5 ms·

This true, but it's actually not the proximate cause for higher food prices: excess stimulus and higher energy prices are. 1. Government spent $1T. 2. Fed mad

by fny 4y ago

This true, but it's actually not the proximate cause for higher food prices: excess stimulus and higher energy prices are. 1. Government spent $1T. 2. Fed made it stupidly cheap to borrow money. 3. We have under invested in the oil and gas industry for years, further industry consolidation after the COVID crash has led to high natural gas and diesel prices. We lack the equipment, manpower, and capital to expand. 4. Fertilizer is made using natural gas for feedstock. Diesel is used to transport food. 5. Ethanol is made from sugar cane and corn. It's used as a fuel additive too. This puts further pressure on food prices. 6. Toss in Ukraine/Russia, it gets even worse.

deleted 4y ago
[deleted]
kjeetgill 4y ago
I hope this doesn't get buried. I don't know enough to agree or disagree, so I'd like to see how people respond.
- fny 4y ago
  I'm sending you articles pre 2022 from various sources just to make the point these effects were well understood and foreseen before the Ukraine war. While I include articles here about Biden's spending, it's worth noting Trump also spent a truckload of money. Use archive.ph to read anything paywalled. [0]: Energy and Food Security: Linkages through Price Volatility https://www.sciencedirect.com/science/article/pii/S0301421518308486 https://www.sciencedirect.com/science/article/pii/S030142151... [1]: Nat gas and fertilizer https://www.marketwatch.com/story/fertilizer-prices-soaring-as-natural-gas-rally-adds-to-perfect-storm-11633699973 https://www.marketwatch.com/story/fertilizer-prices-soaring-... [2]: Biden's Stimulus Is Stoking Inflation, Fed Analysis Suggests https://www.nytimes.com/2021/10/18/business/economy/fed-inflation-stimulus-biden.html https://www.nytimes.com/2021/10/18/business/economy/fed-infl... [3]: Biden’s ‘America First’ Policies Are Spreading Global Pain (Adviser during Trump admin) https://foreignpolicy.com/2021/05/12/biden-global-food-inflation-commodity-prices-stimulus-money-printing-federal-reserve-dollar-exchange-rate-nationalism/ https://foreignpolicy.com/2021/05/12/biden-global-food-infla... [4]: Yellen Wanted Biden Relief Plan Cut by a Third, Biographer Says (Recent article, but mentions her hang ups in 2021) https://www.bloomberg.com/news/articles/2022-06-04/yellen-wanted-biden-relief-plan-cut-by-a-third-biographer-says https://www.bloomberg.com/news/articles/2022-06-04/yellen-wa... Another thing to consider is that the Fed bought bonds issued by any high-grade corporation in the US. There was record issuance during 2020-2021. This means that those companies now have more cash on their balance sheets they can use to steer the economy going forward... so yes Apple can pay $22 an hour as a base rate now in part because they borrowed $12.5B last year but your local community hospital with razor thin margins can't compete with that. Also, many people were able to retire early from stock appreciation and home value appreciation alone which put a huge dent in the labor force. There are a LOT of distortionary effects that remain to be seen from the stimulus alone. Now add deglobalization to the mix, and everything becomes even worse.
  - WalterGR 4y ago
    How has Biden's stimulus differed from Trump's?
    - fny 4y ago
      The nature of the stimulus itself doesn't matter. What matters is the total size. The money always ends up leaking into commodities until the economy chokes. Trump spent way too much money, and then Biden spent even more. We had $1T of debt, Trump spent another $1T, Biden spent another $1T. This alone justifies a doubling/tripling of prices everywhere which is exactly what you're seeing. Wheat has tripled. Natural gas has tripled. Oil has doubled. Copper has almost doubled. Corn has doubled. Soybean has doubled. We need the government to take money back however it can right now to control inflation. The US government needs to use taxes to buy back its debt and drain liquidity from the market. But of course, they're just going to keep spending more in response to inflation (gas stimulus checks, tax cuts, home buying credits), which is even more inflationary.

by fny 4y ago

deleted 4y ago

[deleted]

kjeetgill 4y ago

I hope this doesn't get buried. I don't know enough to agree or disagree, so I'd like to see how people respond.

fny 4y ago
I'm sending you articles pre 2022 from various sources just to make the point these effects were well understood and foreseen before the Ukraine war. While I include articles here about Biden's spending, it's worth noting Trump also spent a truckload of money. Use archive.ph to read anything paywalled. [0]: Energy and Food Security: Linkages through Price Volatility https://www.sciencedirect.com/science/article/pii/S0301421518308486 https://www.sciencedirect.com/science/article/pii/S030142151... [1]: Nat gas and fertilizer https://www.marketwatch.com/story/fertilizer-prices-soaring-as-natural-gas-rally-adds-to-perfect-storm-11633699973 https://www.marketwatch.com/story/fertilizer-prices-soaring-... [2]: Biden's Stimulus Is Stoking Inflation, Fed Analysis Suggests https://www.nytimes.com/2021/10/18/business/economy/fed-inflation-stimulus-biden.html https://www.nytimes.com/2021/10/18/business/economy/fed-infl... [3]: Biden’s ‘America First’ Policies Are Spreading Global Pain (Adviser during Trump admin) https://foreignpolicy.com/2021/05/12/biden-global-food-inflation-commodity-prices-stimulus-money-printing-federal-reserve-dollar-exchange-rate-nationalism/ https://foreignpolicy.com/2021/05/12/biden-global-food-infla... [4]: Yellen Wanted Biden Relief Plan Cut by a Third, Biographer Says (Recent article, but mentions her hang ups in 2021) https://www.bloomberg.com/news/articles/2022-06-04/yellen-wanted-biden-relief-plan-cut-by-a-third-biographer-says https://www.bloomberg.com/news/articles/2022-06-04/yellen-wa... Another thing to consider is that the Fed bought bonds issued by any high-grade corporation in the US. There was record issuance during 2020-2021. This means that those companies now have more cash on their balance sheets they can use to steer the economy going forward... so yes Apple can pay $22 an hour as a base rate now in part because they borrowed $12.5B last year but your local community hospital with razor thin margins can't compete with that. Also, many people were able to retire early from stock appreciation and home value appreciation alone which put a huge dent in the labor force. There are a LOT of distortionary effects that remain to be seen from the stimulus alone. Now add deglobalization to the mix, and everything becomes even worse.
- WalterGR 4y ago
  How has Biden's stimulus differed from Trump's?
  - fny 4y ago
    The nature of the stimulus itself doesn't matter. What matters is the total size. The money always ends up leaking into commodities until the economy chokes. Trump spent way too much money, and then Biden spent even more. We had $1T of debt, Trump spent another $1T, Biden spent another $1T. This alone justifies a doubling/tripling of prices everywhere which is exactly what you're seeing. Wheat has tripled. Natural gas has tripled. Oil has doubled. Copper has almost doubled. Corn has doubled. Soybean has doubled. We need the government to take money back however it can right now to control inflation. The US government needs to use taxes to buy back its debt and drain liquidity from the market. But of course, they're just going to keep spending more in response to inflation (gas stimulus checks, tax cuts, home buying credits), which is even more inflationary.