Thoughtful article. Keep the data flowing

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It's astonishing that no one wants to touch price controls as the answer to this problem. This reminds me of the joke of two inmates in a prison cell. One guy wants to hang a picture on the wall, but he's trying to bang the POINTED end of the nail into the wall with no success. He's slams down his hammer in disgust and declares: "These idiot prison guards can't even give you nails with the point on the right end!" His cell mate points to the opposite wall and says: "You idiot! Don't you know that nail is meant to go on THAT wall?" Neither man can see the obvious solution to the problem.

Think of the pandemic this way: suppose New York City is blasted by a rogue cold front and temperatures plunge into the single digits in the middle of July. What should New Yorkers do? Curse the cold and stay indoors, stop going to work and curtailing their shopping trips and restaurant visits, or should they get their winter coats and sweaters out of storage and weather out the deep freeze? Yes, it's weird to wear a winter coat during a New York summer, and it's weird to slap on price controls--except in the middle of a pandemic. You do what the circumstances require.

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As a small-time real estate investor, I can see that money is flowing into the housing market. It is not, however, increasing supply and reducing prices. It is driving up the valuations used for loans. Those loans, however, are justified by stickiness in the "cap rate", the ratio of net rental income to valuation. So rents are rising, not falling, because of increased investment.

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Back in December, 2021, Matt Stoller wrote a great piece on the contribution of profiteering and price gouging to the current high inflation.


As he is quick to admit, his methodology is a rough, back of envelope calculation, but he came up with a figure of about 60% of inflation being caused by companies with market power raising prices much higher than their increased costs would justify.

His solution, which makes sense considering his focus on monopolies, is a much more robust antitrust regime. With Lina Kahn at the FTC and John Kanter at Justice it looks like we are getting just that.

However, antitrust is a long-term solution and isn't likely to help in the near term.

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Plastic. PVC. Out of control prices. I am building a house (it was NOT pandemic inspired - it has been a long time goal with unfortunate timing). Underground power or overhead. Does not matter, the supplies for this work are off the charts prices. I was quoted about $8200 for 350' underground set up. The PVC alone for 2 runs: power and communications, was $3700. The labor was a mere $1400.

I got a generator, so I had to get a gas can for premium gas for it. $35 for a 5 gal plastic container. At $4.85 a gallon it is still cheaper to fill it with gas!!

And China - which makes everything for us - stopped accepting our recycling, so all the plastic that could be recycled for something like a gas can isn't getting there.

And if you think prices for this kind of stuff is coming down anytime soon you are dreaming!!

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Thanks for keeping inflation top of mind. Various economists recognize inflation as the last tool available for twisting discussions to fit their economic world view. They muddy the waters wonderfully when they get to feel and describe their piece of the elephant.

Every pricing decision is an individual decision. The perceived forces for raising prices go through one mind or one committee. There may be forces arrayed against forces perceived as requiring increases. One I deal with is eating costs for customer good will or to avoid perturbing a well understood price structure.

There is no inflation ether that permeates the universe (like the ether that supposedly carried electromagnetic energy per late 1800 theory). Inflation is the sum of millions of atomic decisions. Attention to that sum may become a force itself although I think it's really only an excuse for public (including economist) consumption.

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Worth noting: monopoly expert Matt Stoller credits profiteering with 60% of current inflation.

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Why not limit price increases to the rate of inflation? Publish the comparisons and you have identified the price gougers for the consumers.

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