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7 August 2022, 05:11 AM | #31 | |
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You guys are both correct but talking two sides of the same coin. |
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7 August 2022, 07:24 AM | #32 | |
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7 August 2022, 07:55 AM | #33 |
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7 August 2022, 07:56 AM | #34 | |
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If sales didn’t help profits in the long run, e.g. by winning new customers, keeping customers engaged and coming back, or moving stale inventory out the door, then businesses would never do them. Similarly, slashing prices to put competitors out of business (A) is a scheme to ultimately increase profit once those competitors are gone, and (B) is such a good way to maximize profit it can be illegal, e.g anti-dumping laws. If it’s not for charity, then it’s for profit. You’re conflating setting the highest price with maximizing profit. Of course Wonder bread can’t charge $100 a loaf. Of course a low-end furniture store can’t move $ 20,000 coffee tables, and that store may be perpetually having a sale. In both cases, the goal is still to maximize profit. If it’s a public company, there’s a legal obligation to do exactly that. Increasingly businesses are finding they can make more money by raising the price, in a way that wasn’t true earlier. I’m no self proclaimed financial wizard here. But the “businesses are greedy” argument can’t be the answer, since they were greedy back when they lacked the pricing power they now have. |
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7 August 2022, 08:38 AM | #35 |
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Patton, my Floridian friend, I never would have taken you for a moral relavist. On a philosophical and cultural level, I take the point on certain issues. But I cannot accept the whole premise all right and wrong being merely merely an expression of one's taste. But there are some scholars who would agree with you
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7 August 2022, 08:54 AM | #36 | |
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And I think Patton agrees that right and wrong are two different things, but doesn't think the folks saying he should pay higher prices for the greater good have any legitimate moral authority or compass. |
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7 August 2022, 09:03 AM | #37 |
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Any round of financial policy by a central bank that is aimed at changing behavior applies to a different public psyche each time.
The Great Depression, Social Security & allied programs, the Financial Crisis in 2008, and myriad others required some form of financial action. The difficulty is modeling the steps to be taken now using the earlier crises’ data. If I said the current behavior is affected via inextricably linked cryptocurrency assumptions, you’d think I was nuts. In other words we don’t know the current market forces with certainty. QE by itself didn’t create the huge demand we see, nor the supply-side constraints. Those are more likely the inflation-causing forces. Sent from my iPhone using Tapatalk Pro
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7 August 2022, 09:37 PM | #38 | |
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Morality does not derive from consensus. It only comes from one place. Pride goes before destruction, and haughtiness before a fall. Often times unbelief is disguised as wisdom Instagram - patton250 |
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7 August 2022, 09:41 PM | #39 |
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7 August 2022, 09:45 PM | #40 | |
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Fixed that for you. Some of these folks who claim to want to help the greater good constantly initiate programs do just the opposite. High gas prices for instance. Who does that hurt? Inflation? I still bought filet mignon this weekend. I bet you did too. Anyway you threw morality into this. Not a big deal but it did hone in on the genesis of the cause. Unfortunately they don’t let us talk about these things here. Either way I appreciate you.
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7 August 2022, 10:22 PM | #41 |
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Did QE Cause Inflation?
How “moral hazard” affects macroeconomics is complex. Inflation can result in some segments of the economy due to the possibility of a bailout. This form of moral hazard drives consumers to borrow beyond their means to pay. Also, for banks, it can encourage them to lend carelessly. The cries for student debt amnesty craziness is driven by similar forces.
See: http://home.uchicago.edu/~rmyerson/r.../mhazmacro.pdf So, no matter how we cut it, interactions among different generations of borrowers/lenders can create credit cycles that central banks are called upon to “manage”. QE and subsequent QT are two tools to deal with with repeated booms and recessions. So it isn’t QE itself - inflation is a symptom like the fever your body emits due to infection. Until the source of the infection is cured, the fever can’t subside. Overtreatment can also have a negative effect. Sadly, recessions are a real outcome of overtreatment, as a scarcity of financial support limits investment. Subsequently this reduces employment. Our cohort of workers suffer due to this. Under such conditions, taxing workers to subsidize the borrowers/bankers is even worse. Bailouts must be paid back. In the most recent financial crisis, the terms of the bailouts were met by bankers and corporations. The pandemic rounds did not have the same teeth, so borrowing and spending did rise, triggering demands for the central banks to rein it in. Ergo, the recent rise in the borrowing rate. Inflation hurts the segments of society that can afford it the least. They aren’t likely to buy a Rolex in their lifetime. So…yes…moral hazard plays a role. Sent from my iPhone using Tapatalk Pro
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8 August 2022, 03:09 AM | #42 | |
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8 August 2022, 05:07 AM | #43 | |
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NVIDIA example is more about their ability to predict the future value of Crypto, or inability. Now that BTC is around $30K below all time highs the demand for mining chips has fallen substantially. When it was in the $60K’s it was a cash cow with no end in sight. If they could have predicted the price drop, thus the demand drop, their pricing strategy would have likely been very different. As would their product dev and release plans. This is a good example of confusing a pricing problem for a different business challenges, the ones actually causing the challenges. “Maximizing profitability does not mean maximizing profit in a given quarter but maximizing to that point over time.” Agree, again not what was said in the post I responded to, despite the subsequent posts reframing the comment. Companies do not maximize profit on every product all the time. This is true in both the B2C and B2B worlds. They may give up profits today for the potential of higher profits in the future, but that doesn’t always work out. In fact it usually doesn’t. Three reasons: 1. Customers get angry always paying more. 2. Customers become dissatisfied having to negotiate prices every time they buy. The trust in the relationship is undermined. 3. for reasons 1 and 2 customers will find another supplier to avoid these headaches and stress on their businesses and employees. These mostly apply to B2B pricing but most of what we buy at retail went through a B2B transaction first. The ability for a company to raise prices and always maximize profit, short or long term, is much more difficult and complicated than 99% of people understand. Especially those who blame todays higher prices on “corporate greed”. Sent from my iPhone using Tapatalk |
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8 August 2022, 05:45 AM | #44 | |
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8 August 2022, 06:05 AM | #45 | |
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If profit had to be maximized at all moments in time, then a restaurant wouldn’t pay people to clean up after closing time, no office would ever throw a departing employee a retirement party, I wouldn’t be able to take prospective clients to lunch, and nobody would sink money into building a new factory, condo building, etc. It Follows logically that no business can be making it’s maximum or desired profit at all moments. |
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8 August 2022, 06:46 AM | #46 | |
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https://www.merriam-webster.com/dictionary/always Always does mean every moment in time, or invariably. Obviously that’s not a logical perspective. But joining two prevailing beliefs today, 1. Corporations are greedy and 2. They always try to make the most they possibly can from every customer on every transaction, is also not logical and is a highly uninformed belief. Many companies today are struggling to pass on their higher costs to consumers/ buyers. Some companies have been able to do this. Every Wall Street pundit for the past 9 months has been telling people to invest in companies with pricing power, the ability to increase price and capture higher costs. If every company could do this, this advice would be unnecessary. Sent from my iPhone using Tapatalk |
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8 August 2022, 07:25 AM | #47 | |
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8 August 2022, 07:50 AM | #48 |
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8 August 2022, 08:02 AM | #49 | |
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I’d like to add that energy, and access to energy such as oil & gas, is the real money. I’m not sure if it’s just a coincidence that the territories of Ukraine that have been and are still being most heavily targeted happen to also be some of its most abundant oilfields. I think Russia and its leaders recognise the supreme importance of maintaining control of oil/gas/energy supplies. What scares me isn’t the high water mark of oil/gas prices. It is that they stay at much higher than historical averages for the long term. (My utility company is now charging a unit rate that is 70% higher per kWh than 2019). Sustained, elevated energy prices are what will probably be the biggest contributors to inflation. And QE, since it entails the permanent increased supply of money, is going to feed into this inflation. Prices are permanently, structurally higher now because of this. I reckon this is the new normal. Sent from my iPhone using Tapatalk |
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8 August 2022, 08:04 AM | #50 |
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8 August 2022, 08:39 AM | #51 |
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Bitcoin did...
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9 August 2022, 02:34 AM | #52 | |
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As far as ETH, proof of work has continued. We’ll see if proof of stake actually proves to not be a unicorn. Good luck with your trades this week |
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9 August 2022, 02:44 AM | #53 |
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