Stop me if you have heard this one before, but lately the Democrats have tried to tell you that it is not their inflation causing policies that are driving up the prices of everything, but rather it is just corporate greed.
They even love to throw out big numbers with large percentages in order to inflame you on an emotional level.
However, the one thing they will not do is provide you with the economic reality behind those numbers to show why it is not in fact corporate greed at all, let alone it being responsible for our current economic woes.
So why then are the numbers going the way they are?
Well, let us start with some holistic understandings that are critical to unraveling the entire thing:
Now that everything is manufactured overseas and trucked from state to state (this includes food), energy costs have become one of the largest contributors to the price of everything that we have.
Profit margin cannot be solely defined as COGS (cost of goods sold) deducted from sales price. Replacement cost must be factored in unless the company intends to no longer sell the product in question or to close their business.
Company profits are no longer considered on an item by item basis, but rather on what are called "turns." The count is how many turns of your inventory you do, and then how much is the average profit per turn. Though this can be slightly different for non retail type businesses, the profit mechanism is much the same. How many jobs can you complete (turns), and how much is your average profit per job?
Now that we have these basic understandings, I am going to attempt to take a wildly complex economic understanding within the world of macroeconomics, and distill it down to a simpler and easier to follow concept.
What follows should not be considered the full understanding, but rather a primer for you to begin to grasp the intricacies of global supply and demand economics and how small stones can have massive ripples.
Let us say that I am a global retail giant. We will call the company SamMart, and that this company has a store brand called GoodValue.
Now any resemblance to any real life company is purely coincidental... (yeah, right)
As the company, I purchased a box of 100 widgets from China at $1.00 per widget. I estimate that my operating and transport costs will be another $.50 per widget. This means that I am paying $1.50 per widget in order to sell it at my location.
Now, I am going to make a 10% margin of ACTUAL PROFIT on this, so I will sell each widget for $1.65. Now, most liberal commentators will not take into account anything past the $1.00 I paid for it, so they will try to convince you that I am making $.65 in profit per widget, or 65% profit, but in truth, I am really not.
Oh, but wait, it gets better.
While I was waiting for these widgets to arrive, the government decided to institute policies that drive up the price of gas by 80%. Now, instead of $.50 per widget in transportation and operating costs, I will be paying $.75 in transportation and operating costs, and I STILL have not gotten my widgets.
So when the case arrives, I look at what it cost me to transport them, and what it will cost me to transport the next batch, and so I raise my prices from $1.65 (which would be a $.10 loss on each widget) to $1.95, which is still only $.20 in profit, which is a jump, but not nearly what you will be told it is, and in truth, when you add in many of the other increased factors that come with that COLA, I will likely not be making more than $.15 in ACTUAL PROFIT per widget.
Yet the liberals will come out and say that I increased profits by a "whopping" 19% (if they're being nice and quasi-honest) when in reality I am only making the exact same profit I was before. The government simply drove up the price of everything.
"Oh, but wait, there's more!" (To quote an old commercial)
You see, in the mean time, the government has been doing some social spending, so they've driven down the value of the dollar against other global currencies by increasing inflation. So when I go to reorder by widgets from China, now instead of being able to get them for $1.00 per widget, I now have to pay $1.25 per widget because the dollar is not worth as much. And I still have to pay the $.75 in transportation and operating costs, so now my cost is $2.00 per widget, and I still need to make 10% total VALUATION profit to maintain the same ACTUAL buying power return on investment for my investors so now instead of making $.15 per widget, I am making $.20 per widget because that is the same number in the new devalued currency.
So now I am selling these widgets at $2.20 instead of $1.65, and I'm getting BLASTED by the corporate and leftist media for having 33% price increases and 25% profit jumps ($.15 vs. $.20). But in the end, after currency devaluation, I'm still making the same actual profit per widget, it just looks different because the money that you are spending is LITERALLY worth less.
This cycle continues on and on and on, and the only thing that does not go up is wages, because if that cost goes up too, then the $2.20 per widget is just a pipe dream.
You see, the liberals try to fool you with big numbers and eye popping percentages, but in the end, it is all kabuki theater to cover the reality that their policies are behind all of the price increases as companies ARE NOT going to make less money. They will simply repurpose and repackage whatever they need to in order to get their profits to the same percentages as they always have been.
If the numbers look bigger, that is because they are, but it is not because the corporations are taking more by percentage, it is because your dollar is literally worth less and less, and your wages will never keep up with inflation.
Ever.
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