Food Price Inflation Scares The Fed

American Thinker ^ | 03/14/2014 | Chriss Street

[SeekAndFind]

Stock markets around the world fell today, led by the 246 point dive, or 1.5%, for the U.S. Dow Jones Industrial Average and the 1.9% drop for German stock market index.  Analysts generally pointed to worries about a shrinking Chinese lending and the potential trade war between Russia and the West, but I am more concerned that since the beginning of 2014 food prices have skyrocketed.  The Federal Reserve must be concerned that their international support for “cheap money policies” to stimulate economic growth may be funding commodity speculation that is driving prices higher and creating wide spread misery. If the Fed decides to raise interest rates to dampen speculation, I believe stock and commodity prices are in for a hard fall.

Margin debt on stocks is now higher than at its last peak in 2008, right before the stock and commodity markets crashed.  This willingness to speculate on margin may also explain the big jump in food prices since the first of the year as shown below:

Cattle              Hogs               Grains             Milk                Coffee

+28%              +25%              14%                +17%              +67%

Over the next couple of months, the rise in wholesale commodity prices is going to start hitting consumer pocketbooks very hard.  More worrisome, the rising price action will encourage morecommodity futures speculators to jump in and continue the rapid price escalation.  If the Fed does not get ahead of this coming tsunami of greed, they will be in a similar situation as when food prices took off in 2008. 

[expat2]

Yes, you are correct — it doesn’t have to be urban, but I added my caution because many might think that way. I myself live on the edge of exurbia, with cattle grazing nearby, but in easy bicycle reach of all that I need (except the public library).

[Balding_Eagle]

For decades the government, using the ‘Cheap Food for the Public’( often called the Farm Program) paid farmer not to plant all of the acres they could.

Freepers complained long and loud, mocking the programs.

When ethanol came along and farmers could make more money by not enrolling in the ‘set aside’ programs I began warning Freepers that they wouldn’t like the results.

Now farmers were are no longer slaves to the government who had chosen cheap food for voters at the expense of farmers for more than 60 years.

It’s not coincidence that high food prices come along with financial freedom for farmers.

A choice has been made; we got rid of cheap food, government farm subsidies, and poor farmers. Now we have higher priced food with much less government involvement and financially free farmers.

Each Freeper can decide for themselves, was it more fun to mock farmers for being paid not to grow crops, or is it more fun to complain about high food prices?

[ncpatriot]

I live in rural area but all of my neighbors could car pool!