Quantitative Easing Causing Food Prices to Skyrocket

[Lumi]

Quantitative Easing Causing Food Prices to Skyrocket

Washington?s Blog
January 24, 2011

As I?ve previously noted, interest rates have risen both times after the Fed implemented quantitative easing.

Graham Summers points out that food prices have also skyrocketed both times:

In case you?ve missed it, food riots are spreading throughout the developing world Already Tunisia, Algeria, Oman, and even Laos are experiencing riots and protests due to soaring food prices.​

As Abdolreza Abbassian, chief economist at the UN?s Food and Agriculture Organization (FAO), put it, ?We are entering a danger territory.?​

Indeed, these situations left people literally starving? AND dead from the riots.​

And why is this happening?​

A perfect storm of increased demand, bad harvests from key exporters (Argentina, Russia, Australia and Canada, but most of all, the Fed?s money pumping. If you don?t believe me, have a look at the below chart:​

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[Summers shows the share price of Elements Rogers International Commodity Agriculture ETN as a proxy for food prices generally.]​

As you can see, it wasn?t until the Fed announced its QE lite program that agricultural commodities exploded above long-term resistance. And in case there was any doubt, QE 2 sent them absolutely stratospheric.​

This isn?t really unexpected.

Last November, David Einhorn warned:

It is quite likely that QE2 will slow the economy by raising food and energy prices [because it is easier to generate these price increases]. [These price hikes] would act as a tax on consumers and businesses.​

Also in November, Karl Denninger wrote:

We have a Federal Reserve that, in the last two years, has printed and debased the currency of this nation by more than 100%, taking their balance sheet from $800 billion to more than $2 trillion. They now threaten, today, to do even more of that. This has resulted in insane price ramps in soft commodities ?.​

(?soft commodities? means food crops).

Stock up with Fresh Food that lasts with eFoodsDirect (Ad)

As the Wall Street Journal, Tyler Durden, the Economic Policy Journal and others note, inflation in food prices isn?t limited to developing nations, but is coming to the U.S.


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[Duff Miver]

and from yout hero Glenn Beck -


"NIA projects that at the average U.S. grocery store it will soon cost $11.43 for one ear of corn, $23.05 for a 24 oz loaf of wheat bread, $62.21 for a 32 oz package of Domino Granulated Sugar, $24.31 for a 32 fl oz container of soy milk, $77.71 for a 11.30 oz container of Folgers Classic Roast Coffee, $45.71 for a 64 fl oz container of Minute Maid Orange Juice, and $15.50 for a Hershey's Milk Chocolate 1.55 oz candy bar. NIA also projects that by the end of this decade, a plain white men's cotton t-shirt at Wal-Mart will cost $55.57."

You'd better dump your gold and invest in underwear. You'll make a killing.

 

[Lumi]

stay out of my threads until you learn to tell the truth

 

[Duff Miver]

stay out of my threads until you learn to tell the truth

Would Glenn Beck lead you wrong? No way! Never!

If Glenn says underwear will appreciate 1000% you'd better get on board.

 

[Lumi]

Would Glenn Beck lead you wrong? No way! Never!

If Glenn says underwear will appreciate 1000% you'd better get on board.

Go away little girl, you annoy me

 

[Chadman]

Can you explain why the QE2 has been a direct cause to food prices rising? That is the assumption being made here, I just wondered why you think this is the case. Lower interest rates mean food prices are rising? I looked a couple of links in the story, and found no sensible link.

These are the countries (I guess) that we are supposed to be concerned about: Tunisia, Algeria, Oman, and even Laos are experiencing riots and protests due to soaring food prices.

Do you think there might be other factors in these countries that could contribute to "food riots?" It's just the Fed trying to keep interest rates down in the U.S. that causes food riots in Tunisia, Algeria, Oman and Laos?

And, from the article was this:

It is quite likely that QE2 will slow the economy by raising food and energy prices [because it is easier to generate these price increases]. [These price hikes] would act as a tax on consumers and businesses.

The QE2 does not raise prices on anything. BUSINESSES raise prices on food and energy - and the reason being given is because it is easier to generate these price increases. Why? Why is it easier for businesses to raise prices when inflation is kept low? Maybe more BUSINESSES are CHOOSING not to lend money to keep their shareholders happy with their bottom lines?

Act as a tax on consumers and businesses... complete bullshit IMO. Businesses are the ones raising the prices, and why is that? Because inflation is being kept DOWN by the fed? Okay - that's a new one on me, but I am far from being an economist.

Since you wanted us to read and think about this, I did. Now, maybe you can explain the fallacy in my thinking? Which there could be plenty, just show me.


I think our interest rates have been artificially depressed by the Fed for a long time now, dating back to the Bush years. I think that's essentially political, to keep us from facing economic realities and current administrations (Bush and Obama) from suffering the repercussions.

 

[Lumi]

How about just doing comparitive shopping? :shrug:

 

[Lumi]

How about just doing comparitive shopping? :shrug:

Maybe watch CNBC, who has been doing stories on this all day.


http://www.cnbc.com/id/15840232/?video=1764680554&play=1

http://www.cnbc.com/id/15840232?video=1764703355&play=1

Rising Commodity Prices Won't Cause Inflation

 

[Duff Miver]

Through December, the Bureau of Labor Statistics reports that food prices are up 1.5 percent overall compared with a year ago.

LMAO @ you Beckites and your Chicken Little panics.:mj07:

 

[Lumi]

Through December, the Bureau of Labor Statistics reports that food prices are up 1.5 percent overall compared with a year ago.

LMAO @ you Beckites and your Chicken Little panics.:mj07:

Go away little girl, I hear the ice cream truck.

You continue your typical Alinsky tactics trying to tie me to Beck.

FAIL

 

[Chadman]

How about just doing comparitive shopping? :shrug:

So, I'm just checking, you have no answer for the question I asked about the article you posted?

I'm not trying to be an ass - as you think - just giving an opinion to your posted article in the sake of discussion, and looking for how my interpretation is wrong.

Cheers!

 

[Duff Miver]

So, I'm just checking, you have no answer for the question I asked about the article you posted?

I'm not trying to be an ass - as you think - just giving an opinion to your posted article in the sake of discussion, and looking for how my interpretation is wrong.

Cheers!

You'll never get answers from Lumi. He never checks the veracity of the stuff he puts up. In fact I don't think he even reads it.

 

[Duff Miver]

I'm not trying to tie you to Beck. You do that yourself, parroting his nutjob paranoia. If Beck farts, you get a nosebleed.

 

[Lumi]

you seem to know more about what he say's than I do.

It's past your bedtime.

 

[Trench]

So, I'm just checking, you have no answer for the question I asked about the article you posted?

I'm not trying to be an ass - as you think - just giving an opinion to your posted article in the sake of discussion, and looking for how my interpretation is wrong.

Cheers!

Your thoughts... Mr. Illuminati?

:0corn

 

[kcwolf]

Lumi, I'm also waiting for your answer to the questions

opcorn2

Thanks in advance for your thoughts.

 

[Lumi]

Can you explain why the QE2 has been a direct cause to food prices rising? That is the assumption being made here, I just wondered why you think this is the case. Lower interest rates mean food prices are rising? I looked a couple of links in the story, and found no sensible link.

These are the countries (I guess) that we are supposed to be concerned about: Tunisia, Algeria, Oman, and even Laos are experiencing riots and protests due to soaring food prices.

Do you think there might be other factors in these countries that could contribute to "food riots?" It's just the Fed trying to keep interest rates down in the U.S. that causes food riots in Tunisia, Algeria, Oman and Laos?

And, from the article was this:

It is quite likely that QE2 will slow the economy by raising food and energy prices [because it is easier to generate these price increases]. [These price hikes] would act as a tax on consumers and businesses.

The QE2 does not raise prices on anything. BUSINESSES raise prices on food and energy - and the reason being given is because it is easier to generate these price increases. Why? Why is it easier for businesses to raise prices when inflation is kept low? Maybe more BUSINESSES are CHOOSING not to lend money to keep their shareholders happy with their bottom lines?

Act as a tax on consumers and businesses... complete bullshit IMO. Businesses are the ones raising the prices, and why is that? Because inflation is being kept DOWN by the fed? Okay - that's a new one on me, but I am far from being an economist.

Since you wanted us to read and think about this, I did. Now, maybe you can explain the fallacy in my thinking? Which there could be plenty, just show me.


I think our interest rates have been artificially depressed by the Fed for a long time now, dating back to the Bush years. I think that's essentially political, to keep us from facing economic realities and current administrations (Bush and Obama) from suffering the repercussions.

Chad,

I was going to answer this, but I just now realized how close it is to 0900 hours and I need to sort myself out for an appt at that time.

Not sure when todays craziness will end?

I will address when I get the time.

Lumi :toast: