- Cars
- Electronics
- Appliances
- Car Repairs
- Home Depot stuff
You've tumbled to it, though, haven't you? Everything's cheap... as long as you don't drive, heat your home, turn on the lights, or say, EAT.
If you're like me, you keep your grocery store receipts. I do this because I live on a budget that is occasionally so tight the "Indian rides the buffalo" in old speak. Though there have been times when the Indian didn't just ride the buffalo, they picked out china patterns and registered at Wal-Mart. 'Nuff said.
If you don't keep your receipts, you're stuck with a nagging feeling; could be gas, could be you're burning through more money than last time, but you're not sure how long ago, or by how much.
In 2008, there was rice rationing - remember? I was stunned... not that I'm a great fan of rice - it's okay, right? But the idea of any food being rationed in the US struck home. That same year, you had people dying in food riots from Haiti to Egypt. There just wasn't enough to go around...
TWO YEARS AGO.
Fast forward to spring of 2010 - in Russia, the leading grower and exporter of wheat. Record heat, record drought, and wildfires - remember? You may also remember this little nugget: President Vladimir Putin has BANNED export of ALL Russian wheat until AFTER next year's harvest. They will send some reserves, but it's not gonna be near what they generally ship to the world.
As of September 3, 2010, according to Bloomberg News, Wheat futures are up 74% year over year. They have also reported 7 deaths and numerous injuries during new food riots taking place NOW in Mozambique.
Aside from Russia's "problem" - this being one of the few things I will understate - there is a greater issue at hand: what is commonly being called "QE2" - Bernanke's latest round of Quantitative Easing. It has already begun - in fact, began in 2009, but apparently there were marketing problems that delayed the publication of it. According to Mr. Bernanke, somewhere in the neighborhood of $600 billion dollars will be henceforth printed and used to buy bonds. What bonds? Well, you know, whatever bonds they feel like buying. Through 2Q2011. Or longer. Depending. My friends at ZeroHedge.com have taken to calling it "QEXXXXX", since it seems endless.
According to Meredith Whitney, part of the program - again, begun in 2009 - equates to state bail-outs. Build America Bonds from California, Illinois, and Nevada are being underwritten by the Fed. If you buy a Califonia bond (it's debt), Uncle Sam underwrote 20% of the interest payment in 2009, and underwrites 30% of the interest this year. In Illinois, 30%. In Nevada, 40%.
So, now, Ben prints money so Cally can print money, only Ben will print 20-40% of the interest money on top of the Cally money just to make sure you get some of those wet-ink bills in your pocket if you're lucky enough to own a piece of the debt pie. Does this sound like a financial circle jerk?
It is, and I wouldn't even go into it, except that, being the circle jerk that it is, it undermines faith in the valuation of the dollar. Remember, we're on the hook for more money now than at ANY time in the history of America. COMBINED. Even with inflation adjustments. We're spending and inflating our way to the bottom, and the only reason we haven't hit it yet is because every other currency is in the same race. So, what do you, the prudent investor, do while all this crap is going on?
You invest in something else. Something... concrete. You could put your hands on it, if you wanted to.
Like oil. Or wheat. Or soy. Or corn.
Unfortunately, the whole world is full of people like you, watching the debasement, looking for something "solid" to invest in, something people need, and will continue to need...
And this is how, according to Drovers.com, corn, milk and dairy, meat, coffee, and cocoa are being driven by lots of interested buyers.
According to CNBC's Brian Shactman (10/25/10), eggs are up 11%, meat up 6% year over year. Apparently, due to competition issues, retailers have been absorbing most of this increase. Since mid 2009.
How much longer do you think they'll continue to do that? Remember also, that corn and soy are far more prevalent in our food supply - and FUEL supply - than you would immediately think. Got mayo? Main ingredient: soybean oil. Got bread? Made with soy milk. Got bread crumbs? Progresso: partially hydrogenated soybean oil.
Beer drinker? Check for corn. Yup, corn. Most lagers are now brewed with some combination of wheat and corn. Don't forget corn syrup: depending on how much packaged crap you eat, you'll find it in a LOT of places. Just like I found soy milk and high fructose corn syrup in my "all natural" whole wheat bread.
Okay, I've made my case; feel free to check my sources, and any others that pop up - it's the beauty of the internet in our modern world. Soooo...
What to do?
There are two things that inflation should always drive you to do:
1. Spend more now. Not as in, cheap plastic crap; as in staples. See above. Think about 3 months' worth of rice, flour, corn meal. Ever use honey as a sweetener? Get some. Get a lot. Turns out, we're running low on honeybees, too. Hell, think about 6 months' worth. Get some air- and water-tight containers. Store that stuff, and if the prices don't shoot through the roof, worst case scenario is you eat it all. If they DO go through the roof, your dollars then won't be worth near what they're worth now.
2. Get your money out of the banks. Do I need to remind you that 143 banks have failed this year? That the FDIC has been drawing on credit lines from the Fed to meet its obligations as bank after bank has failed? At this point, are you really earning any interest anyway? Do you want to have to wait for 6 months for your insured deposit to be returned to you if your bank should fail? Prepare for the worst (to be fair to the FDIC, this has NOT happened. Yet.).
And, finally - I say this as the smell of fresh whole wheat bread wafts from my oven - it's time to get "back to the kitchen". I can say two things about my ability as a baker: First, I'm not very good at it; my first two loaves of bread could have easily been used as wheel chocks for my truck. Second, I know, to the gnat's behind, exactly what's IN that bread, and I'm determined to get better at making it.
I'm happy to watch out for you, and warn you, whenever I can. But this is one of many situations where you can take the wheel, and drive yourselves around the obstacles I'm pointing out. Be prepared. Be smart. I'll keep you posted.
Brutal Truth
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