What Is Greedflation And Is It Making You Poor?

Is Greedflation really happening? I explain the possible effects on us. Add me on Insta: michellemarki

As a highly debated topic, the answer involves asking what are the major factors contributing to some of the highest inflation we've seen in 40 years? Because Consumer Price Index (CPI) Inflation just hit 9.1% in June 2022 with barely any sign of peaking.

Is it corporate greed or concentrated market power that's contributing so much to inflation? The answer's not so simple because there could be thousands of factors making inflation as high as it is today.

We also have to ask, what is being done to try to bring down inflation?

Greedflation is when companies are exploiting situations of high demand and low supply by excessively raising prices AKA price gouging in order to maximize profits.

This could have been happening in some industries, such as in shipping, where a container from Asia to California used to only cost $1,400 to $3,000 and then over the last two years went as high as $32,000 per container. Shipping containers now cost around $7,500 to $10,000.

The fact that shipping container prices have skyrocketed so much is definitely a worrying concern because this could have downstream effects in causing all other traded goods to go up in price.

One example is used car prices skyrocketing by 40%+, and this is partially a result of a chip shortage. New chips couldn't go into new cars, and less new cars were being shipped into the US (possibly because of both high shipping costs and the chip shortage), and this led to a shortage of cars, which caused the prices of used cars going up.

Maybe some companies in the shipping and other industries could have taken advantage of the supply chain disruptions, but maybe not.

And with workers not being as available, maybe some shipping companies had to raise wages to get workers to work.

Eventually they'll stop paying that price, and wait until the price lowers to a more affordable amount.

And while some industries like shipping and oil and gas have been reaching record highs lately, some of this is part of a larger trend of corporations increasing profit margins over the last 15 years.

The historical average had been 5% of profit margins, and now it averages 10%. In the last couple of years, profit margins have been reaching between 11-12% on average if we look at corporate profits after tax over GDP.

Maybe companies want to generate more profits now to use for growth initiatives or maybe they were really leveraged in using cheap debt to juice returns while they still could before inflation erodes their returns.

Maybe profit margins weren't as big before the pandemic because companies would squeeze their suppliers and resist increasing employee wages in order to keep price levels a bit more down.

This could all be part of an inflation-wage-price spiral where the more that workers are demanding higher pay, then that has to go into companies' expenses when making products and services.

And even though we're paying 250% more for gasoline now with $5+/gal vs $2/gal in 2020, maybe oil companies are still just catching up to demand.

Even though people could be totally taking advantage of the supply chain situation being out of whack, and companies could be passing on higher input costs to consumers having to pay more for the same (or less) goods and services, eventually they will also take a hit to profits. It's not a win win for anybody the more that inflation remains out of control.

This is part of why some argue against the concept of greedflation as they say that corporations didn't suddenly decide to be more greedy than they were in 2019 -- they've always been greedy, perhaps.

But eventually consumers will be wiser and realize they don't need to spend as much as when supply seemed really scarce.

Maybe some companies gained some monopoly or oligopoly power. But there's a limit to how much consumers are willing to pay, even for companies that have monopolistic power.

Hopefully the effects of inflation will normalize with The Fed doing QT.

As consumers, we always have the power to not spend money.

I look forward to making more investor friends! Please like and subscribe if you learned something or enjoyed my video. Thank you! :)

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Disclaimers: This content is for entertainment, information, education purposes only. Michelle is not a financial advisor and is not providing financial, investment, trading, tax advice, or recommendations. Please consult with a professional financial advisor with a fiduciary duty and responsibility if you need help in your situation. All trademarks, logos, and brand names belong to their respective owners.

[PassportBrosBusinessClass]

Shrinkflation

Heatflation

And now we add GREEDFLATION to the lexicon.

[CollectingCoinswithJiana]

Great Info as always. Funny how the dollar is Strong against all other currencies yet we have lost purchasing power due to higher inflation. What's the point of having a stronger dollar that's good overseas but not at home. Eventually i think we will end up in the direction of 2008 where peoples savings rate will go down and it will trigger the pop in bloated asset classes like homeprices etc. From what I've seen personal savings rates are back to newer lows from the time they were measuring it with all the stimulus money that was pumped in to the system. Only time will tell. Best we can do is observe and adapt to the situation.

[USAhealthInsReform]

Thanks-good topic! maybe income and wealth inequality and wanting to keep up with the Jones’s means often folks have to take out debt payment plan.Wages flat for many years. payment plan even to buy basic things like even mattresses or kitchen appliances. Has been this way for years maybe it will change with the quantitative tightening

[Iquey]

A lot of us consuners are at our limit. Ive been a lotal starbucks rewards drinker and eater of their codfee and snacks from like 2017-2022 but its just too expensive now and the CEO is a union busting jerk.

[nberrios]

The main problem is not greed, it is the drop in the value of the dollar when government keeps spending needlessly and keeps printing more dollars. People please get educated.

[trainsandlocomotives]

Great video! People who are really affected by inflation, didn’t take advantage of the opportunities or weren’t prepared for it.

[fuhat]

good video but with the case p[assed in in the courts govmerenet cant relautgte oil nd gas company the epa and they people knew they cant count on a war happening but still. there shouldn't be any slack for the oil tycoons. like OPEC is a mob saudai aubai has human rights issues. you also forgot to mention when winter hits its going to cause food crisis. also I think there was cut issues at 9:36. I would also site berine stance on black rock and the them.

[normancarbajal]

Likely not happening has much as the news makes it to be Michelle. Does make for an interesting topic! 👍🗞…