Posted on 10/31/2009 5:32:23 AM PDT by blam
United States Catching The Argentinian Economic Disease Of Hyperinflation?
Economics / US Debt
Oct 31, 2009 - 12:54 AM
By: John_Mauldin
I have been in South America this week, speaking nine times in five days, interspersed with lots of meetings. The conversation kept coming back to the prospects for the dollar, but I was just as interested in talking with money managers and business people who had experienced the hyperinflation of Argentina and Brazil. How could such a thing happen? As it turned out, I was reading a rather remarkable book that addressed that question. There are those who believe that the United States is headed for hyperinflation because of our large and growing government fiscal deficit and massive future liabilities (as much as $56 trillion) for Medicare and Social Security.
This week, we will look at the Argentinian experience and ask ourselves whether "it" - hyperinflation - can happen here.
[snip]
Milk is mostly a subsidized product...
Was it subsidized at $4 a gallon?
So we might fall from a record harvest to an average harvest? C’mon.
GDP has always included government spending, but I agree with you... It’s inaccurate. There is no market mechanism to test the value of government services. The only thing that ensures that government spending is not pure waste is that it’s got to get through the political system. But the political system is broken. At the same time, I don’t think that really has much to do with inflation. It has more to do with redistribution.
The only way that it impacts inflation, I think, is that the taxpayer has got to pay for that waste, and the higher taxes are, the less reason people have to be productive. Less production means even fewer goods, so that it takes less money to have the situation that you have “too much money chasing too few goods.” That’s why I hedged my statement by saying that the only way it can happen is if GDP is growing too fast, “or productive capacity is declining.” There are a lot of ways productive capacity can fall. I think that what happens in the oil industry will be the key to whether this ends good or bad, however. If the price of oil goes up, which might happen if world oil demand outpaces supply, or if the dollar continues to fall, then you’ll see inflation caused by reduced capacity, as well as a further decline in GDP. If the price of oil comes down, then you’ll see the reverse.
The Obama voter is taking us on a ride I never wanted to be on.
There are several freepers, myself included, who have been astounded this past week or so, to see how prices on many food items have suddenly risen, anywhere from a quarter to around forty cents each.
Say, you might consider being very careful about where & how you store your dogfood -- I've not yet had a chance to fully research this, but somewhere recently I read that BY LAW, it is legal for dogfood to contain salmonella -- so you won't want to let commercial dogfood possibly contaminate your emergency storage food for humans. (I know nothing else yet about this, but have removed the bag of dogfood from the kitchen, permanently, and anything canine we've purchased in advance, is now stored in a separate room, not in the pantry.
Buy Food – Price Rises Are Almost Guaranteed
http://www.freerepublic.com/focus/f-news/2373180/posts
Food will never be so cheap again
I’ve had enough with what is being done to our currency.
Little by little, I am withdrawing my savings from the bank (so as not to screw them up) and buying gold and silver.
I’ll take my chances. Now that China is selling gold and silver in it’s bank branches, I’m no longer worried that gold will drop to $ 800 or so. They have established a “floor” via their marketing.
I think that it should be mandatory that everyone posting on an econ/inflation thread spend time drinking with some CBOT traders at least once a week.
I have kept close watch on things since, and now use my microwave oven to treat those and other products. I also have a UV light in my storage room.
You are right that milk and other dairy has dropped. But one example does not prove deflation.
I have noticed over the last year the following:
Product sizes of all kinds, cereal, tuna, pasta, canned goods, have been getting smaller- 16 oz boxes shrinking to 13 or 14 oz, tuna cans shrinking from 6.5 oz to 5.5 oz, cereal boxes shrinking from 16 or 24 oz to 13-15 oz. They have not gone down in price as you say, they are the same as last year. But contents shrinkage means they have gone up in price. It is the first step that manufacturers take to hide inflation. This has affected almost all canned and boxed products. As to other prices, a loaf of “cheap” bread has gone from 1.08 to 1.58 in the last 6 months. A couple of cents at a time to be sure, but the fact remains that it is going up. Same with pasta, which is now over a buck a box, and the sizes have gone down to 13-15 oz.
Gas is another one people want to say has gone down. They are wrong. Yes gas was over 4 bucks a gallon last summer, then it did a nose dive and this spring it was around 1.40 per gallon. It is now at 2.70 and showing no signs of coming down. Hubby pointed out that when oil was 80 a barrel before the spike last year, we were paying 2.15-2.30 per gallon, now oil has been hovering at 80 a barrel and we are paying 2.70+ for the same gas.
Inflation always hits the necessities market first because we HAVE to buy them, therefore supply and demand are less a factor because demand remains. You will see deflation in non essential buying because it is dependent on a demand, and in recessionary times, demand drops. Houses, cars, jewelry, appliances, and the like do move downward, but that in no way proves deflation, any more than charging 17 bucks for a gallon of water or 100 bucks for a sheet of plywood during a hurricane proves inflation.
Listen to the moms who are trying to feed their kids and do comparative unit pricing on necessities. They are the canary in the coal mine on this issue.
Sorry if we don't speak your language, but we do like to report our personal experiences. Next thing we'll all hear that prices will continue to fall...
You know I can’t do that anymore. LOL!
Excellent! You aren't going to claim a few falling prices proves inflation, are you?
That's sooo 'last month,' LOL
Fall Harvest's Way Behind Schedule; Could Have Impact on Prices
Doppler Dale's Weather Posts
^ | 10/27/09 | Dale Bader
Posted on 10/27/2009 1:54:05 PM PDT by dopplerdale
http://www.freerepublic.com/focus/bloggers/2372301/posts?page=6
Crops such as Corn, Cotton and Soybeans Affected
If it has seemed like it has been raining unusually often and by quite a bit, you are right. The months during harvest time (August/September/October) are traditionally the driest .....
Crop prices rise 7.7 percent amid soggy harvest
AP/YahooNews ^ | 10/30/09
Posted on Friday, October 30, 2009
2:19:49 PM by Kartographer
http://www.freerepublic.com/focus/f-news/2374879/posts
Crop prices jumped nearly 8 percent in October as rainy weather delayed harvests across the Midwest.
Farmers are still getting paid much less for their crops compared with a year ago . . . .[groan] Now I need a drink.
GOOD BY.
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