Janet Yellen Rejects Idea Corporate Greed Is to Blame for Inflation
Treasury Secretary Janet Yellen rejected the idea that corporate greed is causing the US inflation surge, differing with fellow Democrats who have accused big businesses of price gouging.
A product (or service) is worth what the customer is willing to pay for it. Nothing more, nothing less, nothing else.
– Desert Dave
(Quotation, with attribution, permitted and encouraged.)
I recall reading somewhere that inflation is caused by to much money chasing to little product or service?
A member of an FB automotive group posted a pic he took of a Ford “Lighting” on a dealer’s lot: $69,000 for the truck, plus a $69,000 “market adjustment”.
A product (or service) is worth what the customer is willing to pay for it.
If you need to get to work in Shinyland, where mass transit is non-existent or ineffective, you need to buy gas for your sled. You can’t run right out and buy a more economical vehicle, because “shortage”, or the model you would like has been discontinued altogether. So, how much discretion do you have whether to buy that $5 gallon of gas?
Your 3 year lease on your sled has run out. The dealer refuses to honor the buyout clause, and takes your ride. How much discretion do you have in buying a new car between “shortage” and “market adjustment”?
Car leaseholder struggles to exercise buyout agreement terms Due to low inventory, some dealerships refuse to honor buyout agreements
In a free market with plenty of competition, the price is set by supply and demand. In a market with monopolies (only one supplier or collusion between suppliers) prices are set by the supplier without regard to cost of production. That is pure greed.
Most products have “elastic” prices. If the price goes up, fewer customers will buy. For example, if gas prices rise, people can decide to stay home instead of taking a Sunday drive in order to use less gas. If beef prices rise, people can eat beans to get protein.
However, many products have “inelastic” demand. Prescription drugs without a generic alternative are inelastic – in many cases, the consumer is in a life-or-death situation and is forced to pay the high price.
The answer to high prices is more competition. The government can and should either break up monopolies or control their prices (as they do with electric utilities). The government should remove barriers to production to enable competitors to start new businesses which can reduce prices. An example is Mark Cuban’s CostPlusDrugs.com which was recently started to undercut the pharmacy middlemen who jack up drug prices.
A member of an FB automotive group posted a pic he took of a Ford “Lighting” on a dealer’s lot: $69,000 for the truck, plus a $69,000 “market adjustment”.
That is a classic example of basic monopolistic pricing behavior. Monopolistic pricing maximizes profit at two times the normal competitive price point. In the example, it is not the mfr doing the gouging, it is the “independent” (?) dealer in this case.
Monopolistic pricing maximizes profit at two times the normal competitive price point. In the example, it is not the mfr doing the gouging, it is the “independent” (?) dealer in this case.
I don’t recall which dealer he saw that Lighting with the 100% price bump, but there are lots of Ford dealers around. Hardly the classic monopoly market. Collusion, on the other hand? Or maybe just counting on the laziness and ignorance of the typical Shiny consumer.