Rising inflation ahead?

[Wysiwyg]

Interest rates have been excessively low for years, pumping too much money into the system.
House prices and stock prices are in bubble territory.

Inflation is defined as:

"an increase in the money supply, or a decrease in the good and servives available to be purchased with the money supply"

Lol. Note the date was March 2005 this poster had the markets in bubble territory. I think he started a thread about shorting the AUD too. Probably makes money from trapping people.

Anyway, I was thinking of how inflation exists at the grass roots level. Like why should the cost of goods and services rise? I can only think they increase because people want to increase their profit margin.

 

[oztrades]

If suppliers come and go, so does the price, based on their operating costs.

If I'm making birthday cakes and the government puts on a 10% GST then the price of my cakes have to rise.

If another company monopolises flour I have to pay more for the product.

If because of weather conditions there isn't enough flour I pay more for the product.

If a country populates vigorously then there is a shortage of flour so I pay more.

If I pay more I pass on the increased cost to maintain my operating margins.

Rudimentary economics dear boy.. rudimentry economics...

 

[Wysiwyg]

If suppliers come and go, so does the price, based on their operating costs.

If I'm making birthday cakes and the government puts on a 10% GST then the price of my cakes have to rise.

Ahhh, yes but the business passes their cost onto the consumer who has to pay the 10% tax also.

If another company monopolises flour I have to pay more for the product.

Why is it a given that more has to be paid for flour. The cost of flour only increases if the company selling it increases their price.

If because of weather conditions there isn't enough flour I pay more for the product.

If a country populates vigorously then there is a shortage of flour so I pay more.

Yes I agree with weather influences on crop production but what you mean is demand outstrips supply and there could be many reasons for this. Not profit driven price increases.

If I pay more I pass on the increased cost to maintain my operating margins.

Rudimentary economics dear boy.. rudimentry economics...

Still doesn't address my confusion about profit driven price increases which can easily be dressed up as "operating costs" and "GST".

 

[boofhead]

Yes I agree with weather influences on crop production but what you mean is demand outstrips supply and there could be many reasons for this. Not profit driven price increases.

The demand may not outstrip supply. The companies can often put that perception out there and abuse the widely understood concept. It makes some sense in that from the top down the price increase but sometimes the end retailer may increase the price to get some money in the bank ready for their supplier increasing costs and back up the chain.

I'm sure some love inflation. The numbers of everything look bigger so some think they're doing better. In relation to everything else they may be no better off.

Governments buying votes can have impacts on inflation.

You could also look at inflation as partially the delayed cost of everyone wanting more. Look how many groups have asked for more than inflation rate pay increases. The entity needs to get that money back. Sometimes you can't rely on greater production and need to pass costs on.

 

[Wysiwyg]

Look how many groups have asked for more than inflation rate pay increases. The entity needs to get that money back. Sometimes you can't rely on greater production and need to pass costs on.

Yeah I don't know who does the sums when it comes to claiming a wage increase but it is just ludicrous when in turn the employer charges more for the goods or services to compensate for additional staff costs. I can`t see why wages, goods and services can`t be maintained at a level equal to the real supply and demand situation. Cans of baked beans are not short on supply but the price keeps rising. Then we get back to the business having to pay more for any multitude of excuses. As you say, the consumer is given the mushroom treatment.

 

[Mr J]

Like why should the cost of goods and services rise? I can only think they increase because people want to increase their profit margin.

They couldn't increase it if the money and credit supply wasn't ever-increasing. Also, the issue is value, not price.

 

[Wysiwyg]

They couldn't increase it if the money and credit supply wasn't ever-increasing. Also, the issue is value, not price.

From my understanding, the value of goods or service is designated in currency. Value is perception, price is what you pay or the figure placed on the perceived value.

 

[Wysiwyg]

They couldn't increase it if the money and credit supply wasn't ever-increasing.

That's another one of those riddles. The money supply increases where and with whom and how does someone being in greater or less debt cause the manufacturer of baked beans (for example) to continuously put prices up.

 

[Wysiwyg]

The financial system is built on lies and back scratching. Someone squeezing a greater profit at the consumers expense. Anyone who believes it is a genuinely functioning honest system is disillusioned, just as the power brokers in society aim to do on a daily basis with their spin on why things are the way they are.

They have their minions which follow blindly the gospel of treasury and trot out the excuses and reasoning to the masses who live on an eternal merry-go-round ride.

 

[Mr J]

From my understanding, the value of goods or service is designated in currency. Value is perception, price is what you pay or the figure placed on the perceived value.

Value is perception, but perception may or may not be reality. Mr Gecko says that perception has become reality when he sells a painting for far more than he paid. His perception was reality, because he was able to realise that value. However, if the new owner goes to sell it and can only get half the price, then his perception was not reality, as he was not able to realise the percevied value.

We also have to consider that everything bought is sold, and therefore for every buyer perceiving value, there is a seller with the opposite view (not always, such as in the markets, but let's pretend it is that simple).

The financial system is built on lies and back scratching.

If you can't beat them, join them. Or at least exploit their system.