Some thoughts on why Weber's suggestion to control retail price inflation by price control was ignored:
Causes of retail price inflation.
1) Tradable inflation: supply difficulties resulting from Covid, Ukraine war.
2) Profit increases (expressed as profit on share capital) resulting from maintenance of prevailing profit margin on inputs subject to (1).
3) Failure of competition to pull those profits on capital back down to a new market rate.
4) Political decision to not intervene on prices, and to use interest rates to reduce demand instead. (3) and (4) are closely related.
I) Post 2008 QE and Covid relief piles huge amounts of money into the stock market at the same time as pulling bonds off the market. Stock prices go through the roof. Sovereign wealth funds- here in NZ that is the NZ superannuation fund and personal but gov't mandated Kiwisaver funds. This means that both government and private savers are heavily invested in stock prices remaining high.
II) Reverse QE (QT) pulls money out of the market and puts bonds back on sale to compete with stocks. At the same time, Covid relief ends. By rights, stock prices should dramatically fall from a price based on 'loose money' speculation to a price based on dividend yield.
III) Except: Government is heavily invested, both financially through its Sovereign wealth funds and politically through wanting to maintain the value to private savers that has accrued in the gov't mandated Kiwisaver.
(IV) The only way that stock prices can be maintained in the face of the downward pressure in (II) is to be allowed to achieve & maintain a profit commensurate with the inflated share price. This is entirely at odds with controlling CPI inflation.
For once I have reason to agree with a Margaret Thatcher edict: "The government has no business being in business". I would also say that the government has no business forcing private individuals to be in the business of share-price speculation through Kiwisaver.
Overheard at a meeting of bankers and their allied oligarchs:
We must not let them include money in their analysis lest it expose how our present paradigm for the creation and distribution of new money, AKA Debt Only, destabilizes the economy, and horrors, they recognize that implementing a new paradigm of Direct and Reciprocal Monetary Gifting utilizing the most temporal universe reality anchoring tool of double entry bookkeeping...end our monopoly dominance of the economy, 99% of the general populace and every preceeding business model to ourselves.
Actually, even the bankers might be unconscious of their paradigmatic dominance, but they do know their power. So what we need is the benefits of the new idea and the old tool communicated to the general populace because we (individuals and legitimate commercial agents) are many, they are few and Victor Hugo was right when he said: There is one thing stronger than all the armies in the world, and that is an Idea whose time has come.
Some thoughts on why Weber's suggestion to control retail price inflation by price control was ignored:
Causes of retail price inflation.
1) Tradable inflation: supply difficulties resulting from Covid, Ukraine war.
2) Profit increases (expressed as profit on share capital) resulting from maintenance of prevailing profit margin on inputs subject to (1).
3) Failure of competition to pull those profits on capital back down to a new market rate.
4) Political decision to not intervene on prices, and to use interest rates to reduce demand instead. (3) and (4) are closely related.
I) Post 2008 QE and Covid relief piles huge amounts of money into the stock market at the same time as pulling bonds off the market. Stock prices go through the roof. Sovereign wealth funds- here in NZ that is the NZ superannuation fund and personal but gov't mandated Kiwisaver funds. This means that both government and private savers are heavily invested in stock prices remaining high.
II) Reverse QE (QT) pulls money out of the market and puts bonds back on sale to compete with stocks. At the same time, Covid relief ends. By rights, stock prices should dramatically fall from a price based on 'loose money' speculation to a price based on dividend yield.
III) Except: Government is heavily invested, both financially through its Sovereign wealth funds and politically through wanting to maintain the value to private savers that has accrued in the gov't mandated Kiwisaver.
(IV) The only way that stock prices can be maintained in the face of the downward pressure in (II) is to be allowed to achieve & maintain a profit commensurate with the inflated share price. This is entirely at odds with controlling CPI inflation.
For once I have reason to agree with a Margaret Thatcher edict: "The government has no business being in business". I would also say that the government has no business forcing private individuals to be in the business of share-price speculation through Kiwisaver.
Let the 'invisible hand' free-market rip? Good one.....
Overheard at a meeting of bankers and their allied oligarchs:
We must not let them include money in their analysis lest it expose how our present paradigm for the creation and distribution of new money, AKA Debt Only, destabilizes the economy, and horrors, they recognize that implementing a new paradigm of Direct and Reciprocal Monetary Gifting utilizing the most temporal universe reality anchoring tool of double entry bookkeeping...end our monopoly dominance of the economy, 99% of the general populace and every preceeding business model to ourselves.
Actually, even the bankers might be unconscious of their paradigmatic dominance, but they do know their power. So what we need is the benefits of the new idea and the old tool communicated to the general populace because we (individuals and legitimate commercial agents) are many, they are few and Victor Hugo was right when he said: There is one thing stronger than all the armies in the world, and that is an Idea whose time has come.