So: inflation is = printing more money (larger money supply)
Price increases are just that. The CONSUMER PRICE INDEX is just that, not an indicator of "inflation"
Inflation is: "There was 120 USD in the world last year, this year there is 200 USD because the Fed printing more because the US Gov needed a bailout?"
"There is more money in the money supply and we want it!"
I don't agree entirely with this. It implies that the businesses are actually aware of an increased supply. They are blindsided by the devaluation that actually occurred many months before.
If there is an immediate response in the form of increased prices, it is most likely due to a change in the supply-demand ratio of a product and not due to inflation.
If you have not, please read my other posts on inflation.
If you disagree with any of my statements, please state your arguments. Argument is the best way for both of us to learn.
My internet company sent me a letter saying they were increasing the prices due to inflation rates increasing. Citing the CPI. So in reality their argument was: we are putting our prices up because this basket of consumer goods has gone up in price. I don't see how one has to do with the other!
Realize that companies are often terrified of raising prices. Although we interpret it as simple greed, part of their greed is also the fear of losing customers to their competition.
All companies want to raise their prices. They are pressured to in many ways. If they could increase their profit margin, they could expand their reach, but expanding fosters more liabilities. This desire for greater profit and for expansion is balanced by the fear of overstepping their value in the minds of their customers.
I frequent a restaurant with unbelievably low prices. As a result of their low prices, they pay their employees poorly and they can't keep their employees. If they raise their prices to the point to better pay and keep their employees, I will not be able to afford their meals. Nor will many other customers.
And the price of all their ingredients, the price of their insurance, the price of their rent, the price of their paper cups, napkins, straws, tray liners, toilet tissue, etc., continue to squeeze their profit margin. They're trapped.
And I'm expected to clean my own table. However, the discount coupons give me prices of three years ago because they allow everyone to use them past their expiration date. They realize that without them, their veteran customers would go away. [This is a shop of a large, nationally franchised company that you would recognize if I divulged its name.]
This is unfortunate however people and companies as a whole do not think about their businesses from an innovation standpoint. The internet company I am with has merged with another, to survive I assume. But like resturants, internet companies face fierce competition who aren't, at most, minutely different in their products and services. So I do understand their concerns however they should probably ask themselves "what makes me expontentially better than my competitors" if they can't answer that question then they cannot expect profits and should probably look to get into another business practice. So I do pity companies who face these harsh margins but it is in their hands to change that.
So: inflation is = printing more money (larger money supply)
Price increases are just that. The CONSUMER PRICE INDEX is just that, not an indicator of "inflation"
Inflation is: "There was 120 USD in the world last year, this year there is 200 USD because the Fed printing more because the US Gov needed a bailout?"
Yes
So when businesses say : "due to inflationary pressures, (LOL) we will be increasing our prices to match the increased devaluation of our currency. "
In reality they are saying : "There is more money in the money supply and we want it!"
"There is more money in the money supply and we want it!"
I don't agree entirely with this. It implies that the businesses are actually aware of an increased supply. They are blindsided by the devaluation that actually occurred many months before.
If there is an immediate response in the form of increased prices, it is most likely due to a change in the supply-demand ratio of a product and not due to inflation.
If you have not, please read my other posts on inflation.
If you disagree with any of my statements, please state your arguments. Argument is the best way for both of us to learn.
My internet company sent me a letter saying they were increasing the prices due to inflation rates increasing. Citing the CPI. So in reality their argument was: we are putting our prices up because this basket of consumer goods has gone up in price. I don't see how one has to do with the other!
They might not.
Realize that companies are often terrified of raising prices. Although we interpret it as simple greed, part of their greed is also the fear of losing customers to their competition.
All companies want to raise their prices. They are pressured to in many ways. If they could increase their profit margin, they could expand their reach, but expanding fosters more liabilities. This desire for greater profit and for expansion is balanced by the fear of overstepping their value in the minds of their customers.
I frequent a restaurant with unbelievably low prices. As a result of their low prices, they pay their employees poorly and they can't keep their employees. If they raise their prices to the point to better pay and keep their employees, I will not be able to afford their meals. Nor will many other customers.
And the price of all their ingredients, the price of their insurance, the price of their rent, the price of their paper cups, napkins, straws, tray liners, toilet tissue, etc., continue to squeeze their profit margin. They're trapped.
And I'm expected to clean my own table. However, the discount coupons give me prices of three years ago because they allow everyone to use them past their expiration date. They realize that without them, their veteran customers would go away. [This is a shop of a large, nationally franchised company that you would recognize if I divulged its name.]
This is unfortunate however people and companies as a whole do not think about their businesses from an innovation standpoint. The internet company I am with has merged with another, to survive I assume. But like resturants, internet companies face fierce competition who aren't, at most, minutely different in their products and services. So I do understand their concerns however they should probably ask themselves "what makes me expontentially better than my competitors" if they can't answer that question then they cannot expect profits and should probably look to get into another business practice. So I do pity companies who face these harsh margins but it is in their hands to change that.