Wolff Responds: The Real Drivers of Inflation

In this Wolff Responds, Prof. Wolff explains who is really driving inflation today, and reveals the truth behind supply chain issues.
Wolff Responds is a‪@democracyatwrk‬ production. We provide these videos free of ads. Please consider supporting our work. Visit our website democracyatwork.info/donate or join our growing Patreon community and support Global Capitalism Live Economic Update with Richard D. Wolff at / gcleu .
____________________________________________________________________________
Check out the NEW 2021 Hardcover edition of “Understanding Marxism,” with a new, lengthy introduction by Richard Wolff! Go to: www.lulu.com/en/us/shop/richa...
“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”
Check out all of d@w’s books: "The Sickness is the System," "Understanding Socialism," by Richard D. Wolff, and “Stuck Nation” by Bob Hennelly at www.lulu.com/spotlight/democra...
____________________________________________________________________________
Follow Wolff ONLINE:
Patreon: / gcleu
Web: www.rdwolff.com
Twitter: / profwolff
Facebook: / economicupdate
/ richarddwolff
/ democracyatwrk
Subscribe to the EU podcast: economicupdate.libsyn.com
Shop for EU merchandise: democracy-at-work-shop.myshop...

[@jazzlives]

You're a siren song of clarity in American life, Dr. Wolff. Best wishes for a speedy recovery on the skin problem of late.

[@icemike1]

I've never seen prices lowered once up it keeps going up

[@gabers]

I didn't think of inflation in these terms, more through the misleading framing in the media. I have just joined your Patreon 👍🏿

[@don66hotrod94]

Speaking as a farmer, fertilizer is up 100% from last year. Can't blame that on wages.

[@WhyteHorse2023]

Only if you buy from the monopolies like Scotts. Inputs to production actually went down. I buy potting soil from non-Scotts sources and it's half price.

[@waitingforparts57]

Have not heard inflation explained in this manner, ever.. And I was around back in the seventies. I became a fan of Dr Wolfe during the pandemic and now share these videos to get others I know something to think about. Thank you for able to learn so much after all these years of hearing one side only. Stay safe

[@The_Angry_BeEconomist]

Wolff defines inflation as a general increase in prices, and then focuses only on prices which corporations control. He ignores the prices of shares on the stock market and real estate for example, where this type of price setting does not exist

[@Khuno2]

@@muuhpropertyyy2465 This has been proven wrong so many times by hard economic data from economies around the world (e.g., Japan from '95-2013) that it's scarcely worth responding to. National debt is not a significant driver of inflation, especially for the U.S., which controls the world's reserve currency. Good day

[@benangel3268]

@@muuhpropertyyy2465 During the 70s inflation was blamed on wage increases. Even though a 10% wage increase should not lead to a 10% price increase. When taking all costs into account The massive debt is partly because of idiotic war expenditure, partly huge tax breaks and evasions by the billionaires, partly because the billionaires loan this money back to the government with interest, partly because privatization actually costs more in the long term because of the profit motive, partly because this profit motive can lead to false economic benefits which cost more in the long term. You are correct in saying that the FED has to keep printing money to prevent the system from crashing. However, why has this huge debt not caused the same rate of inflation previously?

[@ExPwner]

@@benangel3268 utter nonsense. Profits do not cause inflation.

[@benangel3268]

@@ExPwner If a corporation has a 10% profit margin that must be reflected in the price. If the capitalist wants to increase his profit margin to 20% that must inflate the price. Why is that utter nonsense?

[@john2011m]

I'm very suprised these videos do not get more views. Only 12 thousand views Should be millions of views.

[@Istvan-zf1iw]

Ah.....Prof Wolff..the hat really suits you..wel done!

[@antennawilde]

He stitched it together with his tattered golfing pants from the 70s

[@animalspirits5141]

Yes, that HAT! Nice, sharp....

[@Dorina55]

Hahaha!!!

[@leonardmccannon3136]

I thought that was my caddy...

[@nokukhanyamthuli9398]

Heartbreaking truth

[@C3yl0]

Yes! Thank you for finally addressing this issue.

[@stuckinthemud4352]

Simple math is all it takes to disprove this guy. Seriously are you a real person or a fake account? Every developed country in the world shut down there factories and then printed money to pay people to not work. Litterally simple mathematics says this will cause major inflation. Did you know if you make more slices of the same pie the slices get smaller wow that was hard.

[@stephendavis5530]

@@stuckinthemud4352 Except few if any people were paid not to work in the US, were they? The European and UK rates of inflation are 4.4% and 4.1%. Though higher than they were, these rates are hardly massive.

[@stuckinthemud4352]

@@stephendavis5530a simple Google search will prove your 100% wrong. let me get this straight your watching richard wolf discuss inflation and u dont know that millions of people were on unemployment millions of people got numerous stumulus checks millions of business got paycheck protection grants? All while producing nothing? Dont you think richard should mention this? Its not rocket science if u print money to pay people to do nothing it causes the value of the dollar to go down. Its really just basic math.

[@stephendavis5530]

@@stuckinthemud4352 We seem to have forgotten about working remotely from home and the Vast profits Agencies like Amazon were making. China is still producing. Things didn't come to a dead stop during the pandemic as you seem to believe.

[@newcastle5204]

Thank you Prof Wolff

[@jean-pierredevent970]

We always have to bite the sour apple while the producers say " we are so sorry but because of the risen costs (for transport, energy etc) , we have no other option then to pass this to the consumer" and people just can't live without food or energy. It's not clear if this means that in our system, almost whatever happens, the holy shareholders must be protected as long as possible to keep the same return. Normally, the risk should of course be spread fairly but who checks that?

[@WhyteHorse2023]

Just stop buying their crap. Heck, go straight to the farmers if Walmart is going to shit all over you.

[@NotKnafo]

so my theory about inflation was right good to know

[@barbginther2171]

Just discovered you ! Yep, yep, yep! Love Prof. Wolff !

[@username19237]

Great video as always! So important to realize that through all the factors and conditions, “inflation” is a deliberate choice made by a specific class of people. Not some consequence that is bestowed upon the economy from the heavens.

[@nigelgregory99]

Working class are asleep. Good video. Thanks a lot for your efforts.

[@anhedonic-voting]

Thank you🌎✊️🌹🗽

[@Corgis47]

Love you Richard , thank you for what you do it's sacred

[@Will-di4jd]

Thank you Mr wolff!

[@vianniello93]

Wolff, Reich, and Sanders give me some hope

[@TheMDM1956]

I have not had a salary increase, even de minimum 3%, in two years! Sad.

[@sch4891]

the economist michale hudson said that inflation right now is caused by monopoly prices, supply chain problems, and rising wages due to rising strikes. money printing is only a small part of it since most of it went into bailing out corporations again and money in circulation is what causes inflation but that bailout money just increased the savings glut of the 1%. now we'll have sanctions backfire that will make prices go up to.

[@klangklang5249]

Excellent video, as usual. On an unrelated note, I'm digging the hat. It suits you.

[@BBBarua]

"Don't go out. Don't spend. Don't fall for promotions!" Unless you want to complain and work for someone else for the rest of your life.

[@BBBarua]

@潘poon Absolutely! I agree with you on that. I am not trying to change anyone's mind. At least I am happy to express my opinions. I am on some org's platform and they can turn it off and on as they pleased. I understand, I have no control over that.

[@Virtuoso191]

Prof. Wolf I'm hearing that in the state of New York, remote working is ending because of the commercial real estate market's insatiable need to profit since office spaces hasn't been put to good use since the pandemic started. They need everybody to get back to work regardless if the virus keeps mutating, which by the way is the byproduct of profit motives. All things are relative to markets as evidence points out.

[@davidlazarus67]

Yes the end of remote working is designed to bail out the commercial landlords and the banks that have over lent to them.

[@urimtefiki226]

If anything is made only for the sake of money and profit is prone to failure.

[@jackflack9004]

More like the opposite of what your typed. The computer or smart phone you used to type your comment was made for profit and it worked. Do you want another example?

[@jackflack9004]

@@davidh4129 This person, more than likely, uses very shallow logic. I really don't expect a response.

[@dmacf9883]

Inflation is a result of an increase in the money supply beyond the needs of the growth in the economy.

[@gfarrell80]

Or even, increasing the money supply when the amount of goods the economy is producing are actually decreasing.

[@reneeemigree9004]

Although businesses may set prices, ty for enlightening, not the money supply. But, gov’t and business work hand in hand. We definitely believe business and gov’t., are buds and businesses received a green light to continue on. But this vid is revelatory, ty for being the only one I’ve ever found to take the scales off of the eyes and unveiling the truth. God bless.

[@oldsesalt8496]

The intercontinental railroad is a prime example of the stupidity of capitalists. They had a monopoly and kept transport fees unreasonably high to squeeze every dime they could from the farmers trying to get their crops to market. One of them argued unsuccessfully that they should increase train service and lower transport fees. Then that would greatly increase traffic and their profits would go up. Irt was a theory that MacDonald's would spearhead in the restaurant business. Both they and farmers would benefit. It took government regulation to tame the high cost of transport on the railroads.

[@AmericanTestConstitution]

The reason we have inflation is because the Federal Reserve prints money. Inflation is merely an increase in the supply of money.

[@twistedoperator4422]

Market share also matters. If you could theoretically throw away money to destroy your competition in order to gain market share and monopolize the market you'd be sitting good, for future profits. Just a little nuance. Great talk and yes I'm describing Amazon's business model.

[@The_Invisible_Hand]

Inflation is always and everywhere a monetary phenomenon.

[@williamiannucci2740]

Love you Mr Wolff Your a real Jew at heart Sir . Selah. Wish I could meet you.

[@reinerwilhelms-tricarico344]

What's missing here is an explanation of the effects of raising interest rates or even just the anticipation thereof, as they all now call for as "solution". What will it do to the inflation, make if worse? My suspicion would be that they also feel that the poor big banks and lender institutions still didn't get enough of the big redistribution. I suppose the trick is to raise interests mainly for the middle and underclass, including even small community banks. The big banks and speculators can continue to get unlimited allocations of cheap money from all these "stimulation" programs. But I don't understand on what the claim is based that raising interest rates should counter inflation - Other than the crude idea that it discourages people with insufficient resources to take out loans so they can pay for their basic needs, hoping for better times to pay back?

[@user-wl2xl5hm7k]

Professor Wolff, can you please research & advocate for full intellectual property (IP) abolition? This is the most important activist aim for working class people! A worker co-op economy (& most leftist projects) has very little chance without first abolishing IP. IP is the most severe & oppressive tool of the rich & powerful. Please see the work of Stephan Kinsella, Michele Boldrin, & David K. Levine. These are the best experts on intellectual property in the world. Everyone who cares about seriously improving things for humanity needs to know what IP abolition is about.

[@user-wl2xl5hm7k]

IP laws make no sense from either left or right politics. The ‘property’ in intellectual property is a false term used for propaganda purposes. Intellectual property is not property in any sense. It’s monopoly. IP actually stifles innovation & creativity. IP also is the main component of cultural control, propaganda, and advertising. And IP seriously screws up our economy & stacks it for the rich & powerful more than any other tool (especially IP with digital tech and the internet). IP abolition is the most important aim to liberate artists, programmers, inventors, etc. and make them all better off financially

[@user-wl2xl5hm7k]

All 4 types of IP must be fully abolished ASAP: patents, copyright, trademarks & trade secrets

[@user-wl2xl5hm7k]

The 2008 economics book ‘Against Intellectual Monopoly’ and the 2001 essay ‘Against Intellectual Property’ are both as important as Marx’s ‘Capital’! Each has nearly flawless argumentation. All leftists need to read both (free online). If you can’t read them now, then write down both titles so you can tell others so they can read them

[@user-wl2xl5hm7k]

And Uniquenameosaurus has two excellent and entertaining videos from April 2021 about IP abolition.

[@user-wl2xl5hm7k]

NOTICE: To the extent I have any copyright in the comments in this thread, I relinquish those rights to the public domain according to the CC0 license-Signed, /s/ PN. ->Before we abolish IP, everyone use the CC0 license for all types of works (including software) when you’re not in need of money or there if there are no buyers for your copyright-monopoly. Also, as the author you can always ask for donations with crowdfunding even if you no longer have the copyright-monopoly.

[@gannibalof21st]

Dr. Wolf hope you take the invite from Black Power Media.

[@petersepall2590]

Inflation is one of the most propagandized concepts out there and because of that one of the most misunderstood: The only way increased public spending produces inflation is if it generates higher wages as well as prices which is not currently happening. The inflation we are experiencing is just as Wolff explains, the deliberate increase of prices despite a deflation of general public wealth, and this is a political decision to defund the public and to condition it to a new subservient reality to already existent private wealth.

[@matthelme4967]

The market sets prices and wages,not you or me.

[@duggydugg3937]

deficit spending by gvt is the main culprit... gvt borrow money ... spend it... taxes all go to try to pay the loanshark... the debt escalates like wild fire.. borrowing by gvt is a crime to begin with... income taxes are nowhere nearly enough to pay for this crime...

[@Typhoon792]

So I'm guessing the statistics would show a substantial increase in profit margin in most companies that have to do with food, real estate, medicine, and other services to corroborate this?

[@kenshin198406]

I'm surprised the elephant in the room i.e. unprecedented levels of money printing, was not addressed in this video.

[@lot110]

Fiat money has no value! Debt is the only currency this countries has right now.

[@jessier.4237]

He's a liberal, he's not going to acknowledge that.

[@fred8097]

Does this imply that Dr Wolff thinks that employers only care about money for its own sake, rather than as a means to buy more goods? Because if they were after goods, these goods would presumably take the form of resources for more production, which would make it only a means to the final end making more money? Now, those goods they desire can't be mere personal goods, for the price of those would have gone up as well, as it is clear their employer peers in other companies are also raising their prices, and this would defeat the purpose of one a company raising prices because it would decrease the buying power of those new profits. So what is the extra profit a company gains from increasing prices actually for? Or does the lack of uniformity among separate price inflations make this a non-issue from the standpoint of the employer who wants to enjoy his profits?

[@lordlemond1350]

So it’s not my fault? This whole time I thought it was all my fault for trying decide if I want healthcare or a education.

[@alefty4463]

Generally, when people claim something political is "complicated," it usually is not.

[@GhostOnTheHalfShell]

Or it’s a ponzi scheme.

[@benangel3268]

@@GhostOnTheHalfShell Capitalism is a ponzi scheme.

[@GhostOnTheHalfShell]

@@benangel3268 not exactly. the way we manage the money supply and the velocity of money certainly is. in short interest/inflation/existential growth by the other two is inherently price unstable and is also a primary source of economic expropriation to the lender’s benefit. the means of exchange is a public good. that it may be hoarded is a terrible flaw. that we bribe money hoarders with interest a suicide pact.

[@ExPwner]

@@benangel3268 no it isn't.

[@benangel3268]

@@GhostOnTheHalfShell Exchange of goods and services occurred before capitalism. It is the profit motive that necessitates that the capitalist gains more than he gives back in return. In the barter system this would have been considered as fraudulent. Capitalism no doubt seemed like a good system when compared to slavery or feudalism.

[@ACB70]

yes but employers are forced to rise the price in order to cover the expenses that have increased, so the dilemma is whose the first in line who caused this increase and what is the reason? it is a myth

[@manuelmanolini6756]

There is one aspect of Wolff's ideas that I find inconsistent. If the profit motive is at the root of all social malaise, then worker coop's will not solve the problem. Each worker coop will want to profit vis a vis the consumers and competitors.

[@alex0_graham]

Correct! You have accurately pointed out why it is difficult for co-ops to work alongside capitalism. This is why the overarching structure of our economy must change to be a more democratically planned one, not a profit-driven marketplace. And to keep the employer/employee or government official/employee hierarchy from coming back, the base for this new planned economy must be made up of worker co-ops or unions. We must change the base and the superstructure. Changing one without changing the other will lead to a backslide into harsh capitalism.

[@manuelmanolini6756]

@@alex0_graham You might be right. However, worker coops can also compete with other worker coops to obtain the most profit for their worker owners. I am a social democrat Swedish/Danish style and unsure if eliminating capitalism is even possible given human nature. I am sure that it can be tamed, but it will always be a live wild beast.

[@ExPwner]

@@alex0_graham central planning is a failure. Profit is not a four letter word. Learn economics, dude. You missed the mark on this one.

[@sch4891]

this system needs to be done away with and replaced with a democratic new one that would do land reform so that everyone has a house. that way noone is incentized to be a greedy psycho since becoming destitute would be very difficult i dont expect wolff to ever talk about overthrowing anything cause that could put his life on the line. i think that he tries to focus of the economic problems of capitalism more than the political ones cause he's self censoring. even tho co ops alone wont get us there i still learn a lot from him but his work is only the beginning. read paul cockshott's 'how the world works' and michael hudson's 'superimperialism' for something more advanced.

[@molinierscadoganpedroivan8828]

No individual can set prices in a freemarket, the market does

[@DanielRivera-on5qh]

No such thing as a free market. It's a fantasy that it can be perfect like that.

[@ExPwner]

@@DanielRivera-on5qh the free market is not your "perfect market" straw man.

[@DanielRivera-on5qh]

@@ExPwner when people talk about good free markets they always describe conditions that actual markets can't and will never have, which is a "no true Scotsman" fallacy. Actual free markets are like those in the third world where the governments have little sway. 2008 was a great example of what free markets do, they explode society, and the market can't rebuild it, the government has to nanny the mess. Capitalism needs state capitalism to continue to survive.

[@ExPwner]

@@DanielRivera-on5qh no they don't. People like YOU do that and then try to use it to proclaim that free markets are some utopian (or worse dystopian) thing. Actual free markets are nothing like the third world. That is an outright lie that takes all of two seconds to look up in the economic freedom index. Those economies are not even remotely free and are massively hindered by their governments. 2008 was also nothing approaching a free market, and that's another lie that would be dispelled with just two minutes of researching what the Federal Reserve and federal government did to mandate and encourage risky lending and then support that lending by buying up bad mortgages through GSEs. Government literally created the mess so why are you talking out of your rear end and what is your excuse for lying?

[@MINDPLUNK]

@@DanielRivera-on5qh ignore this James Adams guy. He's an ancap troll that spams hundreds of comments on every video about capitalism and socialism. No point wasting your energy trying to change his mind. He won't change

[@Corgis47]

I wish you could live forever, along with Noam Chomsky, Gabor Mate...

[@martinjones8861]

Look on the bright side Mr Wolff, hyper inflation could see the collapse of capitalism

[@stephendavis5530]

But most breaking of economies has been through the rapid devaluation of the currency, NOT because of inflation brought on by running the money printing presses. It is usually brought about by the currency markets short selling a country's currency in order to pick up valuable assets for a song further down the line.

[@blue46gt]

You mean like how hyperinflation collapsed Venezuela's economy?

[@stephendavis5530]

@@blue46gt That was deliberate manipulation by big business in Venezuela that want to ruin Venezuela's economy in order to try and get rid of the left wing government there.

[@sch4891]

places like venezuela collapsed because they didnt print their own currency but we do so we wont get hyperinflation but we're gonna get more inflation for sure. especially since our gov keeps making silly decision after silly decision.

[@mtklima]

👏👏👏👏👏👏✊✊✊✊✊

[@lubakaczmar3198]

We are all 🦞 in the pot. HOW DOES IT END?

[@jamessiu7660]

Talking about this inequality, how will you comment on the ''common prosperity'' advocated by the Republic of China?

[@josephgruber1119]

Does the drive for profit explain the historical instances of hyperinflation? Such as what happened in Germany prior to WW2 and to some of the sub-Saharan African countries after they tried local governance, or is there other forces that can and do cause inflation?

[@ExPwner]

Nope, it absolutely doesn't. Weimar Republic had massive money printing to try to chase massive welfare spending. Same in places like Zimbabwe and Venezuela. Where were the evil capitalists there again? Richard Wolff has no answer for this.

[@bigbillhaywood1415]

@@ExPwner dude. Venezuela had a 65-70% private economy lol.

[@ExPwner]

@@bigbillhaywood1415 no it didn't. This talking point is old.

[@mauibill7233]

Hyperinflation in those cases most likely had external causes. The inflation we're experiencing is purely internal. You just have to laugh at the tools that come around here regurgitating media talking points about "printing money". They haven't been listening.

[@pedrocuello9399]

Question Mr Wolff, how much FIAT was printed in the last 48 months? Can you explain to us the effect of this on our hard earned cash sitting in our bank? Last time I checked, Bitcoin solves this problem. Please enlighten us why not, because this could save the monetary energy of everyone in the planet with a $50 smart phone in the verge of this digital era, I mean, if we really want to insulate our hard earned money form the manipulation of central banks and protect the working class, it’s worth going down that rabbit hole as this might be a missed opportunity for all of us following you

[@s.geemoney3535]

So every owner of every business decided to raise prices of everything at the same time? My business is making the same percentage of profit this year as it has in the past. If that means I have to raise prices because the price of goods and payroll has gone up then so be it. You sir have missed the mark.

[@htlow3598]

I have been watching Professor Wolff's videos for a while and I totally agree with his analysis/thinking. However, if I understand him correctly, although he stated the problem is the capitalistic system, the solution he proposed is a co-op enterprise within a capitalistic system. Okay, I am aware the workings of the co-operative would introduce 'Demoncracy at Work(place)' but such a corporation would still need to operate/survive within a capitalistic system. So there is no change apart from the introduction (& perhaps even the spread) of co-operatives within society. Is there where it ends?

[@JohnT.4321]

Worker's cooperatives and unions work within the capitalist system. The idea is to win better conditions for workers and to raise class consciousness. Both won't change the system to socialism alone. There has to be a political movement also to change the system towards socialism. A system not based on profits, but production and distribution based on need through collective ownership. Also, we have to change from the current monetary system to Cyber Labor Time Credits which do not circulate. Much in the same way Marx wrote about in the Critique of the Gotha Program.

[@jazzlives]

Dr. Wolff never said capitalism has to end in any short term scenario. He is for a synthesis of capitalism with socialism that at first thrives within capitalism but later when people realize that endless minority (super wealthy-) profit mongering sucks, then chooses to end it entirely.

[@JohnT.4321]

@@jazzlives Like I wrote, both worker cooperatives and union work within the capitalist system. Raising class consciousness is what Richard is trying to do here and that is commendable. There has to be a political movement as well.

[@gannibalof21st]

Better to ask him to speak on coop like mondragon and their labor tiers,and how being in the system of capitalism doesn't change exploitation of labor.

[@JohnT.4321]

@@gannibalof21st 🎯 I believe the number are like 1/3 of the workers own Mondragon and the other 2/3 are wage slaves.

[@juliorodriguezp]

So having the federal government printing money like drunken sailors is not a problem?

[@lot110]

Because money has real value, no not really fiat digital money is made up bullsh*t!

[@linzierogers5024]

H.L. Mencken was right about the intelligence of the American public.

[@markguilfoyle1053]

Doesn't have anything to do with the Feds printing a Shit load of money over the last year and a half, economic genius?

[@TheBigGSN5]

A trillion for militarism sails through Congress every year, but five bucks to fix bridges will destroy the economy with inflation. Kakistocracy.

[@pmcw007]

There is an inherent check and balance in capitalism that prevents endless price increases - it's called competition - something they don't have in societies where government controls business. Take a look at the measure of money (M2) - it has increased by roughly $4 trillion during the last two years over the long-term trend of 6% per year. If you look at the chart, the Fed moves in response to 2008 were a mere blip relative to what we've seen more recently. There is an inherent check and balance in capitalism that prevents endless price increases - it's called competition - something they don't have in societies where government controls business.

[@pmcw007]

@Augusta Taylor Thank you for the thoughtful input and question. I wish there was a short and easy answer, but there is not. Capitalism is clearly fragile, which is why it should be protected rather than demonized. If we don't protect it we find ourselves living as we do today with "crony-capitalism," which is what we've seen in the grow like a cancer in the U.S. over the last fifty or so years. It obviously started long before that, but only more recently has gained critical mass. You can divide the cost structure of any business into two groups, fixed costs and variable costs. Fixed costs are there whether the business produces one widget or a billion widgets. Variable costs refer only to the direct costs to produce the widgets - to say labor and material is imprecise, but may help with the understanding. In a general sense, businesses that have naturally high fixed costs like vehicle manufacturing, will always be dominated by large businesses that can better (more efficiently) amortize the high fixed costs over a large volume of widgets. Regulations, licenses, insurance, legal, permitting, etc. costs are all generally fixed costs. Together these are referred to as "frictional" costs - costs of establishing and doing business that are not directly tied to producing widgets. Government policies that we're often told are there to protect us increase these costs. There are a wide variety of industries where these have come into play. For example, the fixed costs of investment banking have led to not only massive consolidation, but also virtually curtailed the competitive threat of new market entrants. When is the last time you heard about a new meaningful investment bank enter the market? To a great extent, we've seen the same in pharmaceuticals and fissile fuel. The pharmaceutical industry is HIGHLY politicized. Not only are the VERY high frictional costs driving the industry, the costs and time to get new technologies through the FDA makes it nearly impossible for small innovative companies to survive through countless rounds of financing. The most common outcome is one of the big players buys the innovator and then magically gets the required FDA approval. I could go into a long rant about how our government has distorted the medical pricing market in the U.S., but that's another story. Prior to the Internet, there was no practical way to centralize the connection from businesses to end consumers. As a result, there was a high variable cost to market, communicate and sell products. We'll use Amazon as an example, but there are actually many others that have executed similar strategies, albeit for smaller end results. Amazon pulled in the high fixed costs of thousands of storefront brick and mortar to a central location (data center) and spent a lot of money (all fixed cost) to provide consumers with an easy way to shop at a variable cost to Amazon that approaches zero. This is how "automation" has always worked - it leverages high fixed costs of investment to eliminate variable costs and then the business focuses on volume. Gross margins often compress, but operating margins (the margin after variable costs) expands. Beyond the frictional costs that I've already highlighted as forcing market consolidations across many different industries, the U.S. FTC has been asleep at the switch during the rise of the Internet driven consolidation. Not only has it allowed massive and anti-competitive growth through acquisition (also enabled by U.S. accounting laws), it didn't evolve to block clearly anti-competitive practices; the details of which are again another story. Let's pause for a moment to evaluate a less obvious market than the ones dominated by Amazon... Years ago a group of property owners in Colorado started a small company, Vacation Rentals By Owner. It went by the acronym VRBO. Property owners could list vacation homes on the platform for an annual fee and travelers could communicate directly with the owners to rent properties. There were NO fees charged to travelers and everything went very well for years. Seeing this nice market, HomeAway bought not only VRBO, but virtually every other small company in the market that showed promise, and at about the same time, Airbnb popped up on the radar. Airbnb started with a similar model, but added on a nominal fee that would be paid by travelers. HomeAway copied the model. Those two companies dominate the market. Due to the high fixed costs of trying to compete, these two companies face a minimal risk of competition from new market entrants and have continually raised the fees charged to travelers to where now they make FAR more profit from a vacation rental than the person owning the property. Working below the surface are a myriad of tax loopholes that have enabled successful players in the crony market to add leverage to the business models. Again, going into details here is yet another story, but the short story is for wealthy people tax rates don't matter - loopholes are the magic elixir. Adding to these problems is the relentless desire of government to take over more of the economy - control the spending of money. In part, that is where the obnoxious growth of the M2 has come into play during the last couple years. Politicians in both parties go to GREAT lengths to keep us divided so we rely on debates of moral equivalency versus realizing both parties are screwing us. Politicians demonize those that have succeeded due to their crony policies and lie to us about their virtue. As I've often said, if you are angry with only one party, the odds are you are being punked by the other. So, is all lost? Not really. Competitive forces still remain in play, even for the most insidious industries. Recall in the spring of 2020 when COVID brought the world to a screeching halt and oil futures literally dropped below zero. There was far too much supply overnight and the future price less than zero told us there was not enough storage for oncoming supplies. While we've evaluated some of the drivers of economic imbalances, if we go back to the question of inflation, it driven by too many dollars chasing too few goods and we can see these dollars in the M2 data. That data is driven by outlandish fiscal policy (what Washington drives) that has been supported by an overly compliant Federal Reserve that continues to invent ways to print dollars. Going forward, if we don't become more alert to what has been and is still going on, we will slip deeper into the hole and if we drift low enough, we as a collective, will actually ask for socialism and an even more totalitarian rule.

[@pmcw007]

@Augusta Taylor You're welcome. You asked / implied a good question that I felt needed some added color. Please take your time. May I suggest a book that I think you'll enjoy. The title is "Dead Aid." You may notice while reading the early chapters it's difficult to tell if the author is suggesting that democracy or socialism (or other) is a better form of government. I don't want to spoil what is later revealed, but can assure you if you read with an open mind, it is apolitical. It's a shame that our schools don't teach economics and history as a single lesson - so much more would make sense if they did...

[@ivanmartinez-jd8gi]

My god how can someone who has recevied such an extraoridnary education be so economically illiterate.

[@ivanmartinez-jd8gi]

@Augusta Taylor Well the most notable would be that he claimed that inflation is caused by corporate greed

[@ivanmartinez-jd8gi]

@Augusta Taylor yeah no worries, Im not trying to argue either. So, when It comes to the behaviour of corporations, most economic models start from a basic notion; corporations will always try to maximize profits ( that is to say corporations are always greedy) . However this does not necessarily mean that raising prices will always maximize profits. Here is when the so called price-elasticity of demand comes in to play. It is just a meassure of how much demand changes when prices change. Now, if price-elasticity of demand is high It means that demand will drop when prices rise. In such a case if a firm decides to raise prices Its income will be reduced because although It sells at a higher price, It sells fewer products. So when will firms raise prices? They will do so either when A) price-elasticity of demand is low ( which will depend on factors such as competition, the importance of the good, availability...etc) or B) when they cannot produce as much as the market is willing to buy. ( for instance if im producing, lets say, 5 phones and im selling them at 100 dollars each and suddenly the market is willing to purchase 20 but I can only produce five, I will raise prices up to, lets say, 150 to the point were the market is only willing to buy the five phones I can actually produce) And its this latter case what tends to cause variations in prices, this is because nominal income is quite variable and higher demand can be induced by, for instance, government stimulus or general tendencies within the market. All of this means that if all of the sudden, demand increases and/or production is reduced prices will rise, and this change cannot be atributed to how greedy firms are because they are always equally greedy. Otherwise how could we explain deflation, Are firms being generous? No they are not, they never are, they are just being forced to act in a certain way by the market. Hope this was useful :)

[@jessier.4237]

He's had a liberal education...

[@GhostOnTheHalfShell]

There are other reactions to supply chain or rebound issues, if a business worries about inventory availability, they may over order seeking to ensure product or to purchase ahead of any expected strong demand. All of these decisions push a non linear system into unstable behavior. It may become chaotic or simply explode if it hits a positive re-enforcement state.

[@GhostOnTheHalfShell]

Soros is the only guy who ever seemed to acknowledge feedback as intrinsic over the efficient markets conjecture. While he isn’t the only one to see feedback in econ9mics, he’s been the single voice I’ve heard saying this is intrinsic and demonstates that the ideological pillars of capitalism are false. He borrowed Popper’s term of reflexivity and this term covers also the notion that desired outcomes effect people’s “reality”. The crux of any solution is mediating this aspect of human existence.

[@codymccubbin2649]

This is so incredibly stupid. If companies had total control of prices and profits, then, no company would ever go bankrupt. EVER. I could just raise my prices and never lose money. My god.. who believes this?

[@lubakaczmar3198]

Cost more to deliver a 🍕 than make it. Franchise for sale?

[@iw7545]

I will add that when merchants raise there prices i will not buy but millions of people will and when they do they will drive them selfs to a early grave

[@astrahcat1212]

Low interest rates are the real driver of all rent inflation. It's a policy of all central banks that's destroying the value of all currencies around the world, creating a situation in where large corporations are able to raise wages while the waters drown mid and small business that can't survive. It's a consolidation of power scheme. All of the housing, transportation, energy, food and water as a result will land in the ownership of large corporations. Example: Like 1/4th of Jacksonville Florida is corporate investment companies renting out property. Already you have ghost towns where small business used to be in America. Profit isn't the bottom line, PROPERTY OWNERSHIP is. The tool to own it all is low interest rates, it's not about enhancing profit, it's about expanding ownership to expand power and control. The only way out us to raise interest rates severely which will dry up credit and lower prices, thus giving truly responsible everyday people the chance of property ownership. Everything starts with ownership, the deed to a commercial property or a house you can zone is 100 times more powerful than profit, as you can have lower profits one year and still survive.

[@skapunkoialternativeliving6522]

These companies only get rich because we the people allow them to get rich. If we the people who gets Rich who does not.. so you cannot blame the companies for getting rich because we the people are the ones buying that products in the first place like iPhones every year brand new TVs every year products like that. You don't even need half of the time which is why I'm a minimalist..

[@player627]

Nonsense.

[@marcusmoonstein242]

Businesses are no greedier now than they were three years ago when inflation was much lower. Greed is clearly NOT the cause of inflation, since businesses have always raised prices whenever they could since the dawn of time. The real question you should be asking is why they can get away with raising prices now, but not three years ago. There are two answers to this question: Firstly, massive supply chain disruptions caused by Covid lock downs reduced the amount of goods available for people to purchase. It is these shortages that in turn pushed up prices as people bid up the price of goods. You incorrectly state that the causality is the other way round: that increased prices in turn caused supply shortages. This is obviously false, since the supply chain disruptions came first and only then the inflation. Secondly, the US government printed vast amounts of new money to cover the costs associated with Covid. Money is a product just like apples, and just as the value of apples goes down when there are more of them available the value of money goes down when there is more money available. We see this change in the value of money as a decrease in its value relative to everything else, exactly as we would see a decrease in the value of apples relative to everything else during an apple surplus. There can be no doubt that the inflation was caused by a combination of government lock downs and money printing. The only real debate should be about whether it was worth it or not.

[@mikeykanstenpoyy6523]

This guy is so dumb talking to his audience like children

[@avancalledrupert5130]

It wasn't . It allso wasn't worth the vaccine injuries.

[@dad45a]

Somehow , people have forgotten the tariff 'wars' a few years ago. The faux price hike of many raw materials has finally found the convenient excuse(pandemic) to blame the increase in prices. The ever shrinking weights and volumes of goods are the hidden inflated prices, while holding 'the price point'!

[@lot110]

What bullshit. I worked in distribution and everything you said is just wrong. The Just In Time product model has long starved the system and the effects are just becoming apparent. Money printing has been going on since the 80's. So, that is not a thing. Debt has been the only currency of this country for decades.

[@marcusmoonstein242]

@@lot110 With respect, I think you just proved my point. JIT supply chains are much more vulnerable to disruptions than traditional supply chains, and so were harder hit by the Covid measures. Prof Wolff is simply wrong when he says that increased prices caused the shortages. The shortages came first, then the increased prices. It's also true that the government has been printing money and living on debt for decades, and this resulted in an inflation rate of about 2%. The difference now is the sheer scale on which it is been done, so we will inevitably see higher inflation rates of 5% or more.

[@NotShowingOff]

He’s right. The dollar keeps going up in value. How the hell is that inflation in the sense that most ppl know it?

[@NotShowingOff]

@@davidh4129 dollar is going up in value compared to every other currency in the world. It’s the most stable. Look at the long term bond yields. They are going downs It sounds like the corporations are trying to pull a fast one honestly. Don’t be such a simp for capitalism.

[@NotShowingOff]

@@davidh4129 bitcoin is an asset. It’s not a currency. And it’s volatile as hell. Gold is a commodity. It hasn’t gone up that much since last year. I’m looking at gold futures. Show me chart that proves the inflation in the gold price

[@bigbillhaywood1415]

@@davidh4129 btc is a liquidity well for the Uber rich lol. It has no real value, just like fiat, only what the next guy will pay for it.

[@NotShowingOff]

@Charles Brainard the currency gaining value against goods, is called deflation. Right now, the type of inflation is important. Credit exapansion is happening for the very rich, hence, asset inflation. The regular consumer isn’t getting g paid according to the raise in the prices. So it is a price inflation, but it’s because the supply chain is price gouging you.

[@OPTHolisticServices]

💗🍃

[@tst6735]

Voff

[@rogersmith7396]

Capitalists greedy? I am shocked. I better have a brandy and a lie down.

[@plane-crashes-aussie-stories]

A great man

[@lastredoubt]

Hey Professor Wolf. I just want you to know that my Business School taught us that Profit was a dirty word. In my day cash flow was King. If you made a profit you were screwing the Economy. It wasn’t too many years after that that profit became king and our society/economy started to suffer.

[@stuckinthemud4352]

Did any of you geniuses know that if you make more slices in the pie the peices of pie get smaller? Apparently not lol

[@petestanton1945]

I like pumpkin pie

[@bigbillhaywood1415]

Did any of you geniuses realize that the printed money only went to the part of the pie where assets are located? Obviously stimmy checks went directly to the money supply but thats a small portion of the money printed. This is why all asset classes have skyrocketed in value. Its already been shown that corps are raising prices far beyond what inflation dictates they should which greatly worsens the situation.

[@stuckinthemud4352]

@@petestanton1945sadly we cant print pies?

[@stuckinthemud4352]

@@bigbillhaywood1415 im not sure what you are talking about. Is the he government printing money and hiding it how is that a relevant point im describing money that got used. Honestly your comment is irrelevant im not sure what your referring to but i doo know you have been fooled. We have pumped 4 trillion into the economy this year. Unemployment checks, stimulus checks, grants and loans for businesses, exstra food stamps are all examples and im sure there's some i missed. A simple Google search is all it takes to see it. Stop listening to Richard wolff its ruining your brain. You could claim there's other factors involved but to claim that printing money (we did in the trillions) and spending it doesn't cause inflation is litterally ignorant of simple mathematics.

[@petestanton1945]

@@stuckinthemud4352 "3D printing", sorry if u need edible

[@witHonor1]

Inflation comes from companies experiencing less traffic, less customers, raising their prices on continued customers to maintain their profit expectatations. I don't need Richard to explain it to me. I'm wondering why you do?

[@Qmpz85]

UHHHHMMM, Marx was actually a real life gay guy.

[@jessier.4237]

You want to see inflation disappear? Vote Democrats out!!! Unless you like the way life is, high crime, inflation, high cost of living, putting more in debt and poverty--continue to vote democrat.

[@SchopenhauerX]

Dr. Wolff's position makes no sense. Businesses *always* try to maximize their profits. The only difference now is there's more money floating around because of increase in the money supply.

[@davidlazarus67]

The money supply is a misunderstood figure. The Fed hasn’t printed any money. They have simply swapped one asset for another with banks. Those reserves are not allowed out of the banks, hence no new money created by the Fed.

[@ExPwner]

Correct.

[@davidlazarus67]

@@davidh4129 I am still correct. Reserves are only for transactions between banks not for general lending. Its having an overdraft facility that is 1 trillion. It’s not money. The banks can lend against it. Money is created when private banks make loans. Most of that new money goes into property which is why it’s risen in value. Banks still need reserves.

[@davidlazarus67]

@@davidh4129 M2 is a broad definition of money so includes reserves which are not money. The central banks have massively increased their reserves but by swapping assets for reserves. It’s basically swapping treasuries for reserves. The banks can get a safe rate of return from their reserves which they can’t from deposits. Banks aim to maintain a level of reserves to back any lending that they undertake. Which is where the fractional lending misunderstanding starts. Steve Van Metre has a good explanation of why QE isn’t money printing.

[@mauibill7233]

Hey, you in the back! Pay attention. You're falling behind.

[@skapunkoialternativeliving6522]

I am one of those people ..Cuz I have my own business..

[@skapunkoialternativeliving6522]

We do all have choices beside our testing me what do you want to work for somebody or be a leader for yourself.. the choice is always yours you choose to look for someone else don't complain that you're not making no money..

[@mauibill7233]

English is second language? If not, go back to school and learn.

[@The_Angry_BeEconomist]

the real driver (one driver) of inflation is monetary policy

[@davidlazarus67]

No the supply shock has given corporations to the smokescreen to raise profits and margins. The “money” that the Fed “prints” doesn’t even make it out of the banking system. It’s not a source of inflation. It’s private banks that create money when they make loans.

[@The_Angry_BeEconomist]

@@davidlazarus67 and who controls the price of those loans?

[@davidlazarus67]

@@The_Angry_BeEconomist That only impacts willingness to borrow. It’s banks that create money not the Fed.

[@The_Angry_BeEconomist]

@@davidlazarus67 I'm not getting into a debate with you on this, I mentioned nothing about creating money, your strawman is beyond dishonest. We are done.

[@ExPwner]

@@davidlazarus67 wrong. You don't know what you're talking about whatsoever. It absolutely leaves the banking system in the form of loans to just name one example.

[@Tyler-hf4uc]

This is one of the most disingenuous, pathetic, inaccurate ways of explaining inflation. I didn't always agree with Prof Wolff, but this has gone too far. This is Koch Brothers level of propaganda, just on the opposite side.

[@skapunkoialternativeliving6522]

There's nothing wrong with a prophet without profit you don't get rich you don't live comfortable. I have nothing against rich people because I live comfortable myself because of the choices I made..

[@mauibill7233]

I'm poor as f*ck, but live in paradise. Your money can't buy what I have.

[@skapunkoialternativeliving6522]

@@mauibill7233 I didn't say it could the point I'm trying to say is my life is great I can't complain just like your life is good and different ways you don't need money to live rich I'm good I'm not rich either I live off tentatively otherwise I downsize two-and-a-half 3 years ago I live out to my family so you see I haven't much money either but the point is I don't care for people who have money I'm not jealous of them like a lot of poor people are if you want to be rich you must have something of value to sell I work for myself also so that helps me a lot I don't work for nobody so that's great also so the choice is yours in most cases

[@antennawilde]

While I often agree with Prof Wolff his main thesis here is simply wrong. The real reason for inflation is the debt. The Fed always, always pushes for inflation to reduce the real value of the debt. If the Fed did not print massive amounts of money (thereby lowering the value of the dollar) the debt would be unsustainable and the system would collapse. We owe China trillions in debt, for example, so the Fed prints money to reduce that debt; and now the debt China holds is worth less. Only THEN do businesses have to raise prices, because the dollar is worth less. If they don't raise prices in accordance with the Fed's monetary policy they will lose their previous profit margins. They don't raise prices to make more profits, they raise them because the Fed devalued the dollar. Obviously businesses want profits but not at the expense of higher prices for consumers. This is why McDonalds for example, keeps the cost of a hamburger low by adding more soy protein and less beef, and making the patties smaller every year, etc. THAT is how they increase profits. For Wolff to say that all these businesses are raising prices simultaneously because they want to increase profits lost during the pandemic presumes a massive conspiracy, which is logistically impossible, illegal, and would result in hundreds of whistleblowers. Not the case.

[@ronnestman4696]

Great response.

[@Khuno2]

This is absolutely, completely and totally false. No serious economist takes this thesis (i.e., that national debt is a significant driver of inflation) seriously anymore. Embarrassing

[@billjones8542]

wolfe really hates employers and profits....

[@earlviney5212]

Just like employers hate paying higher wages to employees.

[@hivac]

Let's condemn the business owner for making a profit, which is how they feed their family, and then beg for money at the end for producing nothing but hate for the people who produce the means of donating to you.

[@stoxarecool763]

How to say "I have no clue about Marxian economics" without saying "I have no clue about Marxian economics"... Lol well done J Paul 🤣

[@rancierae]

Anti capitalist lefty. I was expecting a reasoned explanation rather than propaganda

[@eugeneheifets5780]

Prof. Wolff overstates roll of employers here: any SELLER wants to sell for more, not just EMPLOYERS. Coops have to do the same. Individual producers and traders want to sell for more, too. Prof. Wolff often distorts Marxism to more radical directions following his political views, hurting himself. His interesting advantage, from my point of view, is consideration of coops as economic basis for future society. But, it seems, he recalls about coops more rarely now. Trouble is also that justification , structure and behavior of coops are considered by him too simplistic and politicized. These all is disappointing for me.

[@mohr4less]

“Supply chain disruptions” are not “stuff doesn’t get made that used to.” Dear gawd this man is economically illiterate. No wonder he gets walloped every time he debates folks.

[@TC-eo5eb]

I live in a small rural community of 8,200 people. Mostly low to middle income population with a handful of wealthy locally owned business owners. The handful of wealthy local business owners in my town are incredible philanthropists who have donated millions of dollars to our community. One family donated 1 million dollars towards a new swimming pool at our high school. Two other families donated $300,000 each towards the same pool. Another family donated 1 millions dollars towards a cancer center and 1 million dollars towards a theater at our high school. A local Shell distributor just donated $100,000 to resurface our high school football field. Another family donated $100,000 towards the high school track and field facility. Many local business owners in my home town donate thousands of dollars towards college scholarships for graduating high school students each and every year. Prof Wolff would like you to believe all business owners are greedy evil people. He couldn't be more wrong. He is selling propaganda. People, wake up and think, use critical thinking skills. I'm sure every community has wealthy business owners who share their wealth and give generously.

[@denverspin]

They only give it to their community instead of paying it in taxes. So they give it to the community who then worship these people. Yes, the community gains, but the rich man's act is still based in gain for oneself. Ego, if nothing else.

[@stuckinthemud4352]

@@denverspin what did you give to your community?

[@molinierscadoganpedroivan8828]

Your definition of capitalism is correct, your understanding and way of explaining is zero

[@blue46gt]

This clown says employers set prices... as if consumers don't exist. Sorry, but consumers do more to set prices, and consumers are flush with cash.