• BraveSirZaphod@kbin.social
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    10 months ago

    Record profits (and expenses) are exactly what you’d expect given inflation.

    Say you make widgets as a side gig. You spend $500 a month on supplies and manage to get $750 in revenue, yielding $250 in profit each month. Then, the ghost of Zimbabwe president Robert Mugabe is somehow elected to chair the Federal Reserve, and after a year passes, we see 100% inflation, causing your expenses to blow up to $1000 a month. You raise your prices to match, giving you $1500 a month in revenue. You now have record profit of $500 a month! Of course, each dollar is worth half as much as was a year ago, so despite these literal record profits, you’re in the exact same financial situation as before. My general understanding is that supply-side costs have increased quite a lot, which accounts for a lot, but probably not all, of the higher costs for consumer goods. I know people in my family talked about how wood and other home supplies got a lot more expensive, and the owner of a local cafe told me about how he was seeing significantly higher costs for basic things like cups and lids.

    This is not to say that things like greed don’t apply as well, but record profits during inflation aren’t an indicator of this (and it’s not as if greed is a particularly new discovery). To put it another way, record employee wages during inflation also don’t mean very much if the cost of everything else rises to match those gains.

    • asteriskeverything@lemmy.world
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      10 months ago

      Let me put it this way, When there was a shortage on that important computer chip that all cars need now days, cars were more expensive. So dealerships tried to inflate the price even more and push terrible financial choices. One straight up said “we can charge whatever we want” when I pointed out the multi-thousand difference from the same brand new vehicle online.

      I think it is more like what you say is technically true, but human nature and greed leads to it happening to a more artificial degree, and at an accelerated rate. And the thing is, prices don’t really go back down unless it was something where the price fluctuated anyway such as produce and oil.