Healthy soil and sustainable growing

["Tradingpost" <tradingpost@lobo.net>]

May 15, 2008


Chicken feed so far on food prices
By The Mogambo Guru
http://www.atimes.com/atimes/Global_Economy/JE15Dj01.html

Deepcaster.com, writing at financialsense.com, reminds us that "the US dollar 
has dropped over 35% (when measured by the USDX, a market basket of other 
major currencies) since its 2002 highs of 120 to below 75 on the USDX today".

Perhaps this dollar turning into crap has something to do with John Lee at 
goldmau.com reporting the interesting statistic that the number of dollars 
has exploded in the past few decades, and that now "there is 1,500% more 
paper money today than there was in 1970."

This is important stuff because all of that money created over those decades 
chased goods and services to the higher and higher prices that you see today, 
and produced the gargantuan system of governments that we have today, too.

And it is not just us idiot Americans, but everybody around the world is 
expanding their money supply and suffering inflation, as evidenced by 
Christopher Hancock at Whiskey and Gunpowder, who writes, "Prices are rising 
in Europe as in America. Bread is up 12% in Germany over the last 12 months. 
Butter has gone up 45%. Milk, 25%."

Instead of a list of the things that are up in price (everything), let's see 
how much inflation is 1,500% in the money supply over 43 years, I have no 
idea, but I found to my delight that if you terrorize a young college intern 
from the accounting department long enough, she will get you the information 
you want, and that is how I found out that this 15-fold increase in the money 
supply comes to 7.38% inflation per year over the past 38 years.

And regardless of how many "nightmares" anybody's lawyer says his client has 
had as a result of an alleged "hostile work environment", the real nightmare 
is knowing that inflation in prices generally follows inflation in the money 
supply.

If you want to double-check my math, look up a few prices from 1970 and 
compare them to today, but don't be surprised to learn that I, the one 
usually known as The Mogambo and recently referred to as "the creepy 
defendant", was right when I said that the Federal Reserve is destroying our 
money by creating too much of it, which will show up in consumer prices so 
high that you will vomit up blood at the prices!

In case you are thinking that this old-time "inflation" bugaboo is not 
important, then if you also like tasty fried chicken in the handy "Family 
Bucket" size, then you will be very interested to note that the Financial 
Times reports, "Tyson, the largest producer of beef, pork and chicken in the 
US, yesterday reported its first loss in six quarters in part because it had 
not been able to pass the cost of bird feeding its birds on to consumers."

And it is going to get worse, as Tyson said, "Last year, corn and soy costs 
doubled to US$2 billion" and that "the higher price of corn and soya beans 
would add about $600 million to costs this year" in the chicken business 
alone, and the additional costs of higher prices for "cooking oil, breading 
and feed ingredients such as vitamins could be among factors adding a further 
$400 million to costs."

In short, inflation is waaaAAAaaay out of control, as admitted by Richard 
Bond, Tyson's chief executive, who said, "We can't raise prices fast enough 
to keep up with the rising costs of our inputs."

Ed Bugos, also of Whiskey and Gunpowder, writing at Moneyweek.com, has a new 
article with the title "The Federal Reserve Is Making Inflation Worse" which 
says that more of this is on the way. He reports that "The Bureau of Labor 
Statistics (BLS) reported another sharp increase in producer prices during 
March. Finished goods were up 1.1% and intermediate-level goods rose 2.3%, 
pushing the year-over-year rates to 6.9% and 10.6%, respectively, in the 
month of March - the biggest yearly increases in this price indicator since 
1981. US consumer prices rose 4% year over year, pushing the high end of a 
15-year range."
And if you comprehend the sheer terrifying enormity of that, don't think you 
are going to find solace in a bucket of yummy fried chicken. I've tried it.

Richard Daughty is general partner and COO for Smith Consultant Group, 
serving the financial and medical communities, and the editor of The Mogambo 
Guru economic newsletter - an avocational exercise to heap disrespect on 
those who desperately deserve it. (