Current Events > Will inflation rates ever go down?

(+) Yeah! (+)

WingsOfGood posted...

It doesn't matter whether it does or not.

Starbucks won't lower a cup of coffee because inflation went down. Nor will McDonalds drop prices. Nor will the meat packing companies.
and on and on

Gas has gone down before. And there have been breaks in McDonald's menu before.

Cocytus posted...

Gas has gone down before. And there have been breaks in McDonald's menu before.

Hes right though, its not in these corporations (or by extension, their shareholders) best interest to ever reduce pricing. Their shareholders and boards just dont go for that kinda thing. Oh sure, maybe theyll offer up a very small promotion or temporary discount and be like hey, we dropped prices!! to try to look good and drum up business, but once a new bar is set, youre never going back to the old pricing. Pricing only gets reduced if its necessary in order to crush their competitors.

Gas is a bit of a different beast. There is such a hypersensitivity to pricing there and outrage when gas spikes that levers do need to be toned down in order to control pricing. Lets not also forget that for any corporation producing goods, gas prices directly impact their bottom lines and you have major lobbying from those groups taking place to ensure gas costs are kept under control and inflated prices arent eating into their margins. To that end if gas does go back down, companies will just keep their pricing flat and absorb that favorability as profit, as per my previous paragraph.

Rinse, repeat, and the cycle just keeps going on and on.

No, the default action of government is the print greater and greater levels of money.

TerraSeeker posted...

No, the default action of government is the print greater and greater levels of money.

They plan to have a specific range of inflation and really want to avoid deflation.

Making more money doesnt really cause inflation, like if they made money and then proceeded to like lock it up, nothing would happen because the money isnt interacting with anything. Though no one would make money without the intention of using it, it would be possible for attempts to inject more money to fail to stop deflation.

Inflation happens when either the amount of money in or attempting to be in active use increases relative to the supply of goods/services or when people lose faith in the currency.