Thoughts on the Drought
August 13, 2012 by Steve
Filed under Commentary
I was just sitting here today thinking about the drought and a number of thoughts came to mind about the drought. Thoughts such as: This is supposed to be decimating the corn and soy crops, yet they are the 8th largest harvests on record…So how bad is it for us? I know we live in a global economy and that there are many countries that must source these grains from us and at the same time I wonder if this is just and excuse to raise prices or even worse, to blame the food price inflation on the drought when a lot of it stems from the excessive printing of money!
I believe that on average here in America we spend less than 10% of our income on food, which means that price increases won’t cause us to starve just reallocate money to pay for the increased costs. In many poorer countries that percentage shifts to somewhere between 35%-50% or even higher. For the people in these countries that means that a small increase can mean starvation or doing away with some pretty basic services that we take for granted.
My issue is that with such a harvest and the large price increases we have seen in the commodity markets, are they really justified based on the drought! I am uncertain. Could it be an effort to ‘blame’ these increases on the drought when actually it stems from the inflationary tactics of the Fed? We have already seen some pretty dramatic increases in food prices over the past several years, if you don’t believe me ask your wife or mother or whoever does the shopping. It has been pretty dramatic.
Now that it appears, at least according to the MSM folks and their numbers, the real estate market may be poised for a comeback of sorts, will the price increases, theoretical at this point, be explained away as the ‘natural’ adjustment of values post financial crisis? I wonder about these among many other things. It just feels that sometimes many of the ‘crisis’ headlines are manufactured or have some other motive…
Just saying…
