You may have have heard the term Greedflation floating around lately. What is “Greedflation,” where did it come from, and are there merits to the idea? In this episode we will be looking at a NY times article by Linda DePillis called “Is Greedflation Rewriting Economics, or do Old Rules Still Apply?” A link to the article is in the show notes.

From the article:

Since prices started to escalate a year ago, politicians and economists have seized on inflation to tell their preferred story about what went wrong, and what policies would bring it back into line. Some say it’s very straightforward: Supply and demand, Economics 101.

The White House and progressive organizations, however, say wait a minute: This time is different.

In a time of extraordinary disruption, they contend, increasingly dominant corporations are taking the opportunity to jack up prices more than they otherwise could, which is squeezing consumers and supercharging inflation. Or “greedflation,” as the hypothesis has come to be known.

Robert Reich, former secretary of labor and Berkeley professor, just tweeted (and got 10K retweets):

“Let’s be clear: inflation is being driven in large part by monopolies that are driving up prices for the sake of profit.

On the other side, we have Lyn Alden, a prominent macro commentator and investment strategist with a finance and engineering background:

For people saying that “corporate greed” is the main cause of inflation… corporations are always greedy. They didn’t randomly get more greedy in 2022. A lot of broad currency was created in a short period of time while real supplies (commodities, infrastructure) were limited.

You can probably guess which side of the argument I land on. In my opinion, Whenever prices go up, there is always one or two unhappy people who say “we need to do something about “”Price Gouging”” with serious looks on their faces. But they never get very far with this argument, because the market sets prices and any effort to have the government set prices has always led to inefficiencies and shortages. When no one supports your policy or idea, it’s time to move on. And if you don’t want to move on, it’s time to change the name. I think that's what we're seeing here with Greedflation. But we have to give this argument a full chance, so I’ll read a portion of this article and analyze it.

Links:

1. Is "Greedflation" rewriting economics, or do the old rules still apply? https://www.nytimes.com/2022/06/03/business/economy/price-gouging-inflation.html?searchResultPosition=1

by Lydia DePillis, @lydiadepillis

2. https://twitter.com/RBReich/status/1538283894901862400?s=20&t=n_mCEoOPv-4bjzLDVv0XJQ

@RBReich

3. https://twitter.com/LynAldenContact/status/1533210428238614529?s=20&t=n_mCEoOPv-4bjzLDVv0XJQ

@LynAldenContact

4. Tyson Foods earnings call:

https://www.fool.com/earnings/call-transcripts/2022/02/07/tyson-foods-tsn-q1-2022-earnings-call-transcript/

5. "Corporate Profiteering" PDF with transcripts of earnings calls:

https://groundworkcollaborative.org/wp-content/uploads/2022/06/RESEARCH-Corporate-Profiteering-Findings-22.06.08.pdf

Other Mentions:

Michael Faulkender

John Zhang

Donnie King

Brett Briggs

Samim Bassul