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No Inflation? Commodities Highest Ever For This Time Of Year
While every central banker and policy-leech spews forth the government-supplied statistics on inflation - noting that all is well, carry on - we recently pointed out that Gas Prices are their highest ever for this time of year. Of course, the standard supply constraints (or technical) reasoning was applied to dismiss this as transitory (even though it has continued to rise since); but what is perhaps more worrisome is the broad-based nature of the real inflation that is leaking into our global supply chain. The 24-commodity heavy S&P GSCI index (widely recognized as a leading measure of general price movements and inflation in the world economy) has never been as high in early February as it is currently - ever. And with global growth stagnating at best, it seems a tough call to blame 'recovery' for this inflating (fastest pace in 8 years) raw material price leaking cost-push inflation (and margin-compression) into the real economy.
and the fastest rise in 8 years...
Charts: Bloomberg
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http://future.aae.wisc.edu/data/annual_values/by_area/2052?period=complete&tab=feed
Glad we grass feed our cattle on pasture.
Last night's dinner of Steal au Poivre with unctous sauce and garden sweet potato casserole.
I just checked the tags on my kids new clothes. Even they are made of corn.
Is that a glass of milk? LOL.
Raw milk from our cow; it has not gone up in price, and I know exactly what is in it.
Has the price of Pepsi-Coke many feed their kids for dinner gone up?
MMmmm....Pepsi. It's not just for breakfast anymore.
"By The Sweat of Hedgeless Horseman's Brow He Will Eat His Bread."
Amen Brother.
Don't go talking too loudly about raw milk, HH. That's terrist talk, you know.
Ikea glassware?
I like the candle. I raise my own whales for the blubber to make candles.
Libbey glassware, and I think this style is still made in USA.
LBY stock is up 25%+ over 12 months, in nominal USD terms.
I am in Beijing right now.... there is no such thing as steak or that fancy French word here. My mouth is watering like Niagra Falls.
The raw milk is something I have always wanted to try, but it is illegal to sell where I used to live. Gubment sayz its bad for me. They always know best.
Sweet potatoes? Man, bring on the fries...or yams, hehe.
The state just called. It's about the taxes on your meadow...
Not in our neck of the woods. When the local governements run out of money, they will be at your doorstep. The only thing that is assured moving forward. Enjoy that while it lasts. Some of the southern states still enjoy these types of exemptions. Our operations in Georgia and South Carolina do, but water is becoming a problem as we spar with the developers/profiteers of urban sprawl.
Illinois doesn't tax farmland at it's sale price either. It's a big problem for counties that don't have industry. The home owning property owners have to bear the burden. At the same time the farmers ejoy no sales tax on farm items plus federal subsidies. And the states promotion of ethanol in gas.
Would you mind adopting a 32 year old former Infantryman turned Economist and his wife?
Possibly.
Your wife (please send photo) would need to wear a uniform, and if you are a Keynesian economist, then you just might be qualified to help us with the horses.
LMAO! Not Keynesian, and my wife looks better with a tight skirt, she has a nice ass.
If adopted would not you and your wife become brother and sister............
I'm my own grandpa...
Doesn't matter, did you see that steak?
Horseman.
Got a ribeye yesterday at Publix (just cut), added a rub of brown sugar, Pimenton, salt, garlic red wine and olive oil then grilled an hour later with baked potato - my once a month treat to myself. I remember the farm and my gripe with milk was the onion taste! Butter was incredible though. I had a Valpolicella instead of milk (lol)
pfft, you wish
you ate meat glue (http://www.weatherburyfarm.com/Meatglue.htm) (http://www.greenmedinfo.com/blog/meat-glue-your-fake-steak)
bon appetit
pfft, i call bullshit on your photo of steak. i can tell it is meat glue, not a real steak:
http://www.greenmedinfo.com/blog/meat-glue-your-fake-steak http://www.weatherburyfarm.com/Meatglue.htm
bon appetit
New USD bills
http://i45.tinypic.com/504arr.jpg
At some point, the yield on the 10-YR will start to behave like this, too.
(and that won't be very nice, will it Precious?)
just as long as the 10 year styas 2-5% below the inflation rate.
inflation is the feds only goal----so people nominally see higher numbers but in real terms are surrendering their standard of living
Ive heard a lot of rumblings of people planning to go long nat gas so I expect a slamdown to $2.50 fairly soon
The shale gas investors already went long natural gas over the past 5-8 years. (And it hasn't worked out too well for 'em).
This is not the droids inflation you're looking for. Move along.
This is starting to have a pleasant whiff of 2008 doesnt it? Commodities powering up and all...
"I don't know what you're talking about." - Bernanke
Nah off course not... Transitory.. Not reflected in cpi.. Housing market is solid and all that jazz.. Kunts...
"Mind your own P's & Q's TotalCarp or the IRS shark will bite your fins off." - Jack Lew
I seriously wonder some times if we are all gonna wake up in gitmo soon enuff. But i guess they will start with tylers, not small fish like moi.
Where's Orly to talk about this horrible deflation?
Careful or a drone will be circling over your house.
Keep printing you douchebag Bernanke! The 10year is up 5bps and the vix is down over 5%? This pinball machine is set on [full tilt]today!
Just playing what if here.. what happens if the fed gov. cut spending by half (deflationary) at the same time announcing an official dollar devaluation (inflationary) ? Not that they would ever cut spending... voluntarily.
There was a guy on the radio who was blaming speculators for the hike in prices. Was he tellign the truth?
So if you buy a 10 year treasury yielding next to nothing, you are an investor, but if you buy a commodity you are a speculator?
yes. if you buy items that people use for consumption or manufacturing to horde and not use, then you are a speculator.
"Horde"?
I only play Alliance.
Even if speculators were to drive up prices, they need the liquidity to play the game. The Fed's ceaseless liquidity spigot is at the root. And this is nothing compared to what commodity inflation could be if money velocity ever picks up.
(but your new shoes are worn at the hee-e-e-e-e-e-ls...)
Are you missing /sarc tag or are you actually a moron or a troll???
Somebody has to say it:
Fuck you bernanke. And you krugman.
With the world awash in liquidity, there are few places to go. If there really is a rotation out of bonds, it all will not go to equities but rather a lot will go to commodities. Of course, with all the liquidity, there is no longer any concern about supply and demand for commodities, since the demand is just futures contracts.
Great comment. Spot on. Some will go into equities (as we're seeing), though.
This 'dummy' sounds like that silver bear, hehe:
http://www.youtube.com/watch?v=F584p5kJL-U&feature=youtu.be
Stagflation bitches!! Painful inflation coupled with piss poor econ growth
Of course you need commodities and other real inputs for real growth. That's a nice strawman/catch 22 you have there.
Pay no attention to the Bernanke behind the curtain.
Our money is debt, so why would anyone in DC want to pay off the debt? Moar debt, moar money. No debt, no money.
Except for maybe the shiny stuff.
Was on about inflation to one of my friends the other day.
Another awake one folks, he informed me not to worry, as it was as complex an issue as a jet engine, and winked.
Day by day, little by little more are becoming aware, give it time folks.
Ok, so it looks like all the central banks are hard at work blowing bubbles again. Money is rotating out of bonds into stocks. The prices of oil, food and commodities are moving upwards and are going to go up up up. Interest rates are going to go up and man who knows what various and many repercussions will result all over our economic landscape.
YIKES!
So this begs the very essential question...
What does one do?!
Take on as much debt as possible, live it up and default with everyone else just like the last time.
You certainly DON'T want to have assets or be prudent. That is the lesson.
Just out, Daniel Amerman's latest. His logic is sound imo and I agree with his price inflation call,
Elections, Investments & The Battle For Future Wealth
"... Second, we need to choose an approach by which our wealth will grow with future inflation.
When we have extraordinary promises that increase each year at a rate that is greater than the rate of economic growth, then we can fairly safely anticipate what the government is going to do as a political decision: it will be paying those promises in form but not in substance. That is, in dollar terms, the government is all too likely to be paying future retirement benefits more or less in full, but they will be with dollars that aren't worth nearly as much as they are today.
If you take a look at what has been happening to the annual increases in Social Security payments, and compare that to the annual price increases of food at the grocery store, you can get a pretty good picture of what's going on right now.
As investors we are best off aligning our financial interests with inflation, so that the greater the degree of inflation, the better that we do -- even if all we're doing is achieving average results for the strategy chosen..."
"Second, we need to choose an approach by which our wealth will grow with future inflation."
You better define wealth before you go any further.
I assume he means assets minus liabilities (net worth) in constant dollars.
LOL "...constant dollars." Good luck with that.
Just another "investment" guide for dummies by dummies.
Constant dollars as in constant purchasing power. So for example, an est 10% price inflation rate would reduce the purchasing power of one's net worth measured in dollars by about 9%. Too complicated for you to understand I guess.
And stuff at the grocery store keeps going up. I realise the kids are getting bigger but I spend twice what I used to and have had more time to find bargains and less expensive ingredients.
Each bag of groceries is unbelievably about $40 a piece on average. 15 years ago, you could feed a family of 5 all week for what 1 bag of groceries now costs. Cheese and ice cream are out of control (Ben & Jerrys is over $5 - in winter!??!). Decent beer approaching $10 a six pack. $4-5 for strawberries on any given week - no wonder people are feeding their kids $5 value meals.
Decent beer approaching $12-$18 per six pack here.
One woman here at work recently bought a hot dog, fries and coke at a fast food place for $10.89.
I'm buying storable food, cleaning products, hygiene items, tools, basically anything durable enough to last quite a few years. Anything I think I need, I buy, not out of impulse but for its value given its current price. I'll use coupons and buy when there are sales. It will prove to be the best investment to make in the coming years because those items are guaranteed to go up in price steadily *if not sharply* in as little as one year.
I also use coupons but even better, the local Publix always has 2 for 1 on about 50 items every week and every week I buy - cereal, olive oil, veggies, pasta, etc One we use and the other goes to long-term storage. I truly do not know how someone on an average salary with a family gets by. No wonder food stamps are on the rise.
People will be absolutely shocked this year when they try to buy meat. I hear the U.K. is taxing the air they breathe, really.
Ok, so how to survive and prosper in a high inflation environment?
Lever up and buy as many assets at discount as possible, and pay them off in the future with cheaper dollars.
Make sure your assets and investments are tangible and will have demand and value in the market and will "appreciate" in value due to inflation.
Get as free as possible from dependency on commodities. Don't drive (have a home office or move right next to where you work); get rid of your SUV or gas guzzler and go with energy efficient vehicle; best to be in a location in which you can do everything by walking (get to work, shop, do errands, etc.); stock up on basics, clothes, tools, etc. now so you don't have to buy anything for a long time (be frugal); get energy efficiency going in the household (water heater, refrigerator, wood stove for heat, etc.) grow your own vegetables and fruit (and if you can handle it, keep chickens for meat and eggs); let's see, what else...
Am I doing good? Am I on the right track?
Let me know how you are doing when you are all levered up and you suddenly lose your source of income due to economic collapse... but the lenders still want to get paid.
Only 2 choices to make those dollars cheaper:
#1 get more dollars for the same work-hours (which is not today’s trend) than you are accustomed to
#2 get more dollars on unsecured credit so rather than paying back in any dollars… you don’t. Ever. Maybe someone else is on the hook, maybe you figure something else out, but you're far in the green if YOU never repay. That is how the game is played, nowadays.
Government is injecting cash, but the economy is shrinking.
So demand for products and services are falling.
And so where is this inflation argument coming from?
Now if you said deflation, that would be another story.
Inflation is the increase in the money supply, that is all it is. Some of you are putting too many connotations on the meaning of it. This is an Inflationary situation, and the economy you see is the known and very well documented symptoms of said Inflationary situation.
Correct. There is massive inflation. That we supposedly aren't seeing it is a testament to how strong the deflationary pressures are, the govt lying, and corporations hidding it via smaller packages, slack fill, etc.
Look at how much is being exported through foreign sales of the T-Bill's and the price of Oil.
It seems to me that the majority of the problem we face is that there are not enough people that actually understand how all of this stuff works, and how it's likely to play out.
Yeah that too. China et al are subsidizing the inflation in many ways. I think everyone intuitively knows these things, but they also intuitively know it doesn't make sense (i.e. there should be massive deflation) so they're waiting on the big crash that never comes. Will it eventually? Yes, all empires fail for similar reasons. But a lot has to happen between now and then, and in the meantime there's purchasing power to be gained and converted into gold, land, etc.
Cliffs: Keep Stacking.
People missed the "read between the lines" from the JPM housing hedgefund ZH mentioned yesterday. They have inside info, and they're buying/renting houses. That means interest rates will not rise for at least 5 years no matter what. If they rise, more money printing, which will likely trigger a full blown currency war or a physical war.
I caught it, I just didn't have time to say anything yesterday.
I think money going into commodities is THE driver of inflation. They won't be able to keep this myth of negligeble inflation that long. The stealth inflation is running itself out. So, what are they going to do? Supposed to raise rates right?
But I am certain that JPM's are in sync with the fed and will try everything to keep the commodities down.
Being a team player FAUX Business News played the dogeared, "tension in the Mid East" card this morning. I love the smell of BS in the morning, lets me know I'm still alive.
Isn't speculation a zero sum game? For every evil speculator betting prices will go higher, there is a (benevolent?) one betting they'll go lower.
You can even feel it in Mexico. 12$ to buy a stripper a tiny 8oz tecate light, or a shot of watered down hornitos.