The Clear Signs of a Global Inflationary Tsunami Are Already Visible Around the World

Phoenix Capital Research's picture


Since the Financial Crisis erupted in 2007, the US Federal Reserve has engaged in dozens of interventions/ bailouts to try and prop up the financial system. Now, I realize that everyone knows the Fed is “printing money.” However, when you look at the list of bailouts/ money pumps it’s absolutely staggering how much money the Fed has thrown around.


Here’s a recap of some of the larger Fed moves during the Crisis:


  • Cutting interest rates from 5.25-0.25% (Sept ’07-today).
  • The Bear Stearns deal/ taking on $30 billion in junk mortgages (Mar ’08).
  • Opening various lending windows to investment banks (Mar ’08).
  • Hank Paulson spends $400 billion on Fannie/ Freddie (Sept ’08).
  • The Fed takes over insurance company AIG for $85 billion (Sept ’08).
  • The Fed doles out $25 billion for the automakers (Sept ’08)
  • The Feds kick off the $700 billion TARP program (Oct ’08)
  • The Fed buys commercial paper from non-financial firms (Oct ’08)
  • The Fed offers $540 billion to backstop money market funds (Oct ’08)
  • The Fed agrees to back up to $280 billion of Citigroup’s liabilities (Oct ’08).
  • $40 billion more to AIG (Nov ’08)
  • The Fed backstops $140 billion of Bank of America’s liabilities (Jan ’09)
  • Obama’s $787 Billion Stimulus (Jan ’09)
  • QE 1 buys $1.25 trillion in Treasuries and mortgage debt (March ’09)
  • QE lite buys $200-300 billion of Treasuries and mortgage debt (Aug ’10)
  • QE 2 buys $600 billion in Treasuries (Nov ’10)
  • Operation Twist reshuffles $400 billion of the Fed’s portfolio (Oct ’11)
  • QE 3 buys $40 billion of Mortgage Backed Securities monthly (Sept ‘12)
  • QE 4 buys $45 billion worth of Treasuries monthly (Dec ’12)


The Fed is not the only one. Collectively, the world’s Central Banks have pumped over $10 trillion into the financial system since 2007. This money printing has resulted in a massive expansion of Central Bank balance sheets as the below chart indicates (BoE= Bank of England, Fed= US Federal Reserve, ECB= European Central Bank, SNB= Swiss National Bank, BoJ= Bank of Japan).


This money printing has unleashed inflation in the financial system. In the emerging markets, where consumers can spend as much as 50% of their income, this has resulted in food riots and even revolutions as we saw with the Arab Spring in 2011.


This situation is far from over. Higher food prices continue to be a source of civil unrest throughout the emerging market space. Recently Saudi Arabia banned the exporting of poultry to halt prices which rose by as much as 40%:


Saudi Arabia has banned the export of chickens in an attempt to curb an online public campaign to boycott poultry consumption due to high prices.


The Saudi Ministry of Commerce and Industry decided Wednesday to halt the export of chicken until the domestic market is stabilized, Emirates 24/7 reported.


The decision followed a campaign launched by Saudis on Twitter to boycott buying and eating chicken in the country when prices for poultry rose 30-40 percent, the Financial Times reported.


In the US, a series of droughts and biofuel policies have resulted in corn prices skyrocketing. This has crushed some Latin American markets such as Guatamala:


In the tiny tortillerias of this city, people complain ceaselessly about the high price of corn. Just three years ago, one quetzal — about 15 cents — bought eight tortillas; today it buys only four. And eggs have tripled in price because chickens eat corn feed…


In a globalized world, the expansion of the biofuels industry has contributed to spikes in food prices and a shortage of land for food-based agriculture in poor corners of Asia, Africa and Latin America because the raw material is grown wherever it is cheapest.


Nowhere, perhaps, is that squeeze more obvious than in Guatemala… With its corn-based diet and proximity to the United States, Central America has long been vulnerable to economic riptides related to the United States’ corn policy. Now that the United States is using 40 percent of its crop to make biofuel, it is not surprising that tortilla prices have doubled in Guatemala, which imports nearly half of its corn.


As the cost of living increases around the globe fueled by the Central Banks money printing, wage protests and strikes have become commonplace:


South Africa - A total of 26 people were arrested overnight in connection with farmworkers' protests for higher wages, Western Cape police said on Wednesday.


At least 180 people had been arrested in connection with the protests since Wednesday last week…


Indonesia: Thousands of workers took to the city’s main thoroughfares on Wednesday to protest delays in the increased minimum wage and hikes in electricity rates.


The workers from industrial areas in Bekasi, Bogor, Depok, Jakarta and Karawang belonging to the Indonesian Metal Workers Federation (FSPMI), the All-Indonesia Workers Union (KSPSI) and the Indonesian Workers Assembly (MPBI), demanded that Governor Joko “Jokowi” Widodo instruct companies to immediately comply with the 44 percent raise of the provincial minimum wage to Rp 2.2 million (US$228) for 2013.


China-Sanitation workers' salaries will be increased by 10 percent this year in

Guangzhou, the capital of South China's Guangdong province, following

recent protests demanding higher pay…


"The salary of sanitation workers will be increased by 10 percent this year and the government will also boost other subsidies, for example, housing allowances," Huang said…


Guangzhou has an estimated 38,840 sanitation workers, who earn an average of about 1,300 yuan ($209) a month, almost equal to the city's minimum wage.


Germany-Germany’s major public services trade union Verdi had called for a daylong strike on Friday at Hamburg Airport, impeding security operations and delaying flights as passengers struggled to get to their gates.


The union is calling for an hourly wage of 14.50 euros for its members, who currently earn 11.80 euros per hour.


Only one of 20 security checkpoints had opened, with approximately 95 percent of the passenger security-check staff walking off the job.


These wage protests and the political instability they create have dramatically changed the investment landscape. Historically, precious metals mining companies have been excellent inflation hedges. Not anymore.


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Joe A's picture

First generation of biofuel indeed drove food prices up because it uses potential food as raw material for fuels. And it led to big oil companies buying up land and kicking people living on it of. But second generation biofuel uses agricultural waste as input for biofuel. And third generation uses algae for instance to produce biofuel and in the same time takes CO2 out of the air. Second and third generation are still too expensive and not ready for operation but that is just a matter of time.

CTG_Sweden's picture



Joe A:


“First generation of biofuel indeed drove food prices up because it uses potential food as raw material for fuels. And it led to big oil companies buying up land and kicking people living on it of. But second generation biofuel uses agricultural waste as input for biofuel. And third generation uses algae for instance to produce biofuel and in the same time takes CO2 out of the air. Second and third generation are still too expensive and not ready for operation but that is just a matter of time.”




My comments:


The question is how inexpensive biofuels produced by algea can become compared to sugar cane ethanol which also utilizes sugar cane waste (bagasse) and Fischer-Trops diesel (which can be made from agricultural waste, for instance). You don´t get even the open ponds for free. Closed-loop systems are even more expensive. But with near 0 % interest rates I guess that investments in huge algea fuel plants may stand out as attractive investments. Furthermore, it is probably a better idea to invest printed money in algea fuel production, if that really is a feasible way to produce inexpensive biofuel, than using it for propping up the stock markets in North America and Northern Europe.


The difference between algea fuel and ethanol made from sugar canes in countries like Brazil is that we already know that sugar cane ethanol is a technology that works and currently generates fuel that is slightly less expensive than gasoline. Africa should already have been self-sufficient as regards fuel. It doesn´t make sense if African countries that could produce their own fuel get foreign aid in order to be able to buy imported oil. Brazil is is now self-sufficient as regards fuel for passenger cars due to sugar cane ethanol. Sugar cane ethanol is probably a better solution than some media pundits think.


screw face's picture

Jah Bless the Chicken Chockers, Rosta!

screw face's picture

"These wage protests and the political instability they create have dramatically changed the investment landscape. Historically, precious metals mining companies have been excellent inflation hedges. Not anymore."

Until the 3-D copier is perfected, Bullpuckie, nuf' said.



Popthestock's picture

Hyperinflation is not gonna happen anytime soon, since the money the fed is printing is not going directly into ecenomoy, but are being used to buy bad mortgage debt etc. to improve the failed banks balance sheets. 

Joe A's picture

Who then spend on stocks.

CTG_Sweden's picture


Phoenix Capital Research/NY Times:


“In a globalized world, the expansion of the biofuels industry has contributed to spikes in food prices and a shortage of land for food-based agriculture in poor corners of Asia, Africa and Latin America because the raw material is grown wherever it is cheapest.”





My comments:


I think that you have to separate the short-term impact on food prices caused by using farmland (where they grow corn) for biofuel production from the long term effect on food prices.


As long as there is still potential farmland left with about the same productivity as existing farmland, biofuels don´t make food more expensive in the long run. Food has not become more expensive in Brazil because of the fact that Brazil now is self-sufficient as regards fuel for passenger cars.


However, there is not an infinite amount of potential farmland left neither in South America nor in Africa. So the more the population grows, the sooner these continents will run out of farmland that can be used for producing biofuels. Therefore, I think that minimizing the population growth in these parts of the world should be an objective for the populations in these countries from motives of self-interest. Selling ethanol made from sugar canes or other biofuels should be an easy way to create an industrialized economy in Africa with good-paying jobs and capital incomes for senior citizens. One problem is of course that African leaders so far have not cared for their own populations. They have not been interested in creating prosperity for the masses like for instance South Korea, which in 1960 was a poorer country than Kenya. Even though I think that it is fair to say that politicians in Europe and North America have had a similar mindset, the consequence for Africa of this attitude has been more serious since Africa was poorer to begin with. Another problem with Africa is that they don´t have so many other competitive advantages. I think that their real strength is that their population so far is not too big for a large-scale biofuel industry and that they can produce biofuels at competitive prices. That would be an easy way for Africa to make money. It is much harder to make money by producing clothes and shoes as inexpensive as possible. For a country like Bangladesh, which is so densely populated, cheap labour is the only competitive advantage. But for Africa future exports of biofuels is still an option.


Perhaps large donors of foreign aid to Africa, such as Sweden, should be interested in creating sustainable industries in Africa so that Swedish tax payers would not have to give foreign aid to Africa in the future. The reason why Swedish aid foreign has not been used for creating a large-scale biofuel industry in Africa is probably successful lobby activities by the oil industry. Furthermore, the principal idea of Western foreign aid to Africa does not seem to be to create economic growth in Africa but rather to create incentives for African leaders to give favourable concessions to companies like Anglo American and not to vote wrong in the UN etc. In Sweden, underlying motives for foreign aid are different compared to the UK and the US, but I will not go into details on this subject. In any case the problem seems to be that nobody seems to think that more production of biofuels in Africa and a slower population growth in Africa is in their own interest.



Iconoclast's picture

How's that $1 trn dollar platinum coin coming on, can we just make 25 of 'em with all the platinum on the planet and on various asteroids (with the usa's name on em obviously) and the job's done?

They've (tptb) have so lost control of the supply and meaning of money it's beyond repair. We're fubar

shovelhead's picture

Biofuels are nothing more than corporate welfare. Dumb, expensive and wasteful.

Why not use the wonder plant that does it all? Hemp.

Cheap, sustainable and eco-friendly.

You can patent process but not the item itself. That's the problem. no monopoly opportunity. Hemp will grow where almost nothing else will.

Beyond stupid not to use Hemp.



Stuck on Zero's picture

Liberals were bitching that the low price of corn was driving little growers in the third world out of business.  Now they bitch that high prices are starving people.  I wish they'd get their story straight.


spinone's picture

There'll be no inflation without wage growth, just a reduction in living standards.

Savvy's picture

If the SHTF I don't want to be spending ag/au on t.p. or canned goods, that's what cash is for. Buying barter items now. If the S doesn't HTF you still have items you need anyways, and cheaper today than they will be tomorrow. Don't forget beer!!

Matt's picture

most beer (the stuff you buy in a store) only has a ~6 month shelf life, but I hear rumors there are beers that age like wines.

Croesus's picture

@ Matt:

This is one of my favorites:

It's a Flemish red sour ale, made from 2 different blends; one's aged 8 months, and the other is aged 18 months.

strangewalk's picture

If the diamonds held in DeBeer's underground Antwerp vaults were released onto the market today, prices would instantly fall so low that people would not stoop to pick up one carat stones. The same is true of gold. Conversion of lead into gold was first demonstrated through accidental observation by Soviet phyisicists at a nuclear site in Siberia in the early 70's. The process quickly became understood, and covert yet massive rates of conversion have been produced essentially as a free byproduct of nuclear fission since that time, to a point that the volume must be kept secret, at least for now.     

Lordflin's picture

My god, you are an idiot...

JR's picture

And, whether DeBeers likes it or not, the synthetic diamond created in a laboratory such as those of Gemesis, is a real diamond – at about 30% less the price.

From Wikipedia --

“Synthetic diamond (also known as laboratory-created diamond, laboratory-grown diamond, cultured diamond or cultivated diamond) is diamond produced in an artificial process, as opposed to natural diamonds, which are created by geological processes. Synthetic diamond is also widely known as HPHT diamond or CVD diamond after the two common production methods (referring to the high-pressure high-temperature and chemical vapor deposition crystal formation methods, respectively). …

“Gem-quality diamonds grown in a lab can be chemically, physically and optically identical (and sometimes superior) to naturally occurring ones. The mined diamond industry has undertaken legal, marketing and distribution countermeasures to protect its market from the emerging presence of synthetic diamonds. Man-made diamonds can be distinguished by spectroscopy in the infrared, ultraviolet, or X-ray wavelengths. The DiamondView tester from De Beers uses UV fluorescence to detect trace impurities of nitrogen, nickel or other metals in HPHT or CVD diamonds.[91]

“At least one maker of laboratory-grown diamonds has made public statements about being ‘committed to disclosure’ of the nature of its diamonds, and laser-inscribes serial numbers on all of its gemstones.[88] The company web site shows an example of the lettering of one of its laser inscriptions, which includes both the words "Gemesis created" and the serial number prefix 'LG' (laboratory grown).[92]

Matt's picture


"Using fast neutrons, the mercury isotope 198Hg, which composes 9.97% of natural mercury, can be converted by splitting off a neutron and becoming 197Hg, which then disintegrates to stable gold. This reaction, however, possesses a smaller activation cross-section and is feasible only with un-moderated reactors."

I wonder at what price of gold relative to the operation cost of an un-moderated reactor would this be economically viable.

LawsofPhysics's picture

LMFAO!!!!   Ignore the issue of "money", it is irrelevant.  The issue is energy.  (And it takes a shitload of energy to convert lead into gold moron)  Society has enjoyed the current standard of living because of the excess energy available to society (oil, coal, natural gas, fusion reactors).  Without that excess energy, everybody will be farming the fucking backyard.  All of our energy will simply go into feeding ourselves, there won't be shit left over to innovate anything, much less turn lead into fucking gold.  Halarious.

Matt's picture

Turning lead into gold would require a fusion reaction, which would likely produce several times as much energy as fission, if it were viable. Claiming the Soviets were accidentally creating net energy positive fusion reactions in the 1970s is pretty far-fetched, though. Correct me if I'm wrong, but as far as I can tell, Lead is not even a product of Uranium fission or in the decay chain.

Lordflin's picture

Hmmm... Well, short answer... Iron, atomic number 26, is the most stable element in the universe. Fusion of large atomic nuclei is not net positive for energy... If it were, for example, there would not be such things as fission bombs... Gold is atomic number 79...

bullchit's picture

'Ya think if the Soviets had that little stink bomb, they wouldn't have used it already?

Platinum into gold is the formulae.

Strangewalk indeed.



Ned Zeppelin's picture

Biofuels = welfare for corporate agriculture

LawsofPhysics's picture

"(pick your favorite pet project)=welfare for corporate (pick your favorite corporation)"  -  FIXED  Sorry, did you have a fucking point?  The god damn corporation own everything, including you and your "representation".  This is where all democracies end up and why the republic should have been worth preserving and fighting for.

Poor Grogman's picture

No one could have seen this coming..


Oh sorry that was a bit soon, disregard.

ebworthen's picture

Using corn for fuel is a tremendous waste of food and resources, epic waste.

Corn for biofuels is NET NEUTRAL if not negative.  People can't seem to grasp that corn requires petroleum to grow; to till the soil, for the herbicides and pesticides, the irrigation, the harvesting, the transport, the production.


Corn growers and the farm lobby love it.

Hungry people don't.


disabledvet's picture

corn prices are getting crushed this year as "demand" starts meeting the massive supply. i'm not so sure it's "net energy bad" since the bulk of the "energy" in the form of sugars from corn starch come from the sun. i do agree corn is very demanding on the water supply...hence the premium on "super seeds" and the "Monsanto law" (protecting Monsanto from any litigation period...?) "Waste" of course are cars that use an internal combustion engine period. Wast is using natural gas for generating electricity. Waste is Wall Street which speculates endlessly in such waste...and then leaves someone else to clean up their mess. of course the bulk of their banks and financial institutions have been obliterated now so "hello Mr. Market and efficiency." this is the "beauty" as it were of falling prices. as my buddy used to say to his now ex wife "what has value??" and so it is with credit decisions. "i must lend to make money...but no one but me is worth lending to." hmmm. conundrum indeed.

LawsofPhysics's picture

So long as there are 7+ billion (and growing) mouths to feed, demand for anything edible will be just fine.  As far as waste goes, that which is not sustainable, will not be sustained.  History is very clear about that.

Colonel Walter E Kurtz's picture

I think the TPTB are starting to calculate new numbers, how much of a haircut to the "7+ billion" number is needed so they can remain in TPTB?

willwork4food's picture

..starting to calculate new numbers? Ever hear of the Georgia guidestones?

archon's picture

We should honor dear leader by putting his face on the first-ever trillion-dollar bill, which we can then refer to as the "Obama".  We can put the Bernank's picture on the $100B bill.  In the future, a typical convenience-store conversation might go something like this...

Customer: "I filled her up on pump 5, and I'll have a gallon of milk and a loaf of bread."

Clerk:  "That'll be two Obamas and a Bernank."

Customer:  "WTF?!  That's highway robbery!  Last week the same thing was only 8 Bernanks!"

Clerk: Blinks

Customer: crumples up three Obamas and throws them at the cashier.  "I'll also have one of those vials of hopium.  Keep the change."

Ned Zeppelin's picture

As long as you agree GWB should be on the $100billion note, Clinton on the $50B, and Hank Paulson on rolls of Scott toilet tissue

Boris Alatovkrap's picture

When SHTF, what good is for paper. Boris is look for umbrella.

ronaldawg's picture

Here comes hyperinflation BITCHEZ....

Popthestock's picture

Yeah on Monday morning. look at you hoping for it to happen. get a life.

disabledvet's picture

"Democrats demand higher taxes. Republicans demand spending cuts." That sounds like a "perfect storm" as it were for low interest rates forever. "Blaming defense in the middle of a war...and calling it your bluff being called when 200 billion is disappeared"???!!! hmmm. Really? "a bluff"? that sounds like a very expensive bluff to me. has North Korea just called it?

Freedumb's picture

After that first hit of Bear Stearns QE crack rock you can really see how quickly tolerance built up

MythicalFish's picture

I'd rate you more highly if you wouldn't send an unsolicited free newletter with the report.


Otherwise thanks for the insights!

Scro's picture

Say it three times fast

Saudi Arabia has banned the export of chickens in an attempt to curb an online public campaign to boycott poultry consumption due to high prices.

akak's picture


Saudi Arabia has banned the export of chickens in an attempt to curb an online public campaign to boycott poultry consumption due to high prices.

I hear that China has some extra chickens that can probably be had on the cheap.

spdrdr's picture

"...that can probably be had on the cheep."

There, FIFY.


Jam Akin's picture

So their authorities are choking the chicken?

ihedgemyhedges's picture

Yes, but there was no need to take a cheap shot at RoboTrader.......

ramacers's picture

get the head baskets ready.