I agree. I'm simply acknowledging that corporate greed also plays a major role in all of this. Sure, some markets like housing and being driven by supply and demand, but others, like cous cous is the company thinking that they can cash in even though supply and demand hasn't changed.
The supply of
cash changed. It's the measuring stick for supply and demand.
Prices adjust in response.
This process isn't instant, it takes time through transactions to occur.
If the government increases the money supply by 20% it doesn't mean the price of Fritos, cous cous, and housing will jump 20% instantly.
Housing might go up 10% in the first year, while Fritos and cous cous go up 100%, but when house prices go up another 10% the next year consumers can't spend as much on cous cous, so the price they clear the shelf falls back, maybe only up 50% from two years earlier.
This is where inflation is a danger to producers, because if they misread the first round of price increases as permanent they might make a five year investment in new production facilities. If when the new production comes online the price has fallen back the investment that seemed a no brainer is suddenly a bust.
This is why they raise production more cautiously than prices.
But this happens across a myriad of products too numerous for us to genuinely track, and there's no predictive constants we use to measure how much I value an extra bag of Fritos, or you some cous cous, versus our other expenses. Just discovery through the price mechanism. When producers guess too low the shelf is empty, guess too high, they can't get product to move off the shelf. What it costs them to produce the good doesn't tell them what they can get for selling it. They have to discover that part.
When the government changes the pool of money, the producers have to scramble to find the new set of prices that rebalance supply and demand in light of the new money.
