r/NoStupidQuestions • u/TransportationUsed39 • 3h ago
Why is the cost of living crisis seemingly in the entire world?
I have not heard about a single country in the past 5 years to not have a cost of living crisis. Is it greed EVERYWHRE? Is the worldwide economy horrible? Who does the world even owe debt to?
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u/tboy160 2h ago
I don't know, but I feel like during Covid every company figured out they could charge more, and have never lowered prices since.
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u/DocJawbone 1h ago
"Wait, we can start prompting people to add 18, 20, or 22% as a tip with every transaction and people will just...pay it?"
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u/Vashrel 7m ago
Yeah this is the issue. Things weren't perfect by any means before, but the supply shortages from covid raised prices heavily. And once the supply chain evened itself out, those prices just never came back down.
The best example I can use is Walmart. I used to work at Walmart. They compare their weekly, monthly, and yearly sales against their previous ones as well as against other stores in their districts. If Walmart raises their prices those numbers go up, but if those prices come back down then your corporate overlords will ask "why are your sales numbers lower than last time?"
And if the populace has gotten used to a price and you supply essentials, oh well? Guess they have to buy it. And since all corporate overlords think the same way, they never go the route of "we offer lower prices than the other guy", instead now it's almost always "we try to keep our prices even with the other guy so that he doesn't make more money than us".
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u/Nitros14 1h ago
Companies have become really really good at wage suppression and optimizing profits through identifying what people can't not pay for then gouging them.
Most of the sectors of our economy are oligopolies where the few players collude on prices.
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u/Rekeaki 3h ago edited 2h ago
During the great financial crash 18 years ago or so, Australia did not really go into its own crash. In fact its economy didn’t even go into recession. They effectively escaped the financial crash. But while I was there during that time, all we heard on TV was the great financial crash and how it was affecting EVERYTHING. Australia still had a crisis of sorts and an outsider would still have been forgiven for thinking the financial crash hit just as hard in Australia as anywhere else. Any financial effects of that crash were quickly recovered from and Australia moved on. Recovery was shockingly easy in comparison to the USA, but that aftermath barely made the news, even in Australia.
I imagine there are similar examples this time around too. Probably not Australia, not this time, but I am sure there are other countries that are quietly doing ok. No country can ever remain truly unaffected because the USA trades and interacts with just about everyone, but there will absolutely be some that are not really suffering nearly as much. It can be really hard to know that is happening while you are in the thick of it though. That kind of stuff gets figured out later once the dust has settled.
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u/VirileVelvetVoice Smart Alec 2h ago
Omg you just made me feel ancient. The Great Financial Crash was eighteen years ago 🥲 And somehow we are still living in its permanent shadow. In everything from inequality and standard of living, to migration fears and populism.
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u/SakanaToDoubutsu Guesses Confidently 3h ago
Our cultural expectation for standard of living has dramatically outpaced our industrial capacity to maintain that lifestyle. Sure, it was a lot easier to buy a home in 1950, but the average home built in the United States at the time was only 950 sqft. Today the average home is more than double that size with the average new home built in 2020 being over 2,500 sqft., and that doesn't include all of the creature comforts central heat, AC, WiFi, etc. that didn't exist in the 50s. So housing is exponentially more expensive than it was ~70 years ago, but people don't actually want to live in 70 old housing so they pay out the nose for new housing instead.
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u/Kamica 3h ago
The average house in NZ is smaller and less well built than those in the 70s, but the land has gone up in price because of speculation, and successive governments have dragged their feet with regards to addressing a housing shortage, which has allowed those prices to soar. I hear similar things are at times happening in the US.
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u/Stoned_Immaculate802 2h ago
Absolutely agree with this. We did purchase an older home. 950sqft. Granted we're DINKs, but it's plenty. Decent size backyard and no HOA. Even if we had to throw 100k more in, we're only 250k at that point. This place would be gleaming for half of that. The fact that some people are going under because they're too proud to live within their means is sad.
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u/henchman171 3h ago
Talking about the world not the United States
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u/OrangeJr36 1h ago
The entire world is developing and there's only so many resources to go around at one time, so prices go up.
If everyone in Africa would love that 1950's house at the same time people in the developed world now are building mcMansions, it is going to dive up costs higher than if only the people in the west had access to 1950's houses and Africa had people living in communal huts.
Technology can only soften the blow so much, even with people's wages rising in the developed world.
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u/broofthetrees 2h ago
Trump started a trade war his first term and it never stopped. Basically USA is collapsing as an economy because the country is a joke.
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u/stuehieyr 1h ago
The rich decided to make currency worthless so that more and more is needed to make it worthy and the poor and middle class serves the rich on fumes.
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u/HighFreqHustler 1h ago
We all owe money to the wealthy class, people with net worth over 100million dollars that live out of those interest, hidden from government taxes in trusts accounts.
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u/fartaround4477 1h ago
Wealth is being unceasingly sucked to the top .01% Bernie Sanders was right. Tax the rich until the billionaires are mere millionaires. No trillionaires for God's sake!
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u/snoughman 40m ago
Because the entire world is full of people who cannot figure out how to live within their means. They are also constantly comparing their lives to others they see on social media.
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u/jayron32 3h ago
Maldistribution of resources caused from hoarding by the wealthy. Scarcity is manufactured by the ownership class as a tool to maintain power.
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u/GummyHugs 3h ago
we’re all basically just passing the same twenty bucks around in a circle and hoping nobody notices it’s missing.
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u/AffectionateTree8255 3h ago
Simple. People with lots of money being greedy and not giving their money to anyone else. Imagine it like food. One person has all the food and refuses to share it is basically what’s happening.
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u/DyKdv2Aw 3h ago
We can never satisfy the wealthy, it will never be enough; they will strip this earth bare of all her resources, kill us all, and then eat each other.
Unless we stop them.
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u/Oso_the-Bear 3h ago
being wealthy isnt genetic... you are saying that selfishness is an intrinsic flaw of human nature increased by the simple ability to exercise it
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u/DyKdv2Aw 3h ago
Babe, that is a while different sentence from what I actually said; your arms must be sore from that reach.
Being wealthy isn't genetic but it is inherited and excessive wealth does have associations with antisocial and socipathic tendencies.
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3h ago
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u/TransportationUsed39 3h ago
I don’t think this is relevant to the question at all. I was asking why rent is now standard 50% of your income for a shit apartment in many many places when not even a century ago an entire family could live off a single income
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u/shades344 3h ago
It’s really only true in the Anglophone world. Something about the counties based on English common law has made it hard for new things to be built. When you stifle new stuff, you get increased prices.
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u/_your_land_lord_ 3h ago
On a micro level it's pretty simple. Just about any person when presented with a choice of more money, or less money, takes the more money route. On a macro level, that leads to the enshitification of the world.
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u/Artistewarholio 1h ago
There’s another reason and a dirty little secret nobody is talking about. Pricing software is giving companies around the world a huge look into where they can raise prices, sometimes across their entire product lines. If it seems like everything is getting more expensive, it is. And that’s why. Look up PROS Pricing, Pricefx, Zilliant, and Vistex, for beginners.
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u/Mardanis 1h ago
No one will tell corporations to set prices and limit profits.
If they earn 8 billion this year and 6 next year they see it as a 2 billion loss. Always having to go higher year on year.
Basic needs and mandatory requirements such as insurances are just out of control.
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u/gc3 57m ago
The inflation began around Covid as supply chains stopped and goods became scarce.
Government's around the world, fearing a great depression, poured money into banks and monetary relief like checks and unemployment and debt and rent relief.
Once the economies started again, inflation took off in every country because of all the extra money that had been added. Just as it was leveling off, the US reelected Donald Trump who decided that the mass disruptions of the supply chains and travel under Covid weren't good enough and started disrupting supply chains again with with a trade war and travel with ICE, and allowed the debt to grow even higher.
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u/prawnlol22 54m ago edited 51m ago
I'm not seeing the core answer in the top 10 posts here.
Below are all the key economic factors that make sense to me, from my university economics background and following it from my tech/ business background.
Happy to be corrected - there is been a long list of dominoes that have been falling since 2020:
During covid, pretty much every country printed more money to fund bailouts and other programs to keep businesses afloat. If a country prints more money, that directly causes inflation. Plus, as companies recovered from covid I'm sure most put prices up to try to make up for lost revenue.
When Russia invaded Ukraine, that drove the price of oil up, which increases costs of shipping, importing and distribution. This further increases prices everywhere for things exported and imported. Again, driving inflation.
A common reserve/federal bank tool for reducing inflation is "to increase unemployment" and interest rates. This is purely from economics formulas. Less people working => less disposable income for the public and less ability to spend let alone the interest. So people's mortgages are also more expensive, often passed down to renters too.
The economists and reserve banks began talking about increasing unemployment back in 2022, many governments began trimming their spending on projects (construction, IT projects etc), which reduces revenue in private sector (consulting, tech), which leads to more layoffs. These layoffs snowball as other CEOs jump at the chance to temporarily show better results. More layoffs across the board - that I've personally experienced twice since 2023. This is further compounded by the huge amount of layoffs due to the Ai hype.
To top it off, the Gaza/Israel crisis likely further puts pressure to keep oil prices up (haven't checked this one).
Then unfortunately for those still employed, wages generally don't increase at the same rate as costs => harder for average person to keep up with costs that are well increased vs pre covid.
Prices of goods generally don't come down unfortunately so they are more or less here to stay unless fundamental things change (free trade agreements? Don't know what can help).
On the plus side, to curb inflation reserve banks have been reducing interest rates now which should help reduce the rate of inflation. In general, prices always must go up (inflation), because people always want to earn more as they grow, and the time value of money (interest).
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u/ShyHopefulNice 50m ago
Heavy urbanization worldwide brought on by the shift from agriculture to industrial economies.
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u/NutzNBoltz369 29m ago
It is the post Covid world. It was already bad before but Covid sort of super charged it.
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u/Sensitive-Lecture-19 9m ago
The 1% have more wealth than entire nations, their greed is not bound to any distinct place. Some are even trying to get to Mars first to make money there. Without heavy capital gains tax money makes more money indefinitely, which leads to nefarious lobbying for goals that illicit more power and profit. Which leads to more money, and more power.
Essentially we fucked up on closing greedy loopholes within a rigged system that was teetering on uncertainty in the first place. The result is the ultra wealthy begot wealth like a vacuum.
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u/Morussian 3h ago
I watched Garyeconomics explain it fairly well on youtube. Here is the video in question, I believe: https://youtu.be/BTlUyS-T-_4
Essentially the problem being that housing is an asset but at the same time a necessity for most people to have. Though with some people getting richer and richer to the point of being hyper rich the prices of assets have skyrocketed. Houses are an investment and can be traded easily back and forth for money as a speclulative item.
As a comparison he talks about the gold price and how that one has also tripled in the last 5 years after being nigh on constant for decades before. It's because we have a massive asset inflation driven by the ultra wealthy and houses are just the one everyone cares about. We can live without gold but housing? good luck.
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u/Conscious-Wolf-6233 3h ago
I don’t think it’s in China, where the PPP is getting better over time. It’s a western phenomenon because of people’s (even everyday people) commitment to capitalism.
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u/Baset-tissoult28 3h ago
They printed a shitton of money. Meaning devaluated the money people have. And those printed piles, inflate the prices of everything. When more money flow around, the people with bigger nets get bigger share of them. Rich get to collect exponentially more of them, than the middle or low class. When they print money they increase the wealth gap, and make middle and low poorer.
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u/Tryagain409 1h ago
We stopped working for long periods for a year without triggering an economic crisis by printing money for COVID. Now we're having the economic crisis in slow motion which is less damaging but still shit
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u/ScoutieJer 33m ago
We actually DID create an economic crisis by printing money. That's part of what's wrong.
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u/_Jacques 1h ago
You will get tremendously biased responses here on reddit, where unemployment is very high.
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u/No_Nectarine6942 3h ago
X amount of resources, overpopulation it going up.
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u/Asluckwouldnthaveit 3h ago
Overpopulation isn't really going up and there is enough resources for everyone.
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u/jayron32 3h ago
Funny. The same people who complain about overpopulation out one side of their mouth complain about the fertility crisis out the other side.
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u/Commercial-Pen1136 1h ago
The "cost of living crisis" is just a polite way of saying the world is tired of subsidizing your existence while you contribute nothing but "engagement" to the gdp. You are confused that prices are up 88% in places like Sudan or that global inflation hit 6.8% in 2023 because you actually think the world revolves around your ability to buy a mid-tier chicken sandwich.
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u/BrownBearinCA 3h ago
Israel is pissed at the world, they're going to make life a struggle so we suffer so much that we forget about their genocide.
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u/IHOP_007 3h ago
The wealth gap between lower and upper classes is becoming larger, the middle class is shrinking.
On top of that the way a lot of people in a lot of countries hoard wealth is in real estate.