Inflation. Why isn't a McDonalds Big Mac $50?

[WarGamer]

Why isn't a 2 bedroom apartment in Dustnsteers, Kansas $5000/month?

First thing, automatically assume that Corporations will maximize profit. Their shareholders insist on it.

A Big Mac isn't $50 today because no one would buy them.

https://online.hbs.edu/blog/post/willingness-to-pay

Willingness to pay, sometimes abbreviated as WTP, is the maximum price a customer is willing to pay for a product or service. It’s typically represented by a dollar figure or, in some cases, a price range. While potential customers are likely willing to pay less than this threshold, it’s important to understand that, in most cases, they won’t pay a higher price.

“What the concept of ‘willingness to pay’ is telling us is that whatever your willingness to pay for a product might be, and wherever it comes from, you’re just not going to pay more than that [amount] for it,” says Harvard Business School Professor Bharat Anand in the online course Economics for Managers.

Willingness to pay can vary significantly from customer to customer. This variance is often caused by differences in the customer population, typically classified as either extrinsic or intrinsic.


Thus, prices today show that consumers ARE willing to pay these high prices.


When someone has more money in their pocket, they're willing to pay more for products because... well, they can afford it.

Don't like the price of lumber today? Well... when home mortgage interest rates are 5-6% and the real estate bubble has burst, lumber costs will go back to 2018 levels.

Likewise, McDonalds will bring back the "Dollar Menu" when people steer away from the McD drive-thru because they're not WILLING TO PAY the price.

Basic ECON101 or BUS101...

You can't have a flourishing economy with stagnant consumer prices.

And labor costs are being directly passed on to consumers... as an overhead, just like Corporate taxation and cost of materials.

So what's the solution?

The FED likes to call it "putting the brakes on the economy" meaning increased interest rates which will negatively affect the stock market.

The FED is holding an "Emergency Meeting" this week and Wall St. rumors hint there may be a surprise rate hike coming this week. I've heard as much as 75BP

2022 is going to be a rough year.

In the market, I'm no longer holding ANY long positions. I'm trading weekly options and mostly day-trading... "scalping" for those who are familiar. I may dump CASH into the market if I sense a "March 2020-like" bottom...

[doc03]

1. I have a free Big Mac with a $1 purchase on my

McDonald's app nearly every day. They have another free Big Mac for each time the Penquins win. I haven't had one in at least a month, they aren't that good IMO or very healthy.

[Doodley]

2. "You can't have a flourishing economy with stagnant consumer prices." Japan?

[WarGamer]

3. Japan doesn't have a flourishing economy.

Although their projections of FY 2022 look decent...

[multigraincracker]

4. You have confirmed what I always thought.

The market is not about supply and demand.

It's about what the market will bear.

thanks.

[bucolic_frolic]

5. I've seen some prices advance and some retreat this past week.

But I'm wondering if there are different prices on the weekend from during the week. Seriously. Won't know until the next trip to the store.

Markets? Scalp, or hedged. I'm hearing 50bp tomorrow, or the end of bond purchases, tomorrow. Or even today.

Inflation belongs to Helicopter Ben. He started all this. As bad as 2009 was, the cleansing was mostly in investment banking and mortgage-based debt. And the COVID stim should have fed consumers instead of businesses, taxpayers, and households. Congress created bubbles along with the FED. Inflation is the fallout, in my view of course.

[milestogo]

6. Yuck.