Inflation

[divs4ever]

It looks like everyone has forgotten about productivity. Most people do, so don't feel bad

There is always going to be increases in some part of a businesses cost base, the business that can counteract increases with other measures such as 'productivity' will be the most successful. These are the companies that investors look for.

The Key to Productivity

Explains how to measure and monitor productivity to improve your workforce.

www.netsuite.com

depends on what YOU call 'productivity ' , i haven't forgotten 'productivity ' as described in the 1980's

but the Keynesians know as much about 'productivity ' as they do about 'truth in advertising ' or real economics ( when their theory became a train-wreck they created MMT to fool some more over-educated clowns .)

so yeah , when i see 'productivity gains ' that DON'T increase product sold or reduce costs , my mind registers 'BUZZWORD ' and moves on

if you think i am being harsh check out how many nations define their GDP

 

[noirua]

Jim Grant on What Inflation Means for Asset Values, Crypto, and Meme Stocks 14 January 2022 Https://youtu.be/9xQ4_xtUtqg​

 

[JohnDe]

depends on what YOU call 'productivity ' , i haven't forgotten 'productivity ' as described in the 1980's

but the Keynesians know as much about 'productivity ' as they do about 'truth in advertising ' or real economics ( when their theory became a train-wreck they created MMT to fool some more over-educated clowns .)

so yeah , when i see 'productivity gains ' that DON'T increase product sold or reduce costs , my mind registers 'BUZZWORD ' and moves on

if you think i am being harsh check out how many nations define their GDP

I supplied an example of productivity.

Productivity is real, it can be achieved in many ways - reducing waste, improving energy efficiency, improved working conditions, and so on.

I'm currently reading Power Play: Tesla, Elon Musk, and the Bet of the Century, there is an example from early 2000 of an electroplating company that due to state labour laws could only operate for 16 hours per day. However, one smart cookie worked out a program that allowed the robotics to operate unattended, start up and at the end of its shift prepare for servicing when staff came in. Affectively improving productivity by a very large amount. I don't have the book in front of me so can't quote his name but he went on to help set up the Tesla plants.

Productivity is real, anyone trying to fake it will be caught out pretty fast.

 

[mullokintyre]

There are many examples of productivity improvements, and they are still happening.
The problem is, the huge increases in red tape, OHS regulations, permits, registrations etc are swamping whatever can be achieved through any productivity gains.
Talk to anyone who runs a business, especially if they have employees as distinct from a sole trader.
When we hade had a business, we used to have these A-frame signs that the staff put out in the street every morning announcing we were open, what specials were on etc..
After few years, the local council inspector came around and told all the businesses in the street that they now had to pay $150 a year to have signs put out.
When I asked what do we get for our 150 per sign , I was told so the council would know how many signs there were in the town.
So I waited six months and sent a letter to the council asking how many there were. The response I got back was that they could only give an estimate, as there some exemptions. Not for profit, community orgs, and not surprisingly, council owned premises were exempt.
So I asked why did they need to know how many signs there where, and how would council services be improved by it?
Would the council be sending someone out every morning to count how many signs there were versus how many had been paid for?
Of course not they said, it would be a waste of council resources.
So what was the point I asked? Lots of waffle , but no real reason.
I could make another 8,000 examples, but you get the drift.
Mick

 

[over9k]

and what if ?
there are artificial constraints on supply ?
and/or limits on prices ?

and NO , i do not expect a pleasant answer to that , but that is where we are likely to be very soon

Supply curve moves further upwards.

 

[JohnDe]

There are many examples of productivity improvements, and they are still happening.
The problem is, the huge increases in red tape, OHS regulations, permits, registrations etc are swamping whatever can be achieved through any productivity gains.
Talk to anyone who runs a business, especially if they have employees as distinct from a sole trader.
When we hade had a business, we used to have these A-frame signs that the staff put out in the street every morning announcing we were open, what specials were on etc..
After few years, the local council inspector came around and told all the businesses in the street that they now had to pay $150 a year to have signs put out.
When I asked what do we get for our 150 per sign , I was told so the council would know how many signs there were in the town.
So I waited six months and sent a letter to the council asking how many there were. The response I got back was that they could only give an estimate, as there some exemptions. Not for profit, community orgs, and not surprisingly, council owned premises were exempt.
So I asked why did they need to know how many signs there where, and how would council services be improved by it?
Would the council be sending someone out every morning to count how many signs there were versus how many had been paid for?
Of course not they said, it would be a waste of council resources.
So what was the point I asked? Lots of waffle , but no real reason.
I could make another 8,000 examples, but you get the drift.
Mick

Sounds like your productivity was low, due to time wasted on thought and discussion with council about a $150 yearly fee. Yes, that contributes to inflation and poor business profits.

Others businesses may have gone through another process and increased productivity, maybe by paying the $150 and then actively chasing work or looking at ways to improve savings in idle work hours and and then used those extra hours to produce or sell.

My council fees went up a few years back, most of the time there is no point trying to argue about it, so I looked at how I could increase income to pay the added council fee.
The first thing I did was to approach all my suppliers and discuss price reductions. Most of the suppliers cooperated, they gave me a % discount on purchases which had the added bonus of increased sales due to some of the discount being passed onto our customers, and my purchases increased. In the end everyone was happy and my productivity and profits were improved.

There is always good and bad examples.

 

[mullokintyre]

Sounds like your productivity was low, due to time wasted on thought and discussion with council about a $150 yearly fee. Yes, that contributes to inflation and poor business profits.

Big call there mate, but I see little point in discussion, its not productive.
Mick

 

[divs4ever]

Supply curve moves further upwards.

not if you apply price caps ,

you will find businesses unwilling to supply/produce at a loss and MIGHT even choose to close or cease making unprofitable products ,

now i can't guarantee price caps will be widespread , but Left-leaning governments and those facing an imminent election , have some history of applying them for political gain

 

[over9k]

not if you apply price caps ,

you will find businesses unwilling to supply/produce at a loss and MIGHT even choose to close or cease making unprofitable products ,

now i can't guarantee price caps will be widespread , but Left-leaning governments and those facing an imminent election , have some history of applying them for political gain

Causing a shortage and only making something like an energy crisis worse.

If you're worried about a full on energy crisis, it's a very real possibility yes.

 

[divs4ever]

Causing a shortage and only making something like an energy crisis worse.

If you're worried about a full on energy crisis, it's a very real possibility yes.

yes i am , i hold several that rely on high energy use ( gold producers , various manufacturers , and some transport related companies )

and to make it worse the crisis is by design , not endemic incompetence , so is this incentive to follow the 'climate change agenda ' or foment a major war , somebody is planning for a BIG win

 

[Smurf1976]

Productivity is real, anyone trying to fake it will be caught out pretty fast.

I think it depends on the situation.

Small business probably true. Either the business is profitable or it's not and if not then it fails fairly quickly.

Big business or government however, and that's my personal background in terms of work, well suffice to say some really odd things do happen and it goes to both extremes. Some brilliance does happen but so does some shockingly bad stuff and it comes down to the reality that large organisations, be they government or listed companies, all too often suffer from internal politics which prevents things happening even when "everyone wins".

 

[moXJO]

Business is screaming out for workers at the moment. You can command a decent wage if you know what you are doing. And price is going up for services.

If they do push immigration. It's going to be an upward push on housing prices and rents again.

 

[Smurf1976]

you will find businesses unwilling to supply/produce at a loss and MIGHT even choose to close or cease making unprofitable products

I don't wish to harp on about one industry, the thread is inflation not energy supply, but if I was to pick an industry where that scenario's most likely then energy would be it.

I say that since there are countless precedents globally for price regulation and I'm also extremely well aware of the politics of the industry in Australia and the cost pressures which exist.

About 40% of all gas and electricity retailers in the UK have failed financially in recent months. They're stuck in a "buy high, sell low" loss making proposition, unable to pass on cost increases to consumers due to a combination of fixed price contracts on the sell side not backed by fixed contracts on the supply side, and government price regulation which has financially blown them up.

There's quite a bit of stuff in the industry at present which is reliant on legacy contracts to be viable. That is, the selling price of gas or electricity is lower than the spot market price of the commodity on the supply side. The only thing that's avoiding a crisis being that there's a contract in place which prevents the fuel supplier passing through the spot price. Trouble is, contracts like that always have an expiry date, you can't forever buy a commodity at a quarter of the prevailing market value that ends at some point.

 

[divs4ever]

and in certain areas rising energy costs is a big component in the current inflation , that energy bottle-neck , may easily become a food supply bottle-neck , and be seen as another sign of inflation

( i see inflation as an erosion of buying/spending power )

 

[over9k]

Yeah, leftists don't understand economics and you'll never be able to convince them that they don't, more news at 11.

 

[frugal.rock]

@mullokintyre
I won't go into it, but I detest LGA'S... corruption left, right and centre.
What the Muppets should have told you about your signs is....
Legal liability.
If Aunty Jack falls over and smashes his dentures out on your sign, Council is liable.
Whether they put the money into actual insurance or not is the question one might be concerned about.
My local council had over $10 million invested in Lehmann etc
They got back around 15 cents in the dollar. I reckon they should all be paraded in the village square so we can pelt them with rotten veggies and a few rocks here and there... ??

 

[over9k]

@mullokintyre
I won't go into it, but I detest LGA'S... corruption left, right and centre.
What the Muppets should have told you about your signs is....
Legal liability.
If Aunty Jack falls over and smashes his dentures out on your sign, Council is liable.
Whether they put the money into actual insurance or not is the question one might be concerned about.
My local council had over $10 million invested in Lehmann etc
They got back around 15 cents in the dollar. I reckon they should all be paraded in the village square so we can pelt them with rotten veggies and a few rocks here and there... ??

I point this kind of stuff out to the leftards with their "democratic socialism" all the time - we currently already run at about 30% "democratic socialism" and just look at the amount of money wasted already.

 

[frugal.rock]

A local takeaway shop has just reopened recently after being closed for around a year or so due to "family reasons".
I happened to wander in there this arvo looking for a quick snack as I was peckish.
I checked the menu, now $12.50 for a burger with the lot. Up 20% from before.
20% seems to be a standard price rise that I have found across other takeaway food outlets also.
Getting unaffordable.

 

[over9k]

A local takeaway shop has just reopened recently after being closed for around a year or so due to "family reasons".
I happened to wander in there this arvo looking for a quick snack as I was peckish.
I checked the menu, now $12.50 for a burger with the lot. Up 20% from before.
20% seems to be a standard price rise that I have found across other takeaway food outlets also.
Getting unaffordable.

Yeah, I saw $2/L fuel the other day too. It's definitely noticeable.

And as I've pointed out, we aren't seeing a commensurate rise in wages. Pump those up and things would inflate even more.

 

[divs4ever]

from previous experience , wages ( rises ) lag inflation

one reason is you need the CPI rises to justify asking for the wage increase , so that makes wages at least six months behind

and most governments find it ' politically necessary ' to to fiddle with the CPI ( allegedly to reduce public panic . and voter alienation )
BUT if the masses have less disposable income .... what do they buy , and what do they resist buying ( at previous rates )