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  • From: "Tradingpost" <tradingpost@lobo.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] Chicken feed so far on food prices
  • Date: Wed, 04 Jun 2008 14:42:40 -0600


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. (





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