Daily Digest

Daily Digest 4/2 - The Truth About The Economy, The Power Of The Top 1%, Ten Signs Of Food Inflation

Saturday, April 2, 2011, 9:43 AM
  • The Truth About the Economy that Nobody In Washington Or On Wall Street Will Admit: We’re Heading Back Toward a Double Dip
  • Of The 1%, By The 1%, For The 1%
  • Argentina On The Cusp Of Hyperinflation
  • Plosser Says Inflation May Prompt Fed to Raise Rates in 2011
  • WalMart Says “Serious Inflation” Cometh
  • Dudley Signals More ‘Healing’ for Economy Needed Before Fed Pulls Stimulus
  • Two-Year Treasuries Decline as Employment Gains Revive Inflation Concern
  • The Economic Cost Of Losing Bats
  • The “Shrinkage” Factor: 10 Signs That Food Inflation Is Alive And Well

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Economy

The Truth About the Economy that Nobody In Washington Or On Wall Street Will Admit: We’re Heading Back Toward a Double Dip (kelvinator)

The Reuters/University of Michigan survey shows a 10 point decline in March – the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.

Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.

Of The 1%, By The 1%, For The 1% (David B.)

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin.

Argentina On The Cusp Of Hyperinflation (Alfredo E.)

Officially, inflation, or rather the decline in money's purchasing power as measured by an official price index, runs at about 11% in Argentina, but most independent observers reckon it is closer to 25%. Everybody knows that Argentina's government is just making the numbers up, i.e. they are constructed in such a way as to downplay the situation and the government is quite testy about competing inflation estimates.

Plosser Says Inflation May Prompt Fed to Raise Rates in 2011 (Alfredo E.)

“Signs that inflation expectations are beginning to rise or that growth rates are accelerating significantly would suggest that it is time to begin taking our foot off the accelerator and start heading for the exit ramp,” Plosser said today in a speech in Harrisburg, Pennsylvania.

“It’s certainly a possibility” that the Fed will need to raise rates before the end of 2011, Plosser told reporters after the speech. “In my mind it’s definitely on the table but it will depend on how things play out over the next few months.”

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WalMart Says “Serious Inflation” Cometh (Alfredo E.)

U.S. consumers face “serious” inflation in the months ahead for clothing, food and other products, the head of Wal-Mart’s U.S. operations warned Wednesday. The world’s largest retailer is working with suppliers to minimize the effect of cost increases and believes its low-cost business model will position it better than its competitors.

Dudley Signals More ‘Healing’ for Economy Needed Before Fed Pulls Stimulus (jdargis)

U.S. Treasuries reversed losses after Dudley’s remarks countered investor speculation the Fed is poised to withdraw stimulus. His comments countered suggestions by other policy makers, including Federal Reserve Bank of Philadelphia President Charles Plosser, that the central bank should consider raising interest rates this year.

Two-Year Treasuries Decline as Employment Gains Revive Inflation Concern (jdargis)

“There is a faction in the FOMC that is becoming more skittish about the outlook for inflation and their ability to control it,” said Christopher Sullivan, who oversees $1.6 billion as chief investment officer at United Nations Federal Credit Union in New York. “Indications are that the labor market is undergoing repair.”

Environment

The Economic Cost Of Losing Bats (Jeff B.)

It can be hard to feel much sympathy for bats. Like snakes or spiders or sharks or bunnies (OK, maybe the last one is just me), there's something primordially alarming about bats, something that activates the lizard part of the brain and shutters empathy. Bats aren't actually "flying rodents," but you likely won't see them on the next endangered species poster.

The “Shrinkage” Factor: 10 Signs That Food Inflation Is Alive And Well (guardia)

And as the analyst from Farm Futures Magazine said Thursday, "We could see double-digit corn prices if a legitimate weather scare makes headlines on Wall Street this summer." But don't mistake this as a warning of food inflation to come. Truth is, it's already here!

And for consumers, food producers are merely masking the uptick in prices with a concept that Seinfeld's George Costanza knows all too well: Shrinkage!

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

14 Comments

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
anyone else get the feeling

anyone else get the feeling that the point-counterpoint between Fed presidents is staged to manipulate the treasury market?

SagerXX's picture
SagerXX
Status: Diamond Member (Online)
Joined: Feb 11 2009
Posts: 2219
food "shrinkage"/inflation

One data point:  our local supermarket carries 1-pound packages of bison meat, which my wife & I like to use in burgers and meatlof (southwestern style, with cumin and red pepper/jalapeños etc.  [drool...]).  As of a week ago, the 1-pound package went from $5.99 to $7.99.

So that's 20%+....dang.

dps's picture
dps
Status: Martenson Brigade Member (Offline)
Joined: Jun 27 2008
Posts: 442
Re: food "shrinkage"/inflation
SagerXX wrote:

One data point:  our local supermarket carries 1-pound packages of bison meat, which my wife & I like to use in burgers and meatlof (southwestern style, with cumin and red pepper/jalapeños etc.  [drool...]).  As of a week ago, the 1-pound package went from $5.99 to $7.99.

So that's 20%+....dang.

We're seeing the same here, but with ice cream.  ... dons

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
SagerXX wrote: One data
SagerXX wrote:

One data point:  our local supermarket carries 1-pound packages of bison meat, which my wife & I like to use in burgers and meatlof (southwestern style, with cumin and red pepper/jalapeños etc.  [drool...]).  As of a week ago, the 1-pound package went from $5.99 to $7.99.

So that's 20%+....dang.

Yep, I usually take a ham sandwich for lunch. The local supermarket had been selling sliced ham in its deli section for $4.99 per lb for several years. About a month ago the price was raised to $6.49 per lb. That would be 30%.

anton95's picture
anton95
Status: Member (Offline)
Joined: Sep 29 2008
Posts: 22
SagerXX wrote: One data
SagerXX wrote:

One data point:  our local supermarket carries 1-pound packages of bison meat, which my wife & I like to use in burgers and meatlof (southwestern style, with cumin and red pepper/jalapeños etc.  [drool...]).  As of a week ago, the 1-pound package went from $5.99 to $7.99.

So that's 20%+....dang.

Actually, it's 33%........worse!

 

anton95's picture
anton95
Status: Member (Offline)
Joined: Sep 29 2008
Posts: 22
ARGENTINA and Weimar GERMANY

The Argentina article was a shock.

Just finished "When Money dies" by Adam Fergusson, about Weimar Germany,  reprinted in 2010 by popular demand.

The parallels are scary:

(a)  very high, underreported inflation

(b)  low unemployment

(c) aggressive consumer spending

(d) money printing at ever greater rates

(e) no link made between money printing and price increases, as the former is simply due to "cash shortages"

(f) unions pushing for high wage rises to compensate for price movements 

rinse,...repeat....catastrophe

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: food "shrinkage"/inflation

 

Ready...Aim...Eat!

mmmmmmmmm...a prairie original.

Mr. Fri's picture
Mr. Fri
Status: Silver Member (Offline)
Joined: Feb 21 2009
Posts: 220
SagerXX wrote: One data
SagerXX wrote:

One data point:  our local supermarket carries 1-pound packages of bison meat, which my wife & I like to use in burgers and meatlof (southwestern style, with cumin and red pepper/jalapeños etc.  [drool...]).  As of a week ago, the 1-pound package went from $5.99 to $7.99.

So that's 20%+....dang.

Last week I took my wife out to dinner for her birthday at Macaroni Grill.  (It's one of our favorite chain restaurants.) The first thing I noticed was that they raised their prices. Our favorite dishes which use to cost $8-10 were now $12-14.  We were shocked.  Then, when the waiter came to take our orders he said that some things weren't available because of a "quality issue."  They were out of eggplant, zucchini, carrots, etc. I'm thinking these are main veggies for an Italian restaurant so either food shortages are starting to show up locally (Austin, TX) or the chain is having a hard time and could go under.

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
Supply chain disruption

Japan Quake 'Most Significant' Supply Chain Disruption Ever: IHS


 http://e.nikkei.com/e/fr/tnks/Nni20110402D01NY785.htm

 

 Honda considers suspending UK production after Japanese crisis

Carmakers plan for parts shortage as global impact of earthquake and tsunami takes hold

 http://www.guardian.co.uk/business/2011/apr/03/honda-considers-suspending-uk-production

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
share shrinkage.

A hypothetical share in a Rhodesian company might have been 10c. 

After  Zimbabwean inflation that same share might have been priced at $1million.

Have I understood the sharemarket uptic? If money is printed the sharemarket will rise. 

But I have a simple mind.

 

nixman's picture
nixman
Status: Member (Offline)
Joined: Mar 15 2009
Posts: 4
A hypothetical share in a

A hypothetical share in a Rhodesian company might have been 10c. 

After  Zimbabwean inflation that same share might have been priced at $1million.

I've seen the graph before: http://www.goldonomic.com/zimbabwe.htm

At least for Zimbabwe, the stock market provided some protection against inflation, but it's not a matter of making money, but of losing less than other investments (including hiding the money under a mattress).

I've been wondering how this will play out on the US stock markets.

Jager06's picture
Jager06
Status: Gold Member (Offline)
Joined: Dec 2 2009
Posts: 395
Hyperinflation...

I suspect the US will be similar. The time to plan for hyperinflation is now almost over. But preperation for hyperinflation to me has meant that we will be subsistance gardening, stetching our stored clothing use, etc. during the event. But thoughtful preperation now can mean substantial increases in value after the hyperinflation event. 

I have been pondering this and looking at some of the various hyperinflation events in history. I came across Gonzolo Lira's hyperinflation prosperity interview, but I have not paid for the video yet. I suspect it will be something of a rehash of my own findings, namely that gold and silver in physical form are the things to own going into hyperinflation. Indivudal food storage and self preservation productivity are the things to have prepped for the event. Finally it is during the hyperinflation that one would start using the stored gold and silver to aquire additional productive assets, such as land, which typically gets crushed in nominal terms during the hyperinflation as no one can afford the interest on a note, let alone get the bank to lend. That scarcity of money going into real estate drives prices into the floor making it much more attainable for those holding physical metals, whose nominal values are being increased exponentially with every run of the monetary printing press.

This is just my own surmising, I am not rich from investing, nor do I have any kind of track record to make my ideas or investment thoughts worth paying attention to!

I plan on purchasing the video and will report back as to wether or not I was correct in my assumptions.

Jager06

ddittmar's picture
ddittmar
Status: Member (Offline)
Joined: Dec 11 2010
Posts: 7
Please do post your report

Please do post your report if you happen to purchase the video Jagar.

thanks.

D

SagerXX's picture
SagerXX
Status: Diamond Member (Online)
Joined: Feb 11 2009
Posts: 2219
re: hyperinflation
Jager06 wrote:

I plan on purchasing the video and will report back as to wether or not I was correct in my assumptions.

Please do -- I'd be interested in what GL has to say...

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