Where will inflation stop?

In reply to GameboyRMH :

Notice they did the graph in percentage change instead of raw numbers. If they use the delta of margins they can frame it as massively inflated and it will make people believe the narrative they want to. Even if the real story is a company went from unsustainable profit margins to slight less unsustainable profit margins.

I ran a business in what is normally considered a low margin industry and even as a high performer most of the deltas in that graph would have ended up actually being just a few percentage points to the net income. I can tell you at 3% it wouldnt have been worth being in business.

I agree we do have a monopoly problem in this country, but the fault lies with your politicians for not actually acting on our decent anti trust laws, instead they support these monopolies.

I find it funny that your source about evil capitalist profits, comes from a company owned by the Chairman of the largest conglomerate in Thailand and one of the richest families in Asia.

What im saying is be mad at your government for not protecting the market and competition, and ruining the economy and currency by trying to control it. Companies are supposed to be profit seeking. Dont get mad at companies for doing what they are supposed to (especially when you facts are E36 M3), instead be mad at your government for doing the opposite of what they are supposed to.

Youve got arsonists grandstanding about how its the trees fault they are so flammable.

In reply to Boost_Crazy :

You are right.  We are guilty of doing it to ourselves.
      We buy our stuff at Walmart because it's cheap.  And as a result factories go overseas and the people who used  to make a decent middle class income at that factory  now are making barely above minimum wages working as a cashier for Walmart. 
        America no longer build cars, just trucks or SUV's  that require a 6+ year loan to make the payments affordable.

  The average new vehicle price today is almost $45,000  with good credit you might get a 8% interest loan. 
      The trades provide an income close to what a dentist or middle manager earns  except periodically the trades just stop because of interest rates, prices, or lack of demand.   
 Commercial construction?   Well not much since the pandemic.
   Oh and even Walmart is losing out to Amazon because it's easier  to purchase on line than drive to a store etc.  but hey!  You can use your car to deliver food to those who can afford it, or take people in your car  where they want to go?  You do have a nice car don't you?  
      Our kids are drowning in student loan debt and cannot afford to buy a home.  Thus are stuck renting and the rents are going up.  
  Oh, I just heard that the average American will now have 6-8 different careers in his lifetime.  So forget job security. 

Most of those problems you mentioned have something in common.

In reply to Opti :

It's so easy to blame the politicians. But we did it ourselves to ourselves.   Politicians need money to campaign. So they take it from those who have it to give.  The wealthy.  All they ask is for the politician to let the businessmen write the tax laws. Then vote how they are told.  
    You want politicians to write laws that benefit the average American?   Then make it illegal to accept bribes.  ( oops I meant to say campaign contributions).  
    The only reason  there is so much political advertisement and campaigns last forever, is because the politicians  get more money that way. 
      Give both parties or any serious candidate a fixed amount to run for office. Say $500,000 for President, $100,000 for senate $50,000 congress.   Anybody spends more than that they are disqualified.  No outside interference.  Restricted commercials 

1 week to get the campaign message out. 
   The best one will  win.  
 

frenchyd said:

You are right.  We are guilty of doing it to ourselves.
      We buy our stuff at Walmart because it's cheap.  And as a result factories go overseas and the people who used  to make a decent middle class income at that factory  now are making barely above minimum wages working as a cashier for Walmart. 

 

Sorry to disappoint you, but I have never been in a WalMart in my life  

 

        America no longer build cars, just trucks or SUV's  that require a 6+ year loan to make the payments affordable.

A new Chevy Trax can be bought for under $21k

  The average new vehicle price today is almost $45,000  with good credit you might get a 8% interest loan. 
 

See above, that Trax will get you to the same places as the $45k vehicle, don't blame others for bad choices  

 

      The trades provide an income close to what a dentist or middle manager earns  except periodically the trades just stop because of interest rates, prices, or lack of demand.   
 Commercial construction?   Well not much since the pandemic.

Yet residential construction has been on fire, jobs are there  

   Oh and even Walmart is losing out to Amazon because it's easier  to purchase on line than drive to a store etc.  but hey!  You can use your car to deliver food to those who can afford it, or take people in your car  where they want to go?  You do have a nice car don't you?  
 

Someone forcing you to take a gig job? Plenty of real jobs looking for help, again, choices  

      Our kids are drowning in student loan debt and cannot afford to buy a home.  Thus are stuck renting and the rents are going up.  
 

I know plenty of people with no student debt, and plenty that have bought houses in their early 20s, because they made the right choices  

 

  Oh, I just heard that the average American will now have 6-8 different careers in his lifetime.  So forget job security. 

That's because many are looking for the next thing vs sticking with something, because the next thing will "make everything better" Rinse & Repeat. 
 

You can make plenty of excuses of why it's not working out for whatever reason. While you're doing that, others are making it happen. Don't hate them for not making excuses. 

In reply to frenchyd :

I mostly agree with your point, even though I think its a bit narrow view. People should be mad at politicians.

We have the government and Fed lighting the economy and currency on fire, and telling people everything being expensive is the evil corporations fault. People believe them and want to give the people who really caused the problem even more power. Unless people start blaming politicians and holding them accountable nothing will change. The problems will just get bigger.

As far as doing it to ourselves, I didnt print massive amounts of money, I didnt drop interest rates to nothing, I didnt deficit spend for decades, I didnt create government sanctioned monopolies by telling all the small businesses they had to shut down and only walmart could be open, and I didnt pump huge amounts of money into the economy. Politicians did that.

tester (Forum Supporter) said:

Anything less than a 10% profit margin is asking for bankruptcy in pretty much any  industry.
 

Lack of retained earnings in the business is a recipe for disaster if anything goes wrong. That is how the little guy gets cut out of a job. But hell, let's keep demonizing capitalism.

I'm not demonizing capitalism. When it works, it's great. I'd argue that it's functional capitalism that's keeping margins low in many industries thanks to plenty of healthy competition. This should lead to gains in efficiency from businesses and lower prices for consumers. Those that don't innovate cannot survive. Bankruptcy/failure of business is a healthy and necessary part of capitalism. Not everybody is entitled to make tons of money. Lots of people and businesses barely make enough to survive. Some don't make any money at all.

Grocery stores aren't all on the brink of bankruptcy because of low profit margin. They've had low margin for decades, but people gotta eat, so the cash flow is pretty strong. They're not the only such industry.

Typical profit margin varies a ton by industry. You might be surprised by the number of industries that survive with Net profit margins below your 10% watermark.

Additional source for typical net profit by industry

Additional source for typical net profit by industry

A general theme that I see is that outside of tech and banking/finance/investing most industries are below your 10% net margin target.

In reply to STM317 :

Both of yall are correct. Many industries are below 10 percent net profit, but in those industries you see very common failures of the smaller businesses. It's why you saw massive devastation of the restraunt industry, a notoriously low margin business, during covid. Low single digit margins aren't as terrible if you are huge or have some monopolistic control of the industry, but they aren't places the little guy thrives regularly. Low margin industries almost require economies of scale to survive

Opti said:

In reply to frenchyd :

I mostly agree with your point, even though I think its a bit narrow view. People should be mad at politicians.

We have the government and Fed lighting the economy and currency on fire, and telling people everything being expensive is the evil corporations fault. People believe them and want to give the people who really caused the problem even more power. Unless people start blaming politicians and holding them accountable nothing will change. The problems will just get bigger.

As far as doing it to ourselves, I didnt print massive amounts of money, I didnt drop interest rates to nothing, I didnt deficit spend for decades, I didnt create government sanctioned monopolies by telling all the small businesses they had to shut down and only walmart could be open, and I didnt pump huge amounts of money into the economy. Politicians did that.

Oh,  I agree that we should be mad at politicians. Instead of talking about real solutions or real problems.  They are talking their parties talking points. Designed to divide people not inform them. 
       If you and I have a disagreement about how to solve a problem. I'm sure we could face to face discuss it and find a workable solution.  We may settle it by trading "votes". I give you support and in exchange you support my critical issue.  

In reply to frenchyd :

I agree with you. Much of my friend group has wildly different political views than I do. What I've found is when we talk about it we easily find common ground.

We have more in common than the division sown by politicians would have people believe, but when they sow division and point the finger at things along the political divide, the politicians are able to obfuscate who's actually at fault for things like this. For many of these really big problems like inflation, It's largely the government and the politicians

In reply to Opti :

The only thing then is to vote the party out.  If you traditionally vote along party lines you are staying bound into the party game.  Those politicians need the party to bundle their contributions.  So when the party says vote this way.  They have to fall in line or risk being challenged in the primaries by a better funded  candidate.  
    
    The problem really isn't the politicians it's the parties.  Both parties.   A third party may present better solutions but they simply aren't viable without  the party machinery.  
    Right now both parties have a few stand out politicians.  Willing to do what they think is right. Even  Vote against the parties wishes.  They need to be rewarded. Except usually they aren't on your  states ballot. 

Opti said:

In reply to frenchyd :

I mostly agree with your point, even though I think its a bit narrow view. People should be mad at politicians.

We have the government and Fed lighting the economy and currency on fire, and telling people everything being expensive is the evil corporations fault. People believe them and want to give the people who really caused the problem even more power. Unless people start blaming politicians and holding them accountable nothing will change. The problems will just get bigger.

As far as doing it to ourselves, I didnt print massive amounts of money, I didnt drop interest rates to nothing, I didnt deficit spend for decades, I didnt create government sanctioned monopolies by telling all the small businesses they had to shut down and only walmart could be open, and I didnt pump huge amounts of money into the economy. Politicians did that.

Nobody should believe that everything is expensive due to corporate greed because some governments are saying it, they should believe it because of evidence they can independently verify. Corporate profit margins, especially in the fossil fuel and food industries, have been growing at a pace greatly exceeding inflation since the mid-pandemic, and in the case of fossil fuels especially since the start of the Ukraine invasion. That's a smoking gun that's pretty hard to ignore. You can see where the money is going. With those two products being essential inputs for most other economic activity, they're going to have huge knock-on effects. Governments' financial choices definitely contributed to the problem but the most prominent, easily reversible, and frankly silly cause right now is corporate greed.

In reply to frenchyd :

In a country this big parties give individuals far reaching platforms, access to campaign money, and a network of organizers. That's part of how we've been stuck with a 2 party system.

However, as we've seen a party can change because of particular candidates which goes to show it's just as important to vote in the primaries.

In reply to GameboyRMH :

Your chart and article was already shot to pieces. It didn't show what you thought it did, but you are going to stick to the corporate greed shtick?

Even if you are correct. How is corporate, institutions made to be profit seeking, greed easily reversible, without giving additional power to the other group, that even you admitted are at least partly responsible for this,?

If you worry about yourself vs trying to find someone to blame, politics don't really matter. Lot's of successful people on this board have been successful through 5 Presidents or more, and multiple changes in the government. Multiple people on this board have been "victims" through 5 Presidents or more, and multiple changes in the government. Maybe look in the mirror first.

Opti said:

In reply to GameboyRMH :

Your chart and article was already shot to pieces. It didn't show what you thought it did, but you are going to stick to the corporate greed shtick?

Even if you are correct. How is corporate, institutions made to be profit seeking, greed easily reversible, without giving additional power to the other group, that even you admitted are at least partly responsible for this,?

I don't see how the chart and article were shot to pieces. Are the profit changes not real? Or are companies simply entitled to profiteer off of pandemics and wars after difficult years?

Reversing corporate greed would involve giving more power to governments, but governments are at least accountable to voters. Companies are accountable to nobody but owners/shareholders. We can't vote for those executives to stop profiteering. We could try boycotting some companies, good luck doing that with food and fossil fuel oligopolies though...

GameboyRMH said:

Opti said:

In reply to GameboyRMH :

Your chart and article was already shot to pieces. It didn't show what you thought it did, but you are going to stick to the corporate greed shtick?

Even if you are correct. How is corporate, institutions made to be profit seeking, greed easily reversible, without giving additional power to the other group, that even you admitted are at least partly responsible for this,?

I don't see how the chart and article were shot to pieces. Are the profit changes not real? Or are companies simply entitled to profiteer off of pandemics and wars after difficult years?

Reversing corporate greed would involve giving more power to governments, but governments are at least accountable to voters. Companies are accountable to nobody but owners/shareholders. We can't vote for those executives to stop profiteering. We could try boycotting some companies, good luck doing that with food and fossil fuel oligopolies though...

It's cute you still think that. 

bobzilla said:

GameboyRMH said:

I don't see how the chart and article were shot to pieces. Are the profit changes not real? Or are companies simply entitled to profiteer off of pandemics and wars after difficult years?

Reversing corporate greed would involve giving more power to governments, but governments are at least accountable to voters. Companies are accountable to nobody but owners/shareholders. We can't vote for those executives to stop profiteering. We could try boycotting some companies, good luck doing that with food and fossil fuel oligopolies though...

It's cute you still think that. 

They're often not as accountable as we'd like, but it happens all the time, I can think of two prominent examples from different democracies over the last few days where widely unpopular decisions were reversed. There are few things more widely unpopular in the world than high gas prices, and that has had precisely zero effect on fossil fuel industry profiteering.

GameboyRMH said:

Opti said:

In reply to GameboyRMH :

Your chart and article was already shot to pieces. It didn't show what you thought it did, but you are going to stick to the corporate greed shtick?

I don't see how the chart and article were shot to pieces. Are the profit changes not real?

They are probably real.

They are, however, presented so as to generate maximum outrage, not an accurate picture.  Apparently they succeeded in that goal.

A change in profit margin from 1% to 4% isn't radical, or particularly troubling.

But a chart with a long line that says PROFITS UP 300%! really gets the plebs in a froth, doesn't it?  Even though it is technically the very same data.

THAT is why your article and chart - and credibility - have been shot to pieces.

j_tso said:

In reply to frenchyd :

In a country this big parties give individuals far reaching platforms, access to campaign money, and a network of organizers. That's part of how we've been stuck with a 2 party system.

However, as we've seen a party can change because of particular candidates which goes to show it's just as important to vote in the primaries.

Oh I agree that voting is very important.  Every chance I get.  I hope everyone does,  even those who's goals are directly opposing mine.  ( that's me acknowledging I'm not always right)
   I'm not party loyal because I understand that the party's only loyalty is to the party.  But if you listen really listen to the candidate especially the new candidate you'll hear who they are.  Then it's up to you to figure out if that's what you really want.   Don't assume that just because he talks the party line and you agree with the party line. You agree with him. Power really does change people. Usually for the worse.  
   The old party line hacks aren't going to step outside the party line.   

Duke said:

GameboyRMH said:

I don't see how the chart and article were shot to pieces. Are the profit changes not real?

They are probably real.

They are, however, presented so as to generate maximum outrage, not an accurate picture.  Apparently they succeeded in that goal.

A change in profit margin from 1% to 4% isn't radical, or particularly troubling.

But a chart with a long line that says PROFITS UP 300%! really gets the plebs in a froth, doesn't it?  Even though it is technically the very same data.

THAT is why your article and chart - and credibility - have been shot to pieces.

 

A change in profit margin from 1 to 4% is radical and should be troubling, if a previously financially healthy and sustainable industry is quadroupling its profit margin - and in this case, curiously in concert with its few competitors.

In reply to GameboyRMH :

Do you understand that most metro area's only have one major food supplier?  
( the warehouse where grocers come from )
   It matters little who is selling a can of beans if they all buy that can from the same place. 
     With transportation costs what they are,  shipping from out of town puts the grocery stores at a cost disadvantage that to local sourced items.  
      Oh various stores will periodically have loss leaders to draw customers but typically those loss leaders are offset by higher prices on supporting items. 
   Turkey at Thanksgiving will have higher cranberry,  potatoes, or something. 

In reply to GameboyRMH :

Troubling to you, maybe. But you have repeatedly demonstrated your opinion that profit of almost any kind is unreasonable.  Please also note that it was shown above that the 300% was arrived at by cherry-picking 2 specific years - again, for maximum outrage.

I forget - are you also the person who believes artists shouldn't be able to copyright their material, and should only get paid for the physical media?  My apologies if I am confusing you with someone else on that point.

In reply to GameboyRMH :

Nobody should believe that everything is expensive due to corporate greed because some governments are saying it, they should believe it because of evidence they can independently verify. Corporate profit margins, especially in the fossil fuel and food industries, have been growing at a pace greatly exceeding inflation since the mid-pandemic, and in the case of fossil fuels especially since the start of the Ukraine invasion. That's a smoking gun that's pretty hard to ignore. You can see where the money is going. With those two products being essential inputs for most other economic activity, they're going to have huge knock-on effects. Governments' financial choices definitely contributed to the problem but the most prominent, easily reversible, and frankly silly cause right now is corporate greed.
 

I think you are misunderstanding cause and effect.

Corporate profits margins are exceeding inflation. Okay. But then you jump to it must be greed. Back up a minute. What is inflation? 
 

A general increase in prices and fall in the purchasing value of money.

There are many factors that drive inflation.  Monetary policy, scarcity, demand, and yes, increase in profitability- greed, among others. All of these manifest themselves with the same end result- higher prices. So to use that end result- higher prices- as evidence of the cause is false logic. That some industries are have higher rates of inflation during an inflationary period is a must. Without that, we wouldn't have rising inflation in the first place. The very definition of inflation is the increase in prices. To have an increase in the rate of inflation, someone needs to increase prices at a greater rate. Since some industries have more impact on products used by a broad section of the economy- energy and food like you mentioned- they tend to drive inflation. It's also not a coincidence that those same industries operate at the lower end of the profit margin spectrum. They have to raise their prices, as they can't absorb rising costs as easily as other industries. So since the very mechanism of inflation usually results in those industries driving inflation, it's way overly simplistic to just call it greed. 

In reply to GameboyRMH :

A change in profit margin from 1 to 4% is radical and should be troubling, if a previously financially healthy and sustainable industry is quadroupling its profit margin - and in this case, curiously in concert with its few competitors.

The problem is that you took a short term trend rather than a long term snap shot, which purposely compared the highest and lowest years, ignoring the other data that would have changed your result. And you didn't just clip the ends to make it look better, you clipped out the middle of your sample! I also don't see equal concern over when the same companies lost money. If they are in concert with their competitors, they sure are doing a bad job at it. It's really weird how with that kind of control they can get greedy in some years and rule the market, while losing money in other years.