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.
LOL. Put that on your resume for the position of Science Czar. Be aware though, it may cause you to appear somewhat over qualified.
Be like trading $10 for a dime.....
And to be fair for all I know food prices might be up 1 1/2 % because of ethanol production. My whole argument from the get-go is that ethanol production has not starved a bunch of people and I still hold to that. I also hold that the govt. ought to quit subsidizing it and quit coercing the oil companies to mix in in their gasoline. Let the market decide.
A lot of variables in end user food prices. But regardless of that, it’s not difficult to prove that ethanol is a loser economically and energy wise.
And, for anyone here who has had to pay to have their car towed in and have the throttle body cleaned out because of moisture and crap accumulation related to ethanol, the cost goes a lot further than the lower mileage it causes. I have a friend, a very good mechanic who owns his own shop. The ethanol caused problems he gets are ridiculous in number. The episode I had cost me $300 (towed a long way).
Wankers are ruining our cars and our mileage and taxing us for the privilege.
Commodities, schommodities, it is the price of fuel that will raise the prices. Supplies are low but even at double the price it doesn’t add as much to the end price as the fuel it takes to turn the raw product into whatever and get it through the pipeline for sale.
Example: Wheat leaves the farm, goes to elevator. Buyer purchases it, picks it up and sells it to a mill that turns it into flour. Next buyer purchases the flour, transports it to the bakery. Bakery bakes the bread and sells it to Walmart, who picks it up and takes it to regional warehouses and finally it gets to the store. That is a lot of energy.
We should be screaming, “Drill here and drill now.”
You are way cool! Excellent!
We’re 57, we started farming when we were 19. We have bought 4 small farms over the years and had to sell one of them and have remortgaged more times than I can remember, the last time in 2009.
We’re doing better this last year and hopefully, price-wise, in the coming year but that is assuming we can get a crop and we haven’t yet put any seed into the ground.
We don’t talk about retirement, what is that? Our son works for us but there is no way he can get started on his own, he has no collateral and we can’t back him and the bank isn’t going to give him half a million on a short term loan with potential crops as collateral. Especially after what our county experienced in 2008 when a 60 MPH dry, dusty sustained wind blew for hours and literally fried most of our crops and then returned a few days later to ruin what was left.
When we started farming there were 340 family farmers in our county, there are now 18. Much of the water right has been sold to the county and city, who have been the saviors of farmers who were losing it all. A lot of the water rights sold to the gas-powered electric plant and a lot of it just sits idle growing noxious weeds.
Good luck on this year’s farming. Your post reminded me of that old joke where the farmer wins the $10 million lottery. When asked by the reporter what he is going to do with all of that money, the farmer replies “Oh - I reckon I’ll keep farming for a few more years.”
” I got to go to the old house and get the wood stove/range someday.”
There are buyers for those sorts of things. I may be one. What do you have?
Luckily, we grow a niche crop and weather permitting should be able to make a profit.
I’m not good with jokes but there is another one. How can you become a millionare by farming? Start with multi-millions.
Seriously, in the early ‘80s a guy who had just inherited 7 million decided to farm in our county, he was broke in 5 years. He came from dryland country and just couldn’t understand the economics of irrigated land.
Our neighbor made a really cool(I mean warm) 55 gal barrel heater that he uses in his house. He’s a hard core prepper.
” The whole pot might be on that stove for a week and mom would keep adding things to it during the week.”
Hundred year stew, we called it. Pot never left the stove, we just added suff as we went.
I have stoves. But they are going to get expensive...
No flame. I just took your challenge & posted the most recent findings of a quick search. Earlier studies said 3% & more when the mandates were first implemented.
$5 Billion in tax credits for crappy fuel that has cost me gas mileage and small engine repairs? Thanks no. I have found a source for non-ethanol contaminated gas but can’t seem to get away from my share of that $5 Billion tax burden.
Here’s hoping and praying that your crops do well this year.
I work in a very busy Circle K store that is in the middle of nowhere (and in the middle of everywhere all at once.) When we were hit by a good sized snow storm around New Years we ran out of supplies because our delivery trucks couldn’t make it through the icy roads. I have always heard that grocery stores will be out of product in about 3 days following a disaster. I had confirmation of that with this storm.
I also see first hand the numerous people who are on food stamps. They are the ones that come in and buy $30.00 worth of JUNK-candy, chips, cookies, soda pop, etc.
I believe in stocking up and having supplies on hand, when tshtf it’s too late.
Why, thank you! I am humbled.
food price bump
food storage bump
get download bump
Aint no way. I’ll keep that till I die.
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