Inflation is a phenomenon that sits at the heart of any capitalist type economy. The obsession of politicians is to convince the public that inflation must be managed, often to the detriment of the public.
Inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.
However, one key aspect of inflation creation that politicians prefer to avoid discussing is the impact of corporate profits. Because many politicians are merely spokespeople for corporations, their paymasters are obviously reticent to allow it to become a matter of public discussion and debate. They much prefer to focus on wage levels, as that convinces many to keep their pay demands to themselves.
It has now been revealed though, that corporate profits are an extremely significant issue and actually depend on people not fighting for higher incomes.
How corporate profiteering impacts inflation:
- Demand and Consumer Spending: When corporate profits are high, businesses may expand and invest more, leading to increased job creation and higher incomes. This can contribute to higher consumer spending, which can drive up demand for goods and services. If demand outpaces supply, it can lead to upward pressure on prices, contributing to inflation.
- Cost-Push Inflation: Conversely, high corporate profits can also lead to cost-push inflation. When businesses experience strong profits, they may be more willing to increase wages for their employees and invest in expansion. These higher costs for labour and capital can be passed on to consumers in the form of higher prices, contributing to inflation.
- Supply Chain Disruptions: If corporate profits are high due to supply chain disruptions or scarcity of raw materials, businesses might face increased costs to maintain their production levels. These increased costs could be passed on to consumers, leading to inflation.
- Monopoly Power: In some cases, corporations with significant market power might use their dominance to raise prices beyond what would be possible in a competitive market. This can contribute to inflation, particularly if these price increases are widespread across the economy.
- Global Factors: Corporate profits can be influenced by international trade and global economic conditions. If global demand for goods and services increases, it can drive up corporate profits. This can also impact inflation if higher global demand leads to increased prices for imported goods, which can be passed on to consumers.
- Central Bank Policy: The actions of central banks, such as interest rate adjustments and monetary policy, play a significant role in controlling inflation. While corporate profits can indirectly influence consumer spending and pricing, central banks often adjust their policies to manage inflation directly.
“What’s driving inflation is corporate profit,” says economist Grace Blakeley
“What’s driving inflation is corporate profit. It’s profiteering from energy companies, from big monopolistic organisations that are putting up prices because they can.”
The lesson here is: don’t believe many of the politicians. Many are just puppets for huge organisations that lie to keep us in our place. They do not want us to fight for better pay because they are the ones who have to cough up. That then means fewer super yachts, fewer luxury houses, fewer private planes for them, and greater debt despair for the rest.
Douglas James
Join us in helping to bring reality and decency back by SUBSCRIBING to our Youtube channel: https://www.youtube.com/channel/UCQ1Ll1ylCg8U19AhNl-NoTg and SUPPORTING US where you can: Award Winning Independent Citizen Media Needs Your Help. PLEASE SUPPORT US FOR JUST £2 A MONTH https://dorseteye.com/donate/
