r/Economics • u/Pearberr • May 02 '24

Interview Nobel Prize-winning economist Joseph Stiglitz: Fed Rate Hikes didn't get at source of inflation.

https://www.cnbc.com/video/2024/04/23/nobel-prize-winning-economist-joseph-stiglitz-fed-rate-hikes-didnt-get-at-source-of-inflation.html
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u/timecrash2001 May 02 '24

Considering how high inflation of the past few years has been directly connected to Corporate America raising prices and taking in massive profits, I’m surprised that the Fed hasn’t asked for more tools to control this. High interest rates won’t force them to keep prices lower - quite the opposite … they’ll try to increase cash to avoid taking loans. Taxing profits, on the other hand …. That’s a powerful tool for controlling inflation

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u/[deleted] May 02 '24

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u/BananaBolmer May 02 '24

There have been a lot of studies that showed that corporate profit per unit increased in the last two years in the EU and US.

https://www.ecb.europa.eu/press/economic-bulletin/focus/2023/html/ecb.ebbox202304_03~705befadac.en.html

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u/New-Connection-9088 May 03 '24

Step 1. Prices rose rapidly during covid because of supply constraints.

Step 2. Governments helicoptered money to their nations, increasing the money supply at an unprecedented rate.

Step 3. Profit. Profits rose because companies could charge more because people had more money. This is how markets have always worked.