Hey there,
The last year or so I keep hearing the term ‘Greedflation’ pop up more and more. The Idea here is that there are greedy capitalists that are raising the prices on goods and services faster than their own costs are increasing and this is causing prices to rise.
Now if I think about it inflation is always based on some price increasing, and sometimes because there is some shock that limits how mch of something is available. Oil is scarce because of some natural disasters or war, food is scarce because of drought, etc.
Most of the time there are other sources of the same resources (different crops), or the resource was horded before (‘strategic’ oil reserves), in both cases someone is able to charge more (eg Profit) from the situation.
So now it sound to me that normal inflation and greedflation are both simply based on one entity in the supply chain increasing the price to take advantage of the situation. Whether you call it greedflation or not depends on whether your personal “in” group is profiting from or or not.
Where is my thinking error here? Is greedflation a real thing?
Normally inflation is not based on “one entity increasing the price”. That’s literally just supply and demand. Inflation is an increase in all prices, not just one or two goods. One entity or group usually can’t influence all others.
Examples of situations where nobody benefits from (higher than normal) inflation are things like natural disasters. If all farmers’ crop yields are lower, prices increase but each farmer may make less money than they would otherwise.
A shortage of some supply input due to a localized problem (say semiconductors) may cause prices to rise worldwide. If there is a natural disaster (of political issue, etc.) in the region producing the input, no one is the winner because factories may literally be closed.
Greedflation is like a minor form of price gouging. The inflation is real (caused by real factors) but some companies are increasing prices a bit more. Like someone charging too much for bottled water after a hurricane.
I like the idea of replacing greedflation with price gouging, might bring people back to the actual problem.