If Everybody Is Importing Inflation... Then Who Is Exporting It?

Tyler Durden's picture

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RobD's picture

O.T Fight Club is on TNT at 6:00pm pacific.

MsCreant's picture

No, fight club is on, here, now.

Trimmed Hedge's picture

I'm too cheap to afford cable.  : (

Bringin It's picture

MsCreant and Trimmed Hedge one on top of  the other.  Excuse me while I ponder that for a moment ;)

TH. re. cable - try download.

Cash_is_Trash's picture

La inflacion es exportada por los Estados Unidos.

El Visconde Monetario Von Bernankestein es el responsable.

...hijo de su puta madre.

Mentaliusanything's picture

Correct - The reserve currency is what all comodities are priced in.

Weaken the currency you force the lift in asking prices (or you will go out backwards)

Strong reserve currency means cheaper life.

Michael's picture

Someone should forward the past three days postings at ZH to BB.

Cash_is_Trash's picture

I don't trust Zero Hedge, it's all fact and realistic data, that just doesn't do it when the whole country is living a lie.

sbenard's picture

LOL! Now I know why you wrote that in Spanish! When I lived in South America, I always found that profanity didn't seem to have quite the bite in the other tongue!

And by the way -- I couldn't agree more!

Wood's picture

I have fight club on blu ray anytime I want.  Meatloaf still dies.  Forward or backward.  I cry everytime.

 

edit:  you should reserve the domain:  zerohedgefightclub.com soon as you can.  just sayin'....

10kby2k's picture

What if our politicans had balls ....like any fighter.  Just a bunch of vaginas.

slackrabbit's picture

In life he was known as Meatloaf.. in death "his name is Robert Paulsen"

;-)

snowball777's picture

the guilty

But seriously...is BernankeMoreau responsible for Russian wheat fires, failed cotton crops in Pakistan, and cold weather fucking up the veggies in Mexico?

At least some of this inflation has to be based on supply shocks and increased EM demand...not all of it mind you, but we do ourselves a disservice to pretend that it is all Bennie and the Inkjets.

 

mberry8870's picture

Personally I think there are a number of things working at once, growth of a middle class of about 2 billion people, bio-fuels, weather and the impact on the margins of this massive amount of currency printing at the same time. I think the issue is that this irresponsible printing money at this time tipped the scales.

More Critical Thinking Wanted's picture

 

It's not money printing. It's called "more trade".

ZH asks this rhetorical question:

Recently, some have started to ask a very pertinent question when it comes to the global Current Account: with every developed and developing country supposedly seeing a surge in exports, just who is it that is doing all the importing?

It's like claiming:

All districts in a city report heavy outbound car traffic. If every district is reporting heavy outbound traffic then where is all the inbound traffic??

How about the simple concept of "there's heavy traffic in both directions"?

Did the concept of "increased trade all around the world increasing both exports and imports" never occur to the genius who wrote this article?

So this article earns the #1 spot for the most idiotic ZH headline ever :-)

 

Terminus C's picture

If all countries are seeing a current account surplus... then there is an issue of reporting.  If all countries are just seeing an increase in exports then you may have a point.  For the most part I understand you to be a troll (judging from your previous posts) and I think that you recognize my initial statement to be the intention of the headline.  If the second interpretation I mentioned was the intention, then you have a point.

More Critical Thinking Wanted's picture

 

If all countries are seeing a current account surplus... then there is an issue of reporting.  If all countries are just seeing an increase in exports then you may have a point.  For the most part I understand you to be a troll (judging from your previous posts) and I think that you recognize my initial statement to be the intention of the headline.  If the second interpretation I mentioned was the intention, then you have a point.

So you agree with me that the sentence I quoted is bogus on its face?

Now, you imply that it might just be an honest mistake and that the intended text would have to be about the account balance. Except that the article does not even cite any current account and import/export statistics. It keeps babbling about the Austrian money supply and PPI statistics - which are as far from global trade data as it gets.

AFAICS the article is pretty much bogus in its entirety, and the bogosity starts right in the first paragraph. The article apparently tries to make up for blatantly broken links of logic by volume - but science does not work that way: it's the weakest link that breaks the chain. I'd prefer a half-page article that is robust in its entirety and does not make elementary mistakes.

Btw., you think I'm a troll, still you agree that I made a valid and relevant point? That's a pretty funny definition of 'troll' :-)

 

More Critical Thinking Wanted's picture

 

The Baltic Dry Index increased by 20% in the last 2 weeks.

Funny enough, that development was not reported on ZH, only when it was dropping :-)

It's a bit like ZH's gold price reporting: weekly and monthly highs are always reported - and sometimes even intraday highs are reported as big news, but weekly lows or monthly lows of gold - that's not news on ZH :-)

 

DonnieD's picture

Baltric Dry declined 60% since September and 75% since last May. How does that correlate with demand pushing up prices?

We are living in a world economy that is centrally planned by governments and the governments lie their asses off to stay in power. Do you really believe the US GDP/inflation numbers, much less Chinas?

More Critical Thinking Wanted's picture

 

Do you really believe the US GDP/inflation numbers, much less Chinas?

The US inflation (CPI) numbers were largely confirmed by an independent MIT project recently featured on ZH:

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/von%...

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/von%...

So the US government's CPI metric appears to match reality.

China's inflation data I cannot trust as there's no transparency and no independent verification - and even the official data suggests very high inflationary pressures.

Baltric Dry declined 60% since September and 75% since last May. How does that correlate with demand pushing up prices?

Four important points:

  1. All data suggests that much of the food commodities price increases are due to reduced production/supply. Reduced demand for shipping Russian grain over the sea would result in a lower BDI.
  2. Most global food commodity shipping is not captured in the BDI (it is 'Baltic' for a reason) - so an uptick in demand in India or China would not show up in the BDI. And that is precisely what other data suggests is happening: India and China is importing (much) more food.
  3. Oil shipping is not captured in the BDI - and for oil too, much of the price pressure is due to production/supply problems: peak oil. Pressure on the supply side gets captured via decreased (or stagnating) shipping.
  4. There was a much colder than average winter in Europe:

https://secure.wikimedia.org/wikipedia/en/wiki/Winter_of_2010%E2%80%9320...

Which negatively impacts demand for shipping.

I'd expect a strong BDI up-swing to continue into the spring.

We are living in a world economy that is centrally planned by governments and the governments lie their asses off to stay in power.

We are most definitely living in such a world - but FYI, western government power to lie about key economic data is limited. There's a lot of independent/private data capture going on, so any 'big lie' gets figured out quickly. Most big companies rely on accurate economic data - so the demand for accurate data is very strong.

The power of authoritarian dictatorships to lie about economic data and to suppress independent data gathering is undisputed - we cannot trust anything coming out of China for example.

 

Moe Howard's picture

The problem with the numbers is that they don't take into account real people, real lives.

Say for example you are retired from the Army. You get a check about 1/10th of a retired LA police officer or fireman. There has been no cost of living increase for the last two years. On March 1st, Federal Withholding from Army retirement checks is going up for most retirees, and I quote:

Recent changes to the tax law, tax tables, and other legislation changed the amount of Federal Income Tax Withheld. These changes will be reflected in your Retired Payment dated March 1, 2011.

Give this some thought. What prices do the government claim have fallen? Big TVs, cars [I question this] and homes. Well, in my area, in the last two years, purchasing the same exact new vehicle costs over $2K more. I am sure it is the same elsewhere. A big TV for a retired person would be, at most, every 5 years. Home? Retired people who are actually retired aren't buying homes anyway, however, home prices are the same now as two years ago.

So the bottom line is the government is cutting retired military pay. They are doing this in two ways: Inflating the money supply so the cash the retiree gets is less; and increasing taxes to reduce real income. I am positive it is the same for people on social security.

I think what they have in mind is to cut the Federal Budget by reducing the worth of the FRNs paid out, and taxing the payout more. This is being done without holding messy votes in Congress.

The banksters inflation hurts real people. In other countries, like Tunisa, Egypt, Algeria, it starves the ordinary people. They aren't purchasing houses, cars, big screens. They are purchasing flat bread, cooking oil, sugar and tea.

More Critical Thinking Wanted's picture

What prices do the government claim have fallen?

COLA increases have been largely eliminated from wage deals in the Reagan and Bush anti-union and pro-business legislative and policy efforts. COLA adjustments were common in the 70s.

If you check the CPI data I quoted then after early 2009 the 'government inflation data' (and the MIT inflation data) shows steady increases in the cost of living.

 

Andre's picture

I have to disagree based on personal anecdotal evidence.

  • 15 lb. bag basmati rice at Costco - up $7 in 3 months (15.99 to 22.99)
  • gasoline - up 11 cents in 2 months (2.95 to 3.06)
  • unsheathed copper wire, 12 ga. at Home Depot  - up 3ct./ft in 2 months (.23 to .26)

Other basic prices have risen here (WA state) as well to a similar degree.

I see the misstatement of the CPI as an act of psychology. In previous downturns there was enough liquidity to turn around and say "Things are better!" People would believe it, go out, and buy the country out of recession. At this point, the gap between the statement and the common experience is wide enough the credibility of the system is being undermined in the eyes of the common person, which is a definite problem for a consumer-based economy.

It does not help there is a disturbing employment situation, but I would rather not be flamed for going so far OT.

 

More Critical Thinking Wanted's picture
  • 15 lb. bag basmati rice at Costco - up $7 in 3 months (15.99 to 22.99)
  • gasoline - up 11 cents in 2 months (2.95 to 3.06)
  • unsheathed copper wire, 12 ga. at Home Depot  - up 3ct./ft in 2 months (.23 to .26)

That's +3.7% for gasoline, +13% for copper wire and +43% for rice.

Roughly in line with how these commodities moved (if you use WTI crude for oil, not Brent crude).

A couple of comments:

The last CPI reading is about 1.5 months old (it takes time to collect the data). Here's the latest CPI:

http://research.stlouisfed.org/fred2/graph/fredgraph.png?bgcolor=%23B3CD...

The December CPI was at around 3.5% YOY. I'd expect the next reading to go up.

You listed three products whose price directly depends on a given commodity's price that went up recently. But most everyday products (even including food) do not depend on commodity prices nearly as much:

For example a loaf of bread only has about 10% wheat cost component: the rest is labor and distribution costs - and those are not going up, with this labor market ...

 

snowball777's picture

The Baltic Dry Index increased by 20% in the last 2 weeks.

Geee...what major geopolitik event occured over the past two weeks near one of the most popular shipping lanes in history?

 

Orly's picture

Don't kill his buzz, man.  He's on a roll.

/:

More Critical Thinking Wanted's picture

Geee...what major geopolitik event occured over the past two weeks near one of the most popular shipping lanes in history?

I suspect you did not realize that by stating that you clearly support the argument that commodity prices are predominantly affected by basic supply & demand forces (such as fears of Suez closing off shipping routes), not by liquidity from the evil Fed? :-)

 

DonnieD's picture

Commodity prices are predominantly affected by supply and demand forces. It's the central bank's inflation on top of those prices that earns Genocide Ben his nickname.

More Critical Thinking Wanted's picture

Commodity prices are predominantly affected by supply and demand forces. It's the central bank's inflation on top of those prices that earns Genocide Ben his nickname.

Do you have actual hard data about how much global inflation was created by the Fed, or are you just throwing around baseless genocide accusations?

Also, did you know that more money in the US does not affect global supply and demand forced for food in any major direct way, so alone that statement of yours is in contradiction with your notion that there's significant 'Fed inflation' on top of supply & demand inflation ...

 

skipjack's picture

"more money in the US does not affect global supply and demand forced for food in any major direct way"

 

You have some fact behind that statement ?  Fed money printing goes first to the PDs, who turn right around and ...tada!...bid up commodities.  Which, I might point out, are mostly not based in the US.

 

 

More Critical Thinking Wanted's picture

 

Read the arguments I made above - they are full of references to hard data.

 

Orly's picture

No, I think he's saying that a speculative blip on a chart secondary to a major geopolitik event should not be construed as a change in pattern.

In general, I hear your basic theme: it's not all doom and gloom out there- and you're probably right.  But you cheapen your argument by trying to hype up every last little detail and I think it is working against you.  It makes your arguments seem cheap and based on staccato signals of faulty information.  Kinda like watching Fox News.  /:

Just my opinion, of course, but it may behoove you to pick your battles more carefully.

More Critical Thinking Wanted's picture

 

No, I think he's saying that a speculative blip on a chart secondary to a major geopolitik event should not be construed as a change in pattern.

I did not claim that.

I just countered the (incorrect) notion that a drop in $BDI means 'no supply & demand forces at play', because the index is mostly blind to supply squeezes and is mostly blind to non-European demand surges - and current food shortages are precisely due to supply squeezes in Europe and demand surges elsewhere.

The $BDI would obviously have to show big upticks on increasing demand - but I'm not making that argument.

(Regarding the picking of battles you are quite right - but my goal is to make arguments, even if they are complex or borderline - not to be always seen correct.)

 

Orly's picture

"...my goal is to make arguments, even if they are complex or borderline - not to be always seen correct."

 

I'm with you there 100%, Critical T.  Rock on!

snowball777's picture

I suspect you haven't read the post at the top of this thread.

the grateful unemployed's picture

how much does Egypt make every time a ship crosses the Suez?

zaknick's picture

4-5 billion/year and 1 million barrels of oil per day cross it.

FeralSerf's picture

We're working on that middle class growth thing and it's rumoured that a solution for it is in sight.  Stay tuned -- you might even get to watch it contract.

tmosley's picture

Exactly.  Crops have never failed before for any reason.  Blaming the weather is not simply a convenient excuse.  The Soviet Union should have won the cold war, they just kept having droughts.  No-one could have been expected to produce like that.

snowball777's picture

you write these posts from a room with no windows, don't you?

...and a curiously high ratio of CO2 to oxygen.

StychoKiller's picture

"What is the Law?"

"To deny that we are printing, that is the Law -- are we not Banksters?"

Bitch Tits's picture

See now, I see it as another financial scam. Odd how we're now hearing about all these horrible things happening in the food markets.

Kind of reminds me of the Toyota situation, which came about when American car companies were on their last leg. Now it seems that it was all "user error", after all, eh?

I guess it's time for food producers to get their pint of blood from the "non-productive". Or maybe just those "gambling" on food producers. It's the new post-real estate fad.

Hedgetard55's picture

The fucking Icelanders are exporting the inflation, now, bitchez.

gwar5's picture

We are exporting inflation... and damn proud of it! ...Judging by the Bernank's reaction.

HoofHearted's picture

Both exporting inflation and keeping a good lot of it for ourselves. It's the least a humanitarian like the Bernank can do...share with everyone, and charity begins at home.

Everybodys All American's picture

China I believe will continue to raise rates and will never give in to Bernanke's foolish dollar policy.

Hephasteus's picture

Cotton would have been much much much higher if we hadn't used tons of polyester fibers over the last half centry. Now that we have slow down on that. Oops.