Posted on 01/16/2011 3:54:15 PM PST by blam
Positioning For A Food Riots Economy
by: Kevin McElroy
January 16, 2011
On Monday I wrote something that caused my coworkers to look at me even more sideways than usual.
I said, “I think we can expect the words “food riot” to enter the American lexicon sometime in the next 18 months, and I don’t say that flippantly.” Just to be clear, “lexicon” is a fancy word that means vocabulary – and “food riot” is a phrase that refers to a group of angry, hungry, violent people who destroy property because they feel (among other things) that food prices are too high. And yes, to answer any questions from the peanut gallery in my office, I do believe we’ll see food riots in these United States of America sometime in the next year and a half.
I’m belaboring this point because I want to be crystal clear with this prediction, not because I especially like making predictions. Quite the opposite, actually – I detest making predictions because it’s so easy to be wrong on the scope, specifics, time-frame, location, etc. In that vein, if I am wrong about this prediction, it will probably be a matter of my timing rather than anything else.
But where am I getting these crazy ideas? Let’s take a look at an interesting chart from the folks over at shtfplan.com:
This chart shows us that food stamp participation has risen sharply – with no signs of slowing since early 2008. Currently, over 42 million Americans rely on food stamps – or 1/7th of the entire population. Okay, so the very fact that more people are on food stamps isn’t cause for alarm. But what it means is that 14% of people in the United States already can’t afford to feed themselves – and that number is rising. I don’t know what number of people it would take to break the camel’s back. The number already seems ludicrously high.
The other side of the coin is that food prices are rising too – for three simple reasons:
* The first reason is just plain old bad luck. Bad weather around the world, including heat waves in Russia last summer and flooding in Australia right now, continues to put a crimp in global
food stocks.
* The second reason is sustained levels of higher energy prices. Oil is a vital input to most food production in the developed world. Higher oil prices necessitate higher food prices.
* The third is a global currency devaluation race. Trillions of newly minted dollars will increasingly find themselves competing with trillions of yuan, yen, euros, etc. to buy an
already diminished supply of food.
Perhaps the most common response to these facts is to say something like, “wow that’s scary!” But fear is something that children feel when they don’t know how to deal with a situation, or they don’t understand something.
I’m a grown man and for that reason, I don’t fear these trends. I am preparing myself and my family for the likelihood that these trends will continue down the same inevitable path. You won’t see me in a food riot, because I’ve been positioning my portfolio for survival and maybe even profit during the times to come.
Don’t wait for the Government to start talking about this problem. By then, it will be far too late. Start protecting yourself today, if you haven’t already. Here’s what I’m doing:
I regularly buy physical gold and silver. I’ve stopped paying much attention to the price, though I do try to buy on dips if at all possible. (Both are in a dip right now!)
I’ve been buying durable food goods like rice, beans, pasta, flour, salt, etc. It’s impossible to buy “enough” of this stuff, but a 6 month supply isn’t too difficult to amass. I recently bought a bunch of different fruit and vegetable seeds. We don’t have much of a yard, but seeds are cheap and if stored correctly they remain viable for a while.
I also own shares of blue chip companies that will probably continue to be profitable no matter what happens. I'm continuing to buy shares of precious metal miners, oil exploration companies, and other commodity-based securities.
You’ll notice that none of these things is really “crazy” to own, even in boom times. In the event that I’m 100% wrong, and everything’s going to be A-okay-terrific, I can use or sell all of these different assets, and probably not take too much of a bath.
Yup. Some people just don’t get it and are too lazy to peel the onion. Ethanol is a huge scam subsidized by billions of taxpayer dollars, and it ruins engines. Even Al Gore admitted his backing it was a political ploy to get votes in TN and IA.
How much government subsidies do you get each year?
I live in rural Iowa. I know farmers, worked for farmers, and have relatives that work in the Ag arena. Ethanol is all around me and I myself have been involved in added-value ag. I know more about ethanol than most people on this board.
And ethanol wasn’t even a factor till about 2000. Farmers stopped planting wheat here is substantial amounts in the early 90’s. We stopped getting enough snow to make a go of it. Farmers until then had been doing the bean-bean-wheat rotation since the 50’s. I saw it with my own eyes.
Do your homework on Midwest agriculture.
corn-bean-wheat rotation...
This chart is a crock, and the first clue is the UN label down at the bottom. As has been discussed, only 10% of yellow dent corn is consumed directly as human food in any way, shape or form. That amount has not been reduced as a result of ethanol production. You could argue that the corn could be fed to hogs and humans could eat the hogs. Problem there is that the spent mash from ethanol is already fed to hogs as a high protein suppliment. Besides, most of the people who wring their hands about ethanol induced starvation object to animal agriculture also.
Perfect example: I've fed approximately 150 bushels of corn to deer this year, and eaten more than my fair share of deer meat. That is not even counting the tons of corn that the darn coons have stolen from my fields ... did you know that baked racoon with sweet potatoes is a pretty darn good meal???
;-)
I agree that the subsidies and the mandated usage of ethanol in gasoline should end. The market will decide when we need to use it for fuel, if ever. I would buy ethanol free gasoline, but can’t find it any more. However, I am about worn slick with the business about ethanol production wiping out the food supply. Tain’t so.
Most of what is now used for ethanol was either shipped overseas formerly or sat for long periods in the bins.
As you said, nothing is lost in the production of ethanol. The DDG’s are fed to animals, and are even used for human consumption overseas. DDG’s are actually better for the animals, especially if they aren’t mixed with the stillage. There is no shortage of DDG’s as far as I know.
Agreed. Next thing I need to look up is how much of the food value in the corn is recovered in the spent mash. I think about all the protein.
Between myself, the dog, and the chickens, we will consume three deer this winter. I shot 13 coons last summer trying to salvage some sweet corn, but the last one eaten around here was by my grandmother who has been gone for over 40 years. I might cook up one this spring. The dog will eat it if I don’t.
What about the seniors, or the widows, or the singles, or the frail and infirm, or the family-less who live in small condos or apartments with no basements, attics, garages, acreage or yards.
There are millions of these folks. Hate to think what will happen to them when the crunch comes. It's not all about the young and healthy.
Leni
Need finds a way, IMO.
I have a single older female friend whose home is likely 1000 sq feet, total, if you count the loft and the small basement. She has been investing in gold and silver, physical as well as stocks, has an established eBay resale business, a huge yard that is morphing into garden (she is a wonderful gardener)and storage in the basement, which she has begun to refer to as “the bunker”.
You can pack a lot of food into a small space if there is only one mouth to feed.
Some are going to need assistance from the younger or more mentally agile. That goes for anything in the lives of these people.
As for those in condos/apartments ... it takes very little space for a good store of dry goods (rice, beans, sugar, flour) ... a closet does well. Additionally, it is surprising how much food you can grow on a balcony or patio, or even in a large window.
Its all is a matter of personal responsibility.
Is it possible BHO and minions may be contributing to the food shortage by turning corn into overpriced, inefficient
ethanol for fuel?
LOL. Here we go again.
Actually, no.
The only reason I brought this up is to point out that when push comes to shove, we have to watch out for our more helpless neighbors, friends and relative in addition to ourselves. Everybody doesn't live on farms, on acreage or in large homes with ample storage space.
You are absolutely correct in stating that "some are going to need assistance from the younger or more mentally agile".
Leni
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