Pricing Power : The phenomenon where the value of money falls below the price of goods is called inflation , and it is said we are currently in an era of inflation. However, it’s not that simple. Inflation is realistically characterized by prices not rising all at once during an inflationary period but rather increasing rapidly for some items and slowly for others over several years. This phenomenon is known as the ‘ Cantillon Effect .’ In other words, inflation is neither uniform nor regular. Conversely, when prices fall below the value of money, it is referred to as deflation . To survive deflation, companies must innovate, often by reducing costs and expenses. During inflation, rising costs must be passed on to other economic agents through increased prices, a concept known as Pricing Power. Since companies cannot pass on all the rising costs, many go bankrupt during periods of inflation. - Joseph’s “just my thoughts”
Weather forecasters on the news often feature well-dressed meteorologists who diligently explain the weather using various meteorological terms. But if the forecasts were always accurate , there would be no need for such lengthy explanations. People wouldn’t complain if it were simply raining or not, if the temperature was a few degrees, and if the humidity was comfortable or uncomfortable. However, since there’s a chance the forecast could be wrong , they try to explain it thoroughly to ask for people’s understanding. Do you see why simplicity is great? Simplicity is great because no one can simplify it haphazardly. - Joseph’s “just my thoughts”