Is it possible that the rich are so rich that they have created inflation?

Comments

• 9point6@lemmy.world ⁨11⁩ ⁨hours⁩ ago

  Yes 100%

  Wealth generates income, that income can’t sit as cash or it will lose value, so they need to invest.

  When the ultra wealthy invest, it’s less important to get the best price for an asset than simply getting it. That money needs to be spent. So if there’s competition for an asset, they will spend more to get it.

  When that happens, the price of the asset goes up.

  Those assets ultimately determine the baseline cost of everything else. Can’t grow food if you’ve not got a farm. Farms being more expensive make food more expensive.

  This isn’t malicious, this is just how it has to be when you have ultra wealthy people. They must invest, they must take property away from everyone else.

  The ultra rich are actively pricing us out of living.

  The ultra rich need to go

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  • yyyesss@lemmy.world ⁨4⁩ ⁨hours⁩ ago

    I agree with everything except the “not malicious” part. eventually you have enough and should stop.

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    • 9point6@lemmy.world ⁨3⁩ ⁨hours⁩ ago

      TBF I more meant they weren’t actively trying to be malicious in many cases

      You’re entirely right that they are malicious though

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• TauZero@mander.xyz ⁨15⁩ ⁨hours⁩ ago

  No, money at rest does not create inflation. It is the consumption of goods and services through use of money that does. Trump could mint a one hundred trillion dollar coin and put it on display in the White House, and this would have no effect on prices, even though he is now richer than all Americans put together… as long as the coin stays on display. But the moment he tries to deposit the coin at a bank and start spending its value to pay for goods and services, all prices will skyrocket, because now there are more dollars competing to buy the same amount of food, the same number of houses, the same number of services, that existed/was being produced before, the same that you are trying to buy.

  Remember those news articles last year how the wealthiest 10% of Americans drive 50% of consumer spending? That’s how the rich influence prices. Not hoarding - consumption. The poorest 90% (those earning less than $250k/year, namely you) only have access to 50% of food and consumer goods and such. One person from top 10% consumes 9x more than one person from bottom 90%. If wealth inequality did not exist and the 10% consumed as much per person as the 90%, then you would literally be able to buy 1.8x as much stuff as you can now, with no other changes in productivity required.

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  • adb@lemmy.ml ⁨11⁩ ⁨hours⁩ ago

    So the rich are so rich that they create inflation, just not because of literal hoarding, got it.

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  • Zwuzelmaus@feddit.org ⁨14⁩ ⁨hours⁩ ago

    Trump […] he is now richer than all Americans put together…

    I don’t think so. Neither with Dollars nor with things that really make you rich.

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    • TauZero@mander.xyz ⁨14⁩ ⁨hours⁩ ago

      You overlooked the hundred trillion dollar coin inside the […].

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    • unmagical@lemmy.ml ⁨14⁩ ⁨hours⁩ ago

      You can’t just remove an entire hypothetical that the example was predicated upon and expect to get the same meaning.

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• zxqwas@lemmy.world ⁨13⁩ ⁨hours⁩ ago

  No. Governments (Central banks usually in charge of this) try to create mild inflation to discourage hoarding money.

  The rich also don’t horde money, they hoard assets. Usually stocks in companies.

  Inflation is caused by there being more and more money in circulation competing for the same stuff, or less stuff produced.

  Wealth inequality cause a lot of problems, inflation is not one of them.

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• Thedogdrinkscoffee@lemmy.ca ⁨13⁩ ⁨hours⁩ ago

  I’m going to disagree with the crowd so far, respectfully, and say yes it does happen and is hapening now.

  Defining inflation loosely as more dollars chasing fewer goods…

  When the wealthy become filthy stinking rich, they start taking that capital and malallocating it economically. If food is expensive, building sufficient greenhouses can return food prices to something bearable. The super-stinking filthy rich prefer to deploy capital on super-yacht-makers, private jets, space programs or similar world dominating power grabs. They have no interest in reducing hunger or helping lower prices for food. You can starve to death for all they care.

  Equally, the more moderatly rich would rather buy up all the rental housing and jack up rents squeezing everyone, rather than building homes anyone can afford to live in. When homes are proced as a financial instrument and not a residence, normal people are pusjed out of the market completely and we are left with a tight supply a captured market and crushing inflationary housing costs. The people crushed by rent can never get into the market, and the people in the market never want prices down ever again.

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  • jimmy90@lemmy.world ⁨8⁩ ⁨hours⁩ ago

    this

    the financialisation of eevrything and investments there-in create huge inflationary pressure

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  • Drusas@fedia.io ⁨11⁩ ⁨hours⁩ ago

    This doesn't sound like it's in disagreement.

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    • Thedogdrinkscoffee@lemmy.ca ⁨4⁩ ⁨hours⁩ ago

      At thebtime I wrote this there were 2 or three lengthy “no” responses. I was disagreeing with them.

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• TheReturnOfPEB@reddthat.com ⁨15⁩ ⁨hours⁩ ago

  they did it explicitly with the prices of RAM

  so yes

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• Perspectivist@feddit.uk ⁨12⁩ ⁨hours⁩ ago

  Rich people don’t hoard money. You don’t get rich by doing that. Most of their wealth is invested - the money is put back into circulation. What they do hoard is wealth but that mostly means things that can be easily sold and turned into cash but it’s not cash they’re hoarding.

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• GreenShimada@lemmy.world ⁨14⁩ ⁨hours⁩ ago

  I’ll agree with “no, not really.”

  Inflation happens when demand for something goes up, and/or cost of production goes up (or speculation on the cost of production or restocking something). So with RAM, a few companies bought it all up, so the prices went up. In January 1848 shovels and picks were normally priced in San Fransisco - then the gold rush started and prices went up because people showed up to buy them faster then they would be made. Uber surge pricing is based on the same idea.

  The argument against the minimum wage going up is that it would cause inflation because increased wages would make things cost more - AND that shitbag stores would see people with more money buying more things and say “see? more demand. Let’s raise prices!” While COVID and post-COVID inflation is unique, a lot of that was tied to increased costs because supply chains fell apart and made it hard to get all sorts of things, everything from groceries to plastic goods shipped from China. This was a global thing, not just in the US. Why did the price of locally produced coconut cookies go up in Nigeria in late 2020? Because there were no plastic containers from Nigeria to put them in to sell.

  So inflation can happen either across the entire economy, or on singular things. So for the rich getting richer, inflation would be more likely on things they go in for. So RAM is one example. Exotic sports cars are another example, the number of cars made is kept low, which increases price. Especially if there’s a trend where every rich person wants a specific Ferrari, the price on that goes up and others wouldn’t.

  Based on this, what is money not being spent going to affect? Nothing other than people with rich people goods over-pricing them on spec, which is just trying to lure rich people into spending money, or if everyone knows rich people are hoarding wealth, they’ll raise prices for them since they expect them to be able to pay more. That’s risky, as it has to be coordinated and targeted. Rich people are also usually finicky assholes, so it’s easy for them to just talk shit about the high-priced thing that’s only high-priced for them.

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  • slazer2au@lemmy.world ⁨13⁩ ⁨hours⁩ ago

    Inflation happens when demand for something goes up, and/or cost of production goes up

    You forgot the other way inflation happens. Corporate Greed.
    Increasing prices of products to generate more money even though nothing else has changed.

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• bryndos@fedia.io ⁨13⁩ ⁨hours⁩ ago

  Yes, not necessarily "because" they hold wealth, but as a consequence of how they got there. It's more of a symptom. Although collateral makes it easier to borrow from a bank, and banks create money supply, thus creating inflation every time they make an investment that wasnt productive. (edit: timing matters here, probably better to say they create general inflationary pressure until their investment becomes productive).

  Any transfer not connected to production can create inflation, especially if they borrow money to do it.

  TBF second hand house purchases do this if transacted for a higher price - and linked to a mortgage. So all property owners are at it to some degree - unless there is price regulation , rent control, or sufficient social housing to prevent housing congestion.

  Same is true for amassing market power in other markets where you do it to extract supernormal profits rather than increase production.
  Simple example would be to monopolise a product - a rational monopolist will jack up prices and withhold supply. So long as they're not regulated directly or by a credible threat of market entry and competition.

  Now combine the two, convince a bank to lend you money in order to buy out all your competition and amass excessive market power. Then you've created both money supply driven and product specific inflation. Nice!

  Might as well grift some govt subsidies that don't actually commit you to producing anything whilst you're at it - if govt borrow to do it then you might get some more money supply based inflation.

  If you're effective at this then dumb short sighted investors keep throwing money at you in the hope that you'll keep doing it and give them a slice of your monopoly profits - in fact it might be "short-term" rational to do this - but i suspect / hope that is due to an underestimated risk.

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  • Drusas@fedia.io ⁨11⁩ ⁨hours⁩ ago

    Most people get there by inheritance.

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• Eddyzh@lemmy.world ⁨13⁩ ⁨hours⁩ ago

  If you have debt, like owning a house on a loan. Or a company or whatever. And your debt is greater than your wealth(equity).

  Then inflation makes you richer. Since your debt gets less worth while for example your house very often does get even more Worth.

  Now if you have more money invested in stuff that most of the time has (much)better return than inflation. You still get richer.

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  • Eddyzh@lemmy.world ⁨13⁩ ⁨hours⁩ ago

    So for example after covid when inflation went high. Generally rich people got more rich on average.

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