Posted on 10/09/2012 7:03:04 AM PDT by blam
A Year’s Supply Of Rice
By Addison Wiggin
October 8, 2012
“Better buy now,” advised the rice merchant in Tehran.
The retired factory guard took him up on the advice, buying 900 pounds of the stuff to feed his extended family for the next 12 months.
“As I was gathering my money,” the retiree told The New York Times, he got a phone call. “When he hung up, he told me prices had just gone up by 10%. Of course, I paid. God knows how much it will cost tomorrow.”
Iran’s currency, the rial, collapsed 40% last week under the pressure of Western sanctions and homegrown blundering. We’re not sure if Iran is in hyperinflation, as Cato Institute researcher Steve Hanke asserted in Friday’s 5 Min. Forecast, but at the very least they’re on the cusp.
Austrian economists describe three stages of inflation. In the first stage, people still hang onto their money, expecting prices to come down. In the second stage, people part with their money to stock up on goods before prices rise again. In the final hyperinflationary stage, people buy anything they can get their hands on — even if they don’t need it — because the goods are more valuable than the currency.
As we said on Thursday, Iran today is looking more and more like Iran during the 1978-79 revolution. Now there’s corroboration from someone who lived through those days.
“The new government wanted to prevent flight capital from leaving the country,” recalls Chicago-based derivatives specialist Janet Tavakoli, who married an Iranian while in college.
“In the panic to leave the country with some of their wealth,” she wrote in her 1998 book Credit Derivatives, “citizens found that although there was an official exchange rate of 7 tomans (10 rials) to the U.S. dollar, there was no means to convert money. Banks were closed much of the time. The government put a further restriction on conversion of currency. Citizens could take only $1,000 in U.S. currency out of the country and could take only a suitcase of clothing. The idea was to prevent citizens from taking valuable carpets, now labeled national protected works of art, out of the country.”
“Before a currency goes into free fall,” she writes now at Huffington Post, “its value can be chipped away while a distracted population fails to notice that the currency buys cheaper-quality clothing and less food in a package at a grocery store… That’s the current situation with the U.S. dollar.”
Iran, she says, is far beyond that stage. Where it leads this time, we have no idea… but it’s nowhere good.
For this economy to really get going, interest rates must “necessarily skyrocket.” Why would any bank want to lend money when most interest rates, to say nothing of the Fed rates, are WELL BELOW the actual rate of inflation.
For banks to want to lend, first they must have some assurance that what they get back is actually WORTH MORE than what they lend out.
As inflation has taken its toll over the decades, the quality of our food has deteriorated. In order to keep prices competitive, companies are adding more and more cheap crap to our food. It could be part of the explanation as to why more and more people are becoming obese.
Why would any sane person buy top quality roast beef at the deli when it costs $9.99 a pound?
When was the last time you saw heart wrenching stories of middle class people losing their jobs, homes, medical coverage etc.? About 4 years ago?
I'm sure a lot of young families would love a "fixed" income like SS instead of constant threats of losing jobs, or hours, or benefits, etc...
Bernanke thinks they can manage the economy and prevent the bad things from happening.
Romney probably isn’t making inflation an issue because its hard for many people to understand when interest rates for long term mortgages are 3.5%. He has used the price of gasoline which is one of the indicators though.
First of all they eat real rice and not the crap most Americans think is rice.
Huge difference in taste and nutrients. Rice is easy to grow, store, and cook.
I was being a bit snarky...
personally, I’ll stick to egg noodles, black beans, oatmeal, stuff like that stored in bulk.
I tend to think the popularity of rice has to do more with how many people worldwide live in coastal zones that make rice agriculture easy.
Doesn’t something like 35% of the worlds population live with 100 miles of the ocean? Maybe not that much, but it’s still a huge number.
I figured you were but others aren’t. For storage rice is an ideal item. Its extremely compact, easy to store and cheap. A years worth of rice also takes up significantly less space then a years worth of potatoes. I also have the beans, oatmeal and such but not as much.
-——It continues to amaze me Romney and the GOP are not making inflation an issue.——
The inflation will continue and cannot be stopped until the debt is repaid. That will not happen in the next four years. As a matter of fact, payback for being set up by Bush may be Obama’s revenge.
Shelled pecans here in 'pecan country' are $8.00 a pound.
I can pick up 50 pounds of pecans (in under one hour) from 'volunteer' trees growing on the sides of the roads here.
My biggest producing pecan tree dried from a lightening strike this year.
SS receipients received a 3.6% raise last year and are projected to receive another this year.
I might pay that much for shelled pecans, such a pain! probably take me an hour to shell a pound...how much is time worth?
Sorry about that my post should have read for two years in a row people on SS didn’t get a raise....
Didn’t mean this year, guess I was more tired than I thought.
uh, you do know that “fixed” income for alot of people isn’t that much?
I know a lady you gets 500.00 a month, that’s it. That’s not enough to pay for anything.
gas prices are reflected in food prices...cost lots more for gas for trucking is reflected in food prices and everything else you purchase...Food prices can go up by the day...back in the Carter adm. a can of beans may have been upped in price 3 times on the top of the can....the cost inflation is because of the cost it will be to replace that can on the shelves next time the store has to purchase it...
During Carters adm. inflation (or interest) was reflected in what banks paid on CD.s It was 16% interest...don’t know enough to figure out why the fed or how the fed keeps inflation at 1%
As I understand it, the Federal Reserve bankers are stealing hand over fist...that’s where the difference is going. But what do I know?
I know nothing about that either...but was raising 5 kids the first 2 years of Carter (then one son went into the navy and the other Air Force) When your feeding a house full, food can cost a small fortune. Those families raising kids today have my sympathy. And us seniors that have investments bringing in 1 or 2 % have a little problem...I am doing all right but have kids and grandkids and the grandkids are having a problem finding a job....
Prayers up for your family and all who are in a similar situation of need.
(((((((((goat granny)))))))))))
much appreciated. TY
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