Wolff Responds: Why We Have Inflation Now 

Prof Wolff is a national treasure.

So basically, everyone gets screwed over by “greed is good”

They aren’t job creators, they’re “job exploiters”.

They get bailed out and still raise prices

Richard Wolff is so cool

Thank you. This is the point that people need to understand about capitalism. Inflation is arbitrary and done mostly because of the way the system is regulated (or not regulated), hence why these problems occur in the first place. And they will always be that way because the basic incentive structure not only allows it, but causes people to actively fight against changing it, no matter how detrimental it is.

excellent analysis, very insightful, thnx!

There's no competition anymore. At best there's a duopoly. I have multiple grocery stores but they're owned by two companies.

I like this Professor. Easy to understand. Straight and to the point. I wish I had a teacher like you in school. Thanks for the post. Subscribed!

Before the pandemic, I used to buy street tacos for $8, now the last time I ate tacos in Taco Cabana I paid $13. Currenly, I am eating less in restarants. Thank you, Proff Wolff.

Buying more goods in the US means more jobs where goods are made... generally that isn't in the US

Proff wolff keep the information coming your view mean alot to us your level of education and expertise is of great value to all wanting to learn of the alternatives to capitalism thank you

Prof. Wolff is exactly right and states it so well. Thanks

Simple enough even I can understand. Thanks Professor Wolff.

One thing he fails to mention is that a retailer that raises the price that the consumer pays, is forced to do so because the distributor and/or the manufacturer raised their cost to the retailer. Another words, a distributor or manufacturer price increase, forces the retailer to raise their prices on their goods and services that they charge the consumer.

Given a choice between a utopia and a dystopia the rich choose dystopia.

Very helpful, thank you Prof. Wolff!

If you can increase your price by 50%, you can afford to lose more than 50% of customers and still increase profits by reducing overhead. This became apparent to me back when they started talking about Just In Time supply chain logistics. Ultimately, you're better off with virtual products.

Thank You . . .

I super appreciate you and all your collaborators' hard work Prof Wolff!!! I hope to be able to ask you questions too soon. I studied philosophy and want to write more about economic madness of capitalism and how to shift towards global socialism

Thank you Richard Wolff! Now tell me how we change the greed addiction in this country.

Rising prices and false scarcity.

Inflation is exploding right now. Thanks to Dr Wolff for explaining it in clear terms.

This is one of the best videos I have ever watched

I just now caught wind of your debate last month. While the debate opponent was not a great professor like yourself, it is important that your wisdom is heard on platforms like twitch and the serfs audience. you had great patience at the end. appeciate the great work!

Most economists explain present inflation either by supply and demand or by "money creation" by the Fed. Proff Wolfe explains the current inflation in America by the greed of merchants and their desire to have the same profit as before the pandemic.

Love this simple to understand explanation 🙌

if the initial gov. injection was bound to a limit / value .. shop owner would unconsciously choose option a. adding more goods on the shelf ... after i finished college i realized its just a big ponzi league :)

Raising prices is like selling market share. It's a short term gain in exchange for a long term loss.

You forgot one very important point and the resulting tactic: That "extra money" is only temporary; it will only last for a short time. So, when it runs out, and people are no longer able or willing to pay the higher prices for a business' products and services, guess what happens? Why, they have a BIG SALE, of course! They look wonderful and they get to go back to the same profit level they had before. No loss, no foul for the business.

It should also be taken into account that, as the system works now, there's a disincentive to increasing the offer of products. The shopkeeper would not only have to put more work (instead of just raising the prices), but would also be exposed to more risk. He could be wrong in his estimates regarding how much to increase the offer, if the profit margins are not high, re-stocking could cost more than the price the customer paid, etc. Not only is inflation the easy way out, but capitalist-wise, is in many cases the better option for the shopkeeper. This is a structural deficiency of the system.

I thought he was going to say "the bad year we've had over the last fifteen YEARS."

But is that what's going on, here? Isn't money being infused by the Fed just being hoarded for speculation? We have debt deflation and have for 15+ years. Just seems to me the inflation is arbitrary to recoup profits, like you said; not much to do eith money infusion

Class is in session!

Never mind that more demand requires more production and that it would cost more to produce more.

Great video.

Thank you Mr. Wolff.

If a competing store across the street chooses to order more instead of raise prices, they will siphon all of the customers from the original store, who is now raising prices arbitrarily. Furthermore, if all of the stores choose to order more product, this will cause the manufacturers to raise the prices they are charging the stores, especially if there is some sort of bottleneck that prevents manufacturers from producing more than usual. So increased demand expressed by increased orders from stores, will result in increased prices that the stores have to pay, and this in turn will result in the necessity to increase prices for the customers. No matter which route the stores take, there is potential inflation when the supply of money in the economy is increased.

That's how greed works, period.

Nice

Professor Wolf One thing that entered my mind is How can old Houses Have more value than new houses ? How long have these houses been standing and yes in new york old houses tend to go for 2.5 million dollars . When you can probably build a brand new house cheaper from the ground up . Can we call that greed or can we call it Inflation . i worked all my life and never in all of the time I worked took home 2.5 million in my life time .

Many items people buy are not included in the "basket of goods" used in measuring inflation. The real rate is actually higher.

And the great thing is, this is basic economics. Can't argue with that!

for almost my entire life I have Made jobs rather than get jobs... I am my own Boss, who has clients. I pay no one for this privilege. As soon as you are "looking" for a job you present yourself as a victim who can be stolen from. I have been there, and yet, I will Never Return to the Job Market. I started my own business at age 8 doing door to door car washing.. moved on to custom Christmas cards, then graphic design and murals, now I paint houses and fix computers. Good Luck everyone !

Another example of Opportunistic, hunting mindset. That your hunger, desire for more money is more justified. If you have the power hunt, on every opportunity! Hungry or not.

epic video as always

So why do they not normally raise prices? Because of competition. Because for capitalism to have even a semblance of functionality, you need effective competition. If you don't, existing players will seek rents. A market without competition is just gross extortion. We just saw a scenario where every small business that Walmart competes with was shut down, but Walmart was allowed to stay open as an "essential retailer". They have much less competition today than they had 24 months ago, and they didn't have a ton of competition 24 months ago; We have gradually pared back attempts to ensure market competition and prevent monopolies & cartels. They are more free now to adjust their prices to a level limited by the incomes of the local population they service, rather than by what goods cost to make.

Thanks

I think Arizona tea is the only company I know of that did not raise the price of the product

last 90 sec are key

The US economy has grown its money supply by around 25%. Which as we know chases more goods and services which people buy. Keep in mind also that some people have been at home not producing goods and services but have received money from government so they can buy the same good and services which they haven't help produce. Common sense would say that prices have to rise in this scenario no matter what employers do. Inflation is tax which we all have to pay but the fault lies with whoever created the new money in the first place. To say that employers don"t have to raise prices in a bit naive.

I remember when a McDonalds hamburger was 15 cents.

Stimulus checks are not the root cause of this. People are not all the sudden feeling rich due to a few thousand dollar windfall. Most are using the money to bail themselves out of debt or try to get current on debt. Sure there are those that blow the money and that just pumped money back into the economy. However nearly 0 percent interest rates and rising home costs have put a huge influx of big money into the economy. Homeowners refinancing there homes and snagging the new found big dollar equity,,, now that will drive prices up. Lots of Big remodels going on, expensive RV's are flying off show room floors, People are very eager to get the hell out of town for the first time in over a year. All these big ticket items are coming from the housing market, not the measly stimulus. Hell that little bit of money would get swallowed by a daycare center for 2 kids in less than a couple months. People aren't living large due to stimulus. Interest rates are the root cause.

Good stuff. There are other variables at play, of course, like for instance shortages due to broken supply chains. But all things being equal (which they never are) this is a good basic overall theoretical understanding. What bothers me with Wolff is that I always feel he is addressing us like we're in third grade. It's his delivery and he's probably incapable of changing it, even if he wanted to. But it makes for tough going to have someone re-explain something that he's already explained, as if you're a simpleton or a child. (Rachel Maddow on MSNBC has a similar problem.)

I'm a little skeptical. We've had huge inflation on assets, but actual monetary inflation has been rather minimal. Also, most of the money that hit the economy was horded by the upper class via stock buybacks and games. This may be an attempt to recoup process due to a bad year, certainly, but I don't think it's bona fide inflation. I also don't think that it's that simple because we were witnessing this behavior before the stimulus. It's just that the stimulus allowed businesses to more effectively operate with their thinning margins due to COVID.

No mention of stretched supply-chains and high-demand??

I think prof. Wolff tries to keep things as simple as possible for a big audience. 1. Suppose the other webshop doesn't mind unpacking etc. and keeps the price about the same. Then people will choose this webshop and not the other one. 2. When the prices get higher, but people have not the money anymore to buy them, you would expect they get lower again. 3. When it is produced in a foreign country there will not be more jobs. I suppose points 1&2 are mitigating the inflation, but are not nullifying.

Prof Wolff has that permanent "Why can't you people see how fucked capitalism is?" face.

One thing that's being over looked, I believe inflation is less worrisome today than it used to be, because of the competition in sales, and how much easier it is today to shop for the lowest prices using the internet or smart phone.

What about when the business cannot order more goods? Like PS5s?

If wages aren't rising then it's not inflation, its just prices of commodities or consumer prices going up. Inflation means that all prices are going up proportionally, wages are a price.

You can’t have a rise in Standard of Living without either Inflation or Deflation. The point is that it needs to be distributed equitably. Raising prices enables an employer to raise wages or cut hours without lowering them, or to invest in increasing productivity, quality, or innovation. The problem is that you can’t trust a Capitalist to do any of those things.

how someone can be so illiterate about the economy is amazing. Value is created by WORK not by printing money. you cannot PRINT prosperity. any questions look at Venezuela.

Good story, Grandpa

I spent my stimulus on XRP and 0xMR

And, we only have to live with it if we choose to. If everyone stopped going to work and the store for a week it could be a different world... Or put otherwise... the world is only 9 meals from anarchy - Alfred Lewis (paraphrased)

Thank you

the inflation model makes perfect sense if the people making the decision operate under the MCM prime model.

There has to be a boom/bust cycle periodically for capitalism to survive

true

I follow a lot of economists but I've never seen anyone who can come up with so many creative ways to blame capitalism as Wolff does. He makes no sense. In the store example he gives, he presumes the store owner could easily order more products at an uninflated price but chooses not to just so he can screw over his customers. He also presumes the store owners' competitors won't order more inventory and offer his customers a cheaper alternative causing the store owner to lose all of his sales. No store owner would be foolish enough to run his business like that, even if he was a crook. Dr. Wolff is a very smart guy who is clearly blinded by his ideology.

It all makes sense now.

I think "Competition" is missed in the explanation. If Amazon , kmart (the big players) ... Doesn't raise price, it is hard for the small dad/mum stores to raise price without losing customers.

Housing cost have gone up because 1. it's the Number #1 means to Launder Money by Gangsters from around the World.

Inflation is good for assets and the wealthy who own assets. Inflation is bad for wages and the people who work for wages. The wealthy have yachts which float and rise up with the rising tide of currency being printed. Workers and their wages sink like a stone as the depth of the water goes up and up. This video is bit simple, but broadly true. To an extent the employer lacks a choice to raise prices due to inflation. The textile shop buys from a textile manufacturer, then that textile factory has greater demand and no quick way to make more clothing, even if they can hire more workers or produce more textiles, they have to buy from thread and fabric makers and they in turn from cotton growers who only grew so much cotton and nylon producers who rely on oil. Not to mention land, buildings/factories/construction, trucking/shipping, or electricity supplies which also do not magically increase in the same way the fiat money supply does when more and more dollars are printed out of thin air. Eventually we hit a hard layer of natural production and we cannot simply grow more cotton so readily. At some point the base commodity layer of oil, cotton, wheat, lumber, cattle, etc creates a limitation which can drive up prices due to more demand or simply due to more money existing. An easy way to understand inflation is that it will always outpace wages, certainly that is the case when a tiny group of 9 people worth more than 100 million each are the ones choosing how much money to print from their central bank. Inflation is good for assets and the wealthy who own them. Inflation is bad for wages and the people who work for them.

In option 1, bussiness has to invest in extra production lines setup&tooling and hire extra people. Just to support a most likely a temporary demand spike due to the government stimulus. Which might lower their profit margin. And after the demand spike when the stimulus stops, the excess capacity is not needed. Sure bussinesses will choose option 2.

Wolff !!! Please! Please! Please!! Stay up! And BE OUR NEXT PRESIDENT!!! AT LEAST 3 TERMS!!!

Prof Wolff can you explain why japan doesn't get inflation though they are printing money all the time?

inflation is expansionary monetary police - basically printing money. The effect of printing money is an eventual increase in prices.

"The employer sets the price and not the employee" just repeat that on here. You can either buy more supply for customers and help them and the economy or be an asshole and purposefully raise the price without ordering more and making it harder for others. You have to think like a vulture. Lol

So essentially inflation is the result of greed? Also this doesn’t explain how the kind of inflation where it takes wheelbarrow loads of cash to buy a loaf of bread occurs.

Buy more supply to your demand from the customers or raise the price without getting anymore supply to your demand of the customers and just rob them blind due to shortage and desperation. We choose to be robbed by corperations.

Congress made it worse by not passing stim checks early enough and make it clear more would come. I had doubts they would come through and my decision might have been prices too knowing our govts ineptitude with the covid response Less risk by not counting on the dems and repubs

Option 2 is bad. Is option 1 even worse for the environment? Forever growth of goods on a finite planet?

Do you think Wolff hangs out with 50 Cent ?

FED QE FOREVER ???

But isn’t is also more expensive for businesses to buy more inventory?

we have inflation because the Wealth want to bankrupt as many people Republican or Democrat or any person without incomes over $400,000 salaries. INFLATION HAS NOTHING TO DO WITH ANY OTHER DETAIL... it's to extract wealth period.

So, business should not have raised prices to keep up with rising expenses?? This guy is naive.

elizabeth taylor usa. sound too low. again. why don't you fix this? people on either side are loud enough.

If everybody like me is ordering more goods because people have more money to spend, won't the capitalists who are selling those goods to all of us for resale be raising their prices? And aren't people with more money to spend disposed to bid up the prices of things they really want? Isn't it really just wishful thinking to believe prices won't go up when money is more plentiful?

I respect you Dr Wolff, but that was NOT a very good explanation at all!!

This is stupid. The total amount of U.S. dollars represents the total amount of U.S. wealth. If there were only ten U.S. dollars ever printed, meaning $10 represented all of U.S. wealth, and you had just 1 dollars, then that would me that you own 1/10th (or 10 percent) of the total of U.S. wealth. Let's say you have that 1 dollar, but then the government prints 100 dollars, then you own 1/100 of U.S. wealth instead the 1/10 that owned before. The government prints $1000, the you own 1/1000; government prints 1,000,000, then own 1/1,000,000.

理查德沃尔夫教授，你好。 你认识中文？或者，你有没有来自中国的留学生？或者，你有没有在中国留学的学生？ 我有一个完整的思想体系，我打算寻找外国大学和研究机构做社会实验，实践检验一下我的思想究竟怎么样。 不知道您是否感兴趣？ 我打算让哲学家、思想家、政治家先成为资本家，然后再让全人类一起都成为资本家。 是的，没有错，我希望这个地球上的劳动者都成为善良的资本家。

So what stops the coop from doing the same thing?

@RDWolff You were on 'The Hill' back in September of 2019 warning about the upcoming crash. You weren't alone, lots of other outlets were reporting on the Fed dumping trillions into the market and repo markets being super weird too. Why do you never bring up that you were right? Sure, it was the worst pandemic in a hundred years that sparked and exacerbated the crash, but it could've just as easily been that oil feud between Russia and OPEC that crashed oil prices, or the Ever Given, or just the kerfuffle around the election.

Wait a minute you mean to tell me Biden didn't call up all these businesses and tell them to raise prices? That's not what all the Facebook memes tell me

When taxes on the rich are high the rich are forced to shelter their incomes by reinvesting in their businesses with new hires and expansion of infrastructure. When taxes are too low they will actually GUT thriving businesses to put more untaxed money into their own pockets. (Think Sears and Toys R Us.) We need to go back to a top marginal tax rate of 70% if we're ever going to fix this economy. When taxed were at that level (40s thru 70s) economic growth was TWICE what it been since Reaganomics began destroying the middle class.

So inflation technically doesn’t have to happen, lol

Oh geeze! How can he explain it any clearer after repeating himself every week about inflation? Literally every week. Lol