Rising Inflation

April 15, 2008

The Fed says that it is keeping an eye on inflation. What they don’t say is that their eye balls are slanting upwards. In order to save the whole financial system (if it can be salvaged), the Fed has been printing money as fast as it can and loaning out tens of billions at firesale rates to keep some financial institutions from going bankrupt and bringing down the house of cards.

I have a small car and it takes $50+ to fill it up!

And who hasn’t been to the grocery store in the last 2-3 days? The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it’s getting worse. That’s putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

How do you explain that the US$ is fiat money and becoming worthless?

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent. Would you believe 6%? We’re in a major economic meltdown!

Potatoes anyone?

As wheat and rice prices surge, the humble potato, long derided as a boring tuber prone to making you fat, is being rediscovered as a nutritious crop that could cheaply feed an increasingly hungry world. Potatoes, which are native to Peru, can be grown at almost any elevation or climate: from the barren, frigid slopes of the Andes Mountains to the tropical flatlands of Asia. They require very little water, mature in as little as 50 days, and can yield between two and four times more food per hectare than wheat or rice.

I’m glad I’m Irish. I like potatoes!

It’s an international crisis. U.S. households still spend a smaller chunk of their expenses for foods than in any other country — 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam. In Bangladesh, economists estimate 30 million of the country’s 150 million people could be going hungry. Haiti’s prime minister was ousted over the weekend following food riots there.

Unfortunately, we’ve built a NO WIN economic picture!

Written by Ernie · Filed Under Daily Commentary