Why aren’t corporate profits affected by inflation?
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They are. When you hear a politician or pundit say something about companies earning record profits during inflation they’re being misleading. For an easy to understand example, let’s say inflation is really, really out of control, and in 1 year prices of absolutely everything double. In that case you’d have something like:
**Year 1**
CompanyA makes $11 million in revenue, spends $10 million in costs, so they therefore have a profit of $1 million dollars
**Year 2**
*Inflation has hit hard and the price of literally everything doubled*
CompanyA makes $22 million in revenue, spends $20 million in costs, so they therefore have a profit of $2 million dollars
Someone who is being honest will note that in both cases, the company made a profit of 10%.
Someone who is dishonest will look at the absolute numbers, see that $2 million is 2x $1million, and claim that the company doubled their profits, while ignoring the fact that inflation made those profits worth half as much
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