Forum Post: Q. What causes inflation ? A. High sales profits.
Posted 12 years ago on March 30, 2012, 12:14 p.m. EST by FriendlyObserverB
(1871)
This content is user submitted and not an official statement
A cap on sales profit will prevent skyrocketing inflation.
A cap on sales profit will increase money velocity.
A cap on sales profit will generate revenue.
A cap on sales profit increase demand.
A cap on sales profit will improve the global economy.
A cap on sales profit give value to the dollar.
A cap on sales profit will make the consumers life a bit easier.
A cap on sales profit will close the gap between rich and poor.
A cap on sales profit has never been tried before.
A cap on sales profit is not a salary cap.
A cap on sales profit would be government regulated.
A. Printing too many dollars. Inflation is doublespeak for devaluation. Q. Explain how capping profit prevents inflation.
The true value of product is the cost of manufacturing, profit is added on inflation. The cap limits profit/ inflation.
The true value of something is the what someone will pay for it, not its cost. By your idiotic "thinking", evertything that's made has value. That's just stupid. If you manufacture something that people do't want, it isn't worth much of anything, regardless of its cost. You're stupid.
That's not just false. It's completely unreasonable.
So if the other guy is stupid, what does that make you?
I'm all about fundamentals, but some things are a bit complex, like how much money will change hands at any given time, the post itself, I’m going take somewhat of a metaphor and let it go at that, I like friendly, I don't think it's a workable plan but that's ok nobody is going to check the forum to see what to put in the law anyway, it is the concept that has merit.
This discussion about the value of things, well they are both correct, as is often the case when a broad subject is viewed through a small lens, take for instance the value of a Shack Beam Team card depending on a great number of factors that card has varied a great deal in value, in respect as to what it would "bring at auction".
However what can be obtained in cash is only one measure of value, what is often overlooked is the value of an ongoing economy, if we create a situation where people cannot receive in payment a reasonable value for their product, be it labor or something else, then the supply of that product will become scarce. Milk has been a good example at times, the cost of production was such that the price could not cover it, however the overall cost to the economy to allow it to decline in availability was too great so subsidies were put in place to make it possible for the famers to not go out of business causing a shortage. What the heck am I talking about right? Well what I’m trying to say is that sometimes the overall value of something is such that the rules of the game have to be set so that it will be allow to exist, in this case we are talking about a job, jobs have to pay enough to cover the cost of production, if you get my drift.
Rules of the game "
The complexity is too much for some people. A butterfly on one side of the planet causing a hurricane on the other side. The cap has many complexities to understand. Not only in what it removes from the game but also what it adds.
Thanks for the comment factsrfun
good morning friendly, I have been using the "cost of production" thing a bit, since I came upon it, I believe some states have actully sued Walmart because so many of their workers qualified for state aid, somebody out there was thinking if someone has a job shounldn't the employer be resonsonible for paying enough so people can live
One thing about the fixed profit, at least there is one if you follow, sometimes it's hard to make one, it would actually help the smaller people.
Good morning factsrfun,
Living wage is what you are referring to. Unfortunately there is only a legal minimum wage and it is not tied to company profits. Not directly.
When I stand back and look at the unfair balance of wealth it staggers me. Walmart is a good example. The waltons have made it to the top with an equal worth to nearly 30 million people. ? Surely we can even this out.
I believe everyone deserves a an equal portion of the profits. At least equal to their efforts. But we have a system that does not promote equality. Fairness is nowhere on the books.
I see you around we've only chatted a bit, but yes I know that many call it living wage, we've been calling it that for a while, haven't got it so I'm trying out a new term "cost of production"
I like to take their language and co-op it for good, the words create a picture develop mindset, this is not good or bad, it just is, it's just that most examples we have are bad ones because the right does this so well.
Here's an example of a new term of our own, "trust fund" when we watch TV, they talk about who is or who isn't middle class, about how different people in very different conditions consider themselves to be "middle class" the thing is, you can believe you’re middle class if you want to, you can't believe you have a trust fund if you want to, either you do or you don't, and those that do run things and hardly ever mix with those that don't.
Someone that at least knows some economics. He isn't just stupid because of what he wrote here, he's written this sort of post many times now and has been told by many people that it's stupid. But reason and thinking for some people are just water off a duck. Maybe he's just wanting us to take up a collection and buy him that junior college economics class.
Whatever. Your statement is still patently false and overly simplistic.
So I guess you don't know much either.
All you've given is CATO version.
Yeah, sure then. Everything is worth what it costs to make. No more, no less. LOL. Make that two of you in need of a community college economics class.
If steel prices rise, I was unaware that the value of a car went up by the exact same amount. Fascinating. Or maybe it didn't and now some people will be less likely to buy a car and spend their money on something with better value instead. Doesn't happen, I know. LOL
got 4 friends that don't drive
Shooz and Friendly shouldn't be driving either. LOL
I'd give everyone $50 a day to stay out of trouble
that money will be allowed to be collected into pools by entrepreneurs offering their products and services to the people
the largest pools will be taxed to circulate money back to the people
Who raised the price of steel?
Who raised the price of gas?
What value did they add to the product?
Don't worry about answering. You never do.
Greedy people. See, I think I'm becoming an official occutard.
The clearing of markets is what change prices. Excess demand tends to pull prices up. Excess tends to pull pices down.
How do you get through the day? Do you buy things on your own or does your guardian tag along to make sure you don't fuck it up for yourself?
Thanks. I knew you couldn't do it.
I also expected the lame insult.
It's all you ever do.
Make sure you bring your guardian the next time you buy something. Everything is worth exactly what it costs to make. Brilliant. What a coincidence. Occutard.
Make sure you bring your brain the next time you post.
You seem to have misplaced it.
You keep repeating yourself.
You didn't answer the question.
Everything is worth exactly what it costs. Nothing better can be made from what something is made out of. Products can never be more than the imputs. Occutard.
Sounds like econ 101.
Like a whole lot of other things, that's not how it works in the real world.
Prices are set irrespective of value, by those that can control them, all through the process.
Simpleton.
Does your guardian let you buy many things that aren't worth what you pay for them? If you buy things that aren't worth it, why would you do that? You might not like it when what you buy is right up there with what's it worth prefering instead to pay less you'd ultimately be willing to pay, but you indeed a retard if you go around paying more for things than they are worth.
Prices aren't just set, sweetie, they also have to be accepted. Smarten up.
These are ideas from the generation where everyone gets a trophy not just the winning team. Where the grades are on a curve because everybody did so bad. Where average performance is hailed and success that comes from hard work and talent are chriticized and neutralized.
The world you imagine reminds me of the world created by Kurt Vonnegut Jr. in the story of Harrison Bergeron.
It's just a cap on the middlemans profits. The man who does nothing, has no skill nor ambition but affects the economy for so many without the right of election. The middleman is a number in a supply chain nothing more. He has a function and a purpose; toe to toe dancing you go.
There are many good people that make their money are the middle man.
Under you system I buy one of Picasso's missing paintings at a garage sale for $10 I can only charge $10.10 even if someone is willing to pay $50,000,000 for it.
If I buy oranges in Florida and for $1 and drive them to North Dakota I can only charge $1.01 for them. If I come up with a cheaper way to transport them I would have to charge less and that would put my competition out of business. Your concept would put most retailers out of business. All except for Walmart and the other big box stores. The mom and pop office stores would go out leaving us with high volume stores like Staples.
I should be allowed to charge what people are willing to pay for things. The whole idea of having the government control our lives is horrible.
Used items will also be exempt from cap. Such as art
Transportation costs are not included in the cap.
If a new car is twnety thousand, the same used car will sell for less right?
Your concept would put most small retailers out of business. All except for Walmart and the other big box stores. The mom and pop office stores would go out leaving us with high volume stores like Walmart, Home Depot, Target, and Staples.
I often use the shop on Main Street even though they charge a bit more and make a higher profit on many items.
My idea would strengthen the economy.
With all due respect, you and your idea should visit a psychiatrist.
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Yeah you can visit an economist too. Economists too can sure do with some measure of humor to lighten their day
Your idea would destroy the economy by putting a lot of businesses out of business. We would all be slaves to the government and monolithic companies.
Your idea stifles creativity, ingenuity and entrepreneurship.
Are you allways this stupid or is today a special occasion? You white trash inbred cocksucker.
Very thoughtful reply.
You certainly used immense logic and reasoning to articulate an inspiring response.
You make some great thought provoking points in your post that truly show your insight into the topic.
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Frankly, I don't believe this - but if I believe or you believe this is IRRELAVANT!
As long as corporate money "from" Citizens United & Buckley is aligned against ANY progressive legislation - WE WILL LOSE!
The first step is to get rid of these SCOTUS disasters. How do we do that ????????????????
You need to believe democracy is stronger than money.
You need to show congress the strength of democracy with signed petition. This will influence the final decision.
We the people have quite frankly been too quiet.
We the people have quite frankly been too quiet.
OR
JOIN 83% OF YOUR FELLOW AMERICANS
Because of the Supreme Court's Citizens United decision,
we cannot accomplish anything significant,
without FIRST ending corporate personhood.
Because 83% of Americans already agree on it - we don’t have to explain or persuade people to accept our position – we only have to persuade them to ACT based on their own position. Pursuing this goal will prove to the world that we, at OWS, are a serious realistic Movement, with serious realistic goals.
Achieving this goal will make virtually every other goal –
jobs, taxes, infrastructure, Medicare – much easier to achieve –
by disarming our greatest enemy – GREED.
I feel that using the tactics of the NRA, the AARP an the TP – who all represent a minority – who have successfully used their voting power to achieve their minority goals - plus the Prohibition Amendment tactics – bringing all sides together - is a straight path for us to success
Our current project is developing and implementing, a voting bloc petition to create voter support for candidates throughout the country.
We want to vote for candidates who pledge to support a Constitutional Amendment that includes:
Overturning the 2010 Citizens United Supreme Court decision which enabled the flood of secret money that is drowning our political system,
overturning the 1976 Buckley Supreme Court decision which equates money and speech,
eradicates the corporate personhood rights invented in the courts that
have enabled corporations to buy our democracy,
and supports campaign finance reform to level the playing field for all candidates.
The People For the American Way found 74% of Americans
want to vote for candidates who support an amendment.
Koch and the tea party and ALEC have the money –
and the government –
and they use them.
We have the people -
and the vote –
and we must use them.
Join the our NYC
Corporations are not People and Money is not Speech Working Group
………….( even if you are not near NYC )
regular meetings Wednesdays 5:30-7:30PM @ 60 Wall St – The Attrium
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Counterfeit currency causes inflation. It has no real value except what value it absorbs from legitimate currency.
If you have a single bottle of wine, pour half into another bottle, then fill them both with water to the top. The alcohol content has been devalued in each bottle. You have twice as much apparent wine but only the potency of a single bottle. It takes twice as much wine to get the same buzz. That is inflation.
A cap on profit is not possible because not all products take the same amount of time to produce and the only products/companies that could survive would be high volume products/companies, ie... cheap shit. Craft and trade based products which are a staple of self employed persons would become extinct. You would be left with walmarts and mcdonnalds as they already operate on low profit high volume. Your model would drive us further in the ditch. I have read a lot of good stuff from you and I'm not trying to be harsh but those are the facts.
I understand your concern. And I agree with you, I would not advocate something harmful to society. But when looking at the model I propose of capping sales profits, I have discovered the claimed would in fact have more money available to buy quality product. Generally we buy what we can afford and with current " take as much as you can" profits the consumer is always strapped for cash. But with the cap consumers will have money left over leading them to look at better quality.
The cap does not affect the manufacturing quality. In fact with an increase in sales due to low retail prices, the manufacture will improve quality.
The list of positive effects of a sales cap on profits is compounding.
Thanks for your comment.
I have studied long on this and am convinced this will correct the economic system known as capitalism.
nothing could be further from the truth. There are few industries that are price gouging. Energy, automobile, banking and insurance, the industries Occupy struggles with are guilty of such markup but almost every other industry runs on high volume low price. This is the nature of preventing monopolies, so in effect your model was implemented long ago. The industries I named as problem areas are only gauging in prices because they have become to large and are as close to a monopoly as you can get without actually being a sole provider. That is also why Occupy has targeted some of these industries with it's actions.
Can you provide full transparency on all retail markup ?
Most retail is publicly traded or owned by a publicly traded company. As such you can find that info on their corporate site or they may have another place on the web to get it. It is required of publicly traded companies to disclose such info.
Please provide a few examples of markup.
Hi Friendly, Agree. Best Regards
So the market doesn't do this automatically? I swear everything I learned in economics 101 is a lie... This turns everything upside down
When you look at the original American revolution, it was spark by the greed of a king. This time it is sparked by the greed of the middleman. Sure you could have told colonialists not to shop if the prices are too high. Or you could tell the people today not to shop. But the results will still be the same. The king had run the people to broken poverty. As does the greedy middleman run the people into poverty.
This is advanced economics. Something a capitalist education will never teach you.
Lol
So the whole Idea of competition is a lie? You know, sellers compete to see who gets the customer? Lowest price wins?
Please do us all a favor and start a small business. You will quickly realize you cannot charge anything you feel like.
Cap on profits? How about making it ZERO :)
No one can survive on zero. And the middleman does provide a service worthy of at least minimum wage.
It depends on how you define profits. Under a labor theory of value, profits are the surplus value of goods, basically, market value minus the value of labor. Of course the more popular formulation is marginal utility, but just because that's the prevailing dogma taught to economics students, doesn't mean it's correct (or at least not in all aspects).
True there are variations.
The profit between buy and sell is capped. By percentage.
The manufacture is not between buy and sell , therefor not capped.
A bank borrows and loans money , banks are capped.
The true value of a product is the cost of manufacturing.
Capping profits is all well and good, but it operates under the premise that profits are necessary. If a company was owned and managed by employees, or a co-op, nonprofit, etc., the concept of "profits" (as it exists today) is removed from the equation. The motivating factor underlying all the corruption we have today is eliminated.
I would like to see it happen across the board. But the cap I have proposed would go on existing middlemen until we bring the economy afloat. From there more changes will be considered. There is a good chance middlemen will opt out and leave control to non profit government run retail outlets. We the people will run it. Kinda like employee owned.
Why even have a government middle man (government is never really a middle man, it's just a strong man, and it rarely relinquishes control once it seizes it). Don't get me wrong, a direct democracy fixes that to a large extent, but maybe not completely (and anyway, a central authority cannot manage an entire economy effectively, it always results in a banana republic or more authoritarianism or both).
Well , either way there will be costs associated and " zero" markup would insufficiently cover such costs.
This tool is proving my previous posts on this thread.
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Why not eliminate derivatives, speculative betting, and market manipulations. running our labor output through a casino profit-extraction process that adds zero value, while skimming the house their share, is insane.
Monopoly- short rules; elect a banker, the banker wins.
the current 'market' is a parasite sucking the life blood from the people.
what value does it add?
Why do the bankers have the monopoly on money creation? for-profit private banks create our money, this is a mistake that needs to be rectified. pronto.
Lol... Never laughed so much lately. Wow... Where do you get such ideas from? Keep them coming please, i need my daily fix of humor.
Hey dickbreath Milton Friedman was a filthy cocksucker. Laugh at that you white trash pillow biting motherfucker.
Now I see why you don't have a job. All you learnt in school are swear words. Anyways keep protesting, I am sure someone will take pity on you and give you enough money for a McD burger and a beer.
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Keep it at 1% and things would be very different in this country. You may have something here.
By that do you mean no one can have a profit margin over 1%?
Yes.
I think it would be near impossible to keep a profit margin at 1% simply because of the uncertainties of running a business. I can usually predict within 2-3 percentage points each year what my margin will be, which is pretty accurate, but if I was shooting for 1% I would inevitably loose money some years. For what it's worth, I normally have a margin around 35% and if I was capped at 1% I would just close up shop because I wouldn't want to work all week to just barely break even. It would suck for me, sure, but it would suck for my 9 employees even more. I am sure I am not the only one that feels like that.
As a dentist your business would not be capped. So breathe easy !
Haha I remember, we discussed it previously. I just wanted to make sure he got the memo too, I still have a few more student loan payments to make.
I admit I don't necessarily agree with a profit cap but you make some good arguments and it is a pretty interesting idea that you don't often hear discussed.
It is good to see you smile.
Thanks
I've no doubt you are correct. I am connected with a small business myself. 7 employees. But you must understand something here. Many, if not all, of OWS have been indoctrinated into the whole business is evil government will save us school of "thought". They understand nothing of the real world. If their methods were put into practice we would eventually become a Third World country. Unfortunately , I think they are ignorant to believe we would be happier.
dude, we are currently becoming a third world country! open your eyes!
Yes, I know it is. But not because of what you are saying.
what exactly am i saying?
You need to stop projecting your greatest fears on a movement you seem to know nothing about. Because of the history of this nation, it will never become a one hundred percent socialistic nation, but that don't mean that this movement is not good for America. I believe that since the Reagan revolution, business interests, and not small business but corporate businesses, have had free reign when it comes to federal law. So I believe this movement is a good check on the abuses of power that any institution, when unchecked, will exhibit. Big business has been colluding against the middle class for a couple of decades now, and no one has been man enough to check and balance their needs from their wants. It has nothing to do with socialism, It has to do with balancing the self interests of one interest group over another, and checking and balancing power is what America is all about.
I love America !
You just keep on believing that shit.
I don't think asking the government to reinstate regulations that were repealed is a bad thing.
I don't think asking certain fraudulent corporations to stop exploiting the little guy is a bad thing either.
People have done a lot more than just "ask the government."
Tons of people do boycotts. For example I haven't shopped at a wal mart in years. Look at the "pink slime" shit for example. 3 of their biggest plants are closing now because people found out about their bullshit and didn't want it. More people need to realize the power of being consumers and that's how we win. If everyone wants apple to stop using chinese slave labor, don't buy apple products for a month. If everyone stuck to that, Apple would shape the fuck up because they want your money.
The government has a lot of power and its supposed to be supportive of the people. That's why people ask their congressmen to create legislation.
Don't you understand that in present day America it has moved beyond all of that? What century are you living in?
I'm living in this one - http://www.youtube.com/watch?v=Sfn1TBxL1lA
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Yeah.....right.
Thanks.
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FriendlyObserverb you are retarted, it's not greed it is simple econmics
Actually not having enough precious metals such as gold and silver to back up the amount of printed money is what causes inflation.
Actually it is the greedy middleman and unfettered profits.