Posted on 11/01/2009 5:21:06 PM PST by FromLori
The National Inflation Association today released the following statement to its http://inflation.us members:
"While most mainstream economists such as Nouriel Roubini are warning of deflationary threats to the U.S. economy, it is our belief that massive price inflation has already begun. The Federal Reserve's policy of massive monetary inflation in 2009 has caused the Dow Jones to bounce over 50% from its low, oil to rise 100% from its low, and gold to surge to a new all time nominal
high. One NIA co-founder just saw his health insurance premium rise 16% over a year ago; and the average tuition for a four-year public college increased this year by 6.5%.
Prices are rising all around us, yet agricultural commodities have for the most part been left behind and remain at historically depressed levels.
Fundamentals for agriculture are improving on a daily basis. A worldwide shortage of farmers combined with food inventories falling to record lows is setting up the perfect storm for an explosion in agriculture prices. There is a huge opportunity today to invest at the ground-floor into what will likely be one of the biggest boom industries of the next several decades.
Wheat is currently down 60% from its all time nominal high set in 2008 and 80% from its inflation adjusted high set in the 1970s. Corn is currently down 50% from its all time nominal high set in 2008 and 75% from its inflation adjusted high set in the 1970s. Wheat and corn have only bounced 13% and 26% from their 52-week lows this year respectively. While sugar has faired much better and is now at a 28-year nominal high, sugar is still down 70% from its inflation adjusted high set in the 1970s.
With crude oil back above $80 per barrel, we will soon see
(Excerpt) Read more at reuters.com ...
Everyone needs food. Remember that.
Yes. Our food prices are higher than last year. But Social Security got no increase this year. Nice. Thanks, Obama.
Finally a cure for obesity who says big pharma is not interested in cures
It seems that everytime I go to the grocery store, which is about once a week, my grocery bill is usually $20 higher than the previous week. We are definitely experiencing a rise in food costs!
Meat and dairy prices have been unbelievably low all summer long. We’ve been buying T-bone and NY Strips for $4.99 a pound, and primal cuts of beef and pork are really cheap. A whole Top Round is going for about $1.69 a pound, and boneless pork butts are $.99 a pound.
What that reflects is a near collapse in Dairy and other livestock operations. In the State of Vermont alone, over 30 dairies have failed just this year, and Farmers have been selling off their herds for meat. Milk is fetching around $7 per hundred pounds, and it costs $15 (and up) to produce that same hundred pounds of milk. It’s cheaper to slaughter the herd than it is to feed it.
What will happen is that eventually inventories of meat, dairy and other products will fall and the prices will skyrocket, because at some point the only milk, beef, pork and other goods that will be available will be imported from Brazil or some other country.
My personal benchmark is the price of a 50 pound sack of US Grown long grain white rice at Costco. It’s still selling for about $16, and when that starts to rise significantly it will be another indicator of the onset of inflation in food prices.
Ping for the gardening thread.
Food prices going up could be great news for gardeners not so dependent on the stores.
There are several reasons for that ~ resumption of rice imports by Iraqi people. They were cut off ever since the Kuwait invasion.
Then there's been some serious droughts in China, India, Brazil, Argentina, South Africa, and California.
You can readily assume that rice is going to go back up to $22.00 per sack pretty soon ~ but the United States is going to be EXPORTING IT and earning valuable foreign exchange in the process.
I recently went out to Illinois on I68/70/74 and lo and behold RED WHEAT didn't look so good. There are still plentiful supplies in the US, but Europeans import a major chunk. That's going to be another major foreign exchange earner.
Even nasty soybeans were being harvested ~ and again, they will earn beaucoup foreign exchange due to the almost total loss of the beancrop in Brazil and Argentina for two years running.
Not all agricultural commodity price rises result in inflation in this country.
I have been contemplating investment in agri. commodities but don’t how to do it. Any freeper have advice?
The Social Security laws have been in place for a long-time and the "increase" that happens each year is determined by the changes in the consumer price index. There are plenty of problems with the CPI (there is even a new CPI that measures inflation specifically for senior citizens), but social security increases only come to adjust for inflation. That has always been the rule, we've just never seen a year-over-year deflationary period as we did recently due to the banking collapse.
Even though food prices have increased in some areas, other costs have decreased year-over-year such as gasoline and (if the projections turn out to be true, heating oil for winter). The result is real purchasing power is actually HIGHER this year than it was last year. Thus, the old social security laws dictate no "raise".
If we were to go ahead and given the social security raise, it would increase the deficit by $13 billion. Given that real purchasing power has already gone up, I can't support that in good conscious. If we do that, we're no different than the liberals the are running $1.4 trillion deficits, spending money they don't have.
I remember corn being $2.00 a bushel way back in the 60’s.
In today's dollars that bushel of corn should be $10-$12 dollars.
Why would the government suppress the value of agricultural commodities? Food stamps. The USDA’s largest expenditure is not on farm subsidy, but the food stamp program. From a government's standpoint, a well fed population tends to not complain near as much as a hungry population.
For COLA purposes for SS, the government has dropped the cost of food and fuel from the figures, the two things with the highest rising prices and the very basic needs of all of us
They mandate the use of ethanol which decreases the amount of corn available for food and increases the price. It does the same to fuel. Unintended consequences?
They starve the northern California farmers of water to protect the “Delta Smelt.” What the Hell is a Delta Smelt and how important is it? Regardless, that valley is a major supplier of food for this country and this just increases the food shortage. Unintended consequences?
The only thing that adds up is this administration is trying to put this country into one major crisis after another. Why? Unintended? Hardly.
I’m ready. I know many are. :)
Ping for the Gardening Group, Red, if you feel it’s applicable.
One of the biggest exporters of dairy products is China.
Since there are no import tariffs, supply is saturated and US farmers can’t pay their bills.
thanks Obama. Food used to be safer in America until the imports got a free pass.
Invest in gold and silver while they’re down these next few weeks/months. You can’t possibly have enough cash to get into commodities right now; cocoa alone is at $3K! And buy the physical commodity if you can find it; do NOT buy any paper shares!
Do your own personal ‘investing’ and stock up on rice, dried beans, coffee and chocolate. Lead, too. ;)
I’ve been playing the commodities market since I was in High School...back when the Dinosaurs roamed the Earth and you had to read about your gains/losses in the newspaper, fer Pete’s Sake!
Unless you have a lot of money that you can comfortably afford to lose, I’d advise against speculating in commodities other than gold & silver at this time.
thanks Diana! I have been buying no make that hording rice, beans, bulets, pasta, coffee etc LOL. I have thought about buying the old silver coins but haven’t yet guess now is the time! BTW, I bought two years worth of heirloom seeds too, have you bought yours yet>
You’re right on target. We had a small dairy (operative word: had) until May of this year. We actually decided to sell out in the spring of 2008. Between fall of 2007 and spring 2008, we saw increases on the expense side of 80-400% while fuel prices and milk prices were at record highs. (Every supplier said the same thing: milk prices are at a record; you can afford to pay US more. Like they were the only ones raising prices.) When fuel prices went down, fuel surcharges etc. stayed in the monthly bills. The the milk price collapsed, and dairies of all sizes began to hemorrage money. While I am currently unemployed, we are losing less each month than if we still had the business.....
hh
I would like to be on the gardening group please!
Better to invest in an agricultural ETF (Exchange Traded Fund) such as DBA (use a discount broker such as Scottrade). To obtain income from such an ETF merely write (sell) covered options against your holdings. If the ETF has a huge rise in price for some reason..., the worst that happens is you wind up being "Called Out" and selling for less than you might have.
Trading the actual commodities market is a sure way for a novice to get wiped out quickly!!!
We hear you. We sold out in 2003. Hope it all works out for you. DH kept making hay and selling it to horse owners and hobby farmers, but after THEY lost their jobs, things got kind of tight.
Things would seem so much better if we could get our crops harvested.
good to know...Thank you!
Holy cow, sharks with laser beams are my favorite but maybe not when it involves my $$$
So they lie about what farmers spend?
The Chicago Board of Trade basically sets markets
All those guys yelling in the pit don't set the price?
I remember corn being $2.00 a bushel way back in the 60’s. In today's dollars that bushel of corn should be $10-$12 dollars.
Evil plot??? Or increased productivity???
Why would the government suppress the value of agricultural commodities?
LOL!
Is the silly ethanol boondoggle suppressing the value of corn?
No they haven't.
you could start a dairy farm...my brother did this past spring...
That works out to 32cents per pound. I bought US grown long grain white today for 20 cents per pound. I bought a 5pound bag for 99cents in the local grocery.
I really sometimes wonder about the prices of things at the warehouse places.
I should note that he is conrolling his costs quite effectively and is actually making a profit at milk’s current price.
Aldi > warehouse store
I’ve never set foot in an Aldi store. As far as I know the nearest one is at least 100 miles.
Thank you for the alert but I will check on it. I recently read that food and fuel were no longer included in the inflation figures, period.
So far I have determined that what I described is called the core Consumer Price Index and it excludes food and fuel. It is used by the Federal Reserve in determining monetary policy but I am not sure where else it is applied. I read somewhere else that SS and COLA are affected by that.
bookmark
I moved to Maine nine years ago. Each year my garden gets bigger, and so does my pantry.
I’ve found the time and energy spent in the vegetable garden pays real dividends at harvest time.
An example; 1 healthy tomato plant can yeild 4 to 5 pounds of fruit. Organic tomatoes (of dubious origin) at whole foods run about 4 dollars per pound. Even if you bought the seedling at a green house, bought organice fertilizer, and a pot to grow it in, you saved money.
Growing up, we always had a ‘victory garden’.
I now refer to my vege garden as the ‘John Galt Memorial Garden’.
Yes, every month they release a CPI number and a core CPI number. The core is less volatile, but the all inclusive number is the one they use for COLA adjustments.
Same here. Prices are going up quickly. And not a word in the media. Go figure...
Haven’t you noticed the “pound of coffee” is now 10.8 oz., a reduction of 30%? The half-gallon of ice cream isn’t? These are the tricks of the Jimmah Carter era, prices stay almost the same, but you get less for that price. BO is the second coming of Carter.
“I now refer to my vege garden as the ‘John Galt Memorial Garden’”.
Love it! :)
I manage a garden center. We buy a flat of tomatoes in 4 packs (48 plants) for $7 and sell the whole flat for $15. The mark-up is astronomical on veggie plants, herbs and seed; yet people will pay it versus starting or saving their own. Still, even purchasing plants and growing your own food is the way to go, IMHO.
And lucky for me; it keeps me employed, LOL!
I am going through my jelly cupbard in the coming weeks and jazzing up the jars for Christmas gifts. It’s going to be a very lean Christmas around here. Leaner than normal, but everyone is in the same boat, so no big deal.
I’d like to get back to ‘The Reason for the Season’ basics and be done with it! Sadly, we have congress and 0bama to thank for our sad state of affairs.
But that’s OK. Those of us that can produce food, cook from scratch, bake bread and sew on a button are going to be the new gods and goddesses in the coming times, LOL! :)
Thanks for the heads up and the correction.
Red - Please add JoesJane to our Gardening Ping List. Thanks!
joesjane I have add you to the ping list!
H/T to Diana for her ping!
I picked 40 pounds of peppers and 180 pounds of tomatoes this weekend................we are blessed.
Can you plant any old potato from the supermarket or must you buy seed potatoes?
Looking at the prices of the seed potatoes, I’m wondering how cost effective it is to plant them vs. just buying them from the store.
2lbs of seed potatoes runs from $10 to 5lbs at $35 at some garden supply sites.
8I looked, and there before me was a pale horse! Its rider was named Death, and Hades was following close behind him. They were given power over a fourth of the earth to kill by sword, famine and plague, and by the wild beasts of the earth.
Just cut the “eyes” off the “old potato” and plant them, leaving about a 1/4” thick slice attached...................
Visit the Chicago Mercantile Exchange website.
I don’t do the grocery shopping but I am in the hardware store at least once a week and I am STUNED by the prices (sticker shock)...
Of course higher food costs are coming.
I’ve been expecting that ever since they shut off the water to the central valley in order to protect a non-native anchovy type fish called the delta smelt.
Last week, I had a chance to speak with a young farmer’s wife (3 kids)for the first time in about 6 months. My husband spoke with her husband. These are not whiners, they are generational farmers, under 36 and staunch conservatives.
She had just had to sign her two oldest up for free lunch. She knows many, many others in her peer group who have had to go on food stamps. They were unable to harvest their field crops in time, due to rain, and the prices as well as the market are depressed. They see no percentage in switching from bred heifers to beef calves and everyone raising beef around here is seeing very low slaughter prices.
About the only good thing in their lives is that the 13-year-old has been able to help more and more with chores, which reduces the cost of paying for milking help. I have seen her grocery cart and I know I could not afford to feed a family today and that is with being able to provide their own meat and some produce.
It is just heartbreaking.
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