> In theory supply and demand should force prices back down over time

I'd bet that the theory you are using doesn't care a bit if prices go down or salaries go up.

I say that because no, no reasonable economic theory predicts prices go back down after a high inflation. That's because this is very obviously false. (Maybe a few do, by a small bit. Certainly not on average.)

> In theory supply and demand should force prices back down over time, but ongoing consolidation/monopolies/backdoor price fixing (RealPage, Amazon Marketplace) kinda broke the efficient market stuff.

One way this could happen is if salaries increased to match the new prices over time. The issue is that we are not seeing that happening, prices are increasing much faster than salaries, while corporate profits break records.

The money is flowing upwards, at some point people will get very fed up with that...

In any inflationary environment, corporate profits should be expected to regularly break records (in nominal terms) just like GDP should be expected to regularly break records.

Break nominal records, yes, not to break record margins.

Corporate profit margins are in the range which has been typical since the recovery from the 2007 GFC.

https://www.gurufocus.com/economic_indicators/62/corporate-p...

They're not currently breaking records and they jumped into this range during a period of notoriously low inflation (by historical and absolute measures).

Salaries basically only increase 2 ways: job hopping and unions.

The bottom 10% are doing a lot of job hopping these days.

And everyone is doing a lot of union joining.