/st...Z5dxV6U3A&s=19

What's that people do want to work just not for slave wages in the service industry?

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[Spicyryan]

Slave wages in the hospitality industry?! Sounds like a job for removing private property from the hands of those exploiting their workers to the point it is called "slave wages."
Thus placing the decision of distribution of income, reinvesting into the business, etc into the hands of those actually creating the profit. You know, basically democratize the workplace if you want people to work for those wages. If they are truly justified, which they obviously aren't.

[Spicyryan]

Ouch.

https://twitter.com/arpitrage/status...11025605746688

[Mayareira]

Or we can realize that given absolute freedom humans are greedy fucks and corporations being run by greedy fucks behave like greedy fucks. Cap profits and compensation for businesses that are publicly traded or over a certain size and that would stop inflation even if us plebes have more buying power.

Prices don't need to go up just because regular people have more buying power. That is just an excuse.

This is a problem with the inflation. Its easily exploitable.

After a while with price hikes people become less aware and worse, less sensitive to the fair price trends (with everything increasing how are you going to follow each of them, really) and businesses end up exploiting this to the end. They simply don't stop with the cost impact to them and the consumers receive whatever they are given by a "well, fuck inflation."

Their limit becomes basically "the maximum point they can raise up to."

Other than price caps through direct govt. intervention (which has other problems) the most effective way fighting this is for the consumers become more vigilant, and be very switft at pulling their business from those that take it too far. If the inflation is 10% and all the menu prices at a restaurant had increased 50% you should approach this business with suspicion.

[kuronosan]

Well, look at gas. Already back up to about $1.20 more than it fell to over the past 6 months, but not as much outcry.

It's the gradual approach that does it, and they know what they're doing. Milk and eggs are the outcry right now and in the meantime the reality will hit a lot of people in June when payments resume and loan forgiveness is forgotten about.

[Qalbert]

https://twitter.com/timjhogan/status...59261193474050