Food Inflation or Fiat Currency Inflation?

As expected with ever expanding the volume of Fiat Currencies, like the Dollar, Euro and Yen, prices are rising on commodities very quickly.  Of course, as Reuters reports below, the reason for rising prices is blamed on other commodities instead of the money supply.
I believe that before anyone should be allowed to report on economics or inflationary results, they should be required to read Von Mises, Rothbard and Friedman, to name a few.

By Svetlana Kovalyova
MILAN, April 5 (Reuters) - World food prices are likely to rise for a third successive month in March, and could gain further beyond that, with expensive oil and chronically low stocks of some key grains putting food inflation firmly back on the economic agenda.
Food prices grabbed world policy makers' attention after hitting record highs in February 2011 and stoking protests connected to the Arab Spring wave of civil unrest in some north Africa and middle eastern countries.
Prices later receded, but an upturn which began in January, initally seen as a pause in the overall downtrend, has persisted.
The United Nations Food and Agriculture Organisation (FAO) will update its monthly Food Price Index on Thursday and the organisation says prices could rise more in the short and medium term as grain supply tightens and energy prices stay high.
"You can see prices in the near term rising even further," FAO's senior economist and grain analyst Abdolreza Abbassian told Reuters ahead of the index update.
High crude oil prices have fuelled the upward pressure on inflation since the start of this year. Consumer prices in the 17 nations sharing the euro were up 2.6 percent in March from a year ago, despite stumbling economy.
"The food price index has an extremely high correlation to oil prices and with oil prices up it's going to be difficult for food prices not to follow suit," said Nick Higgins, commodity analyst at Rabobank International.
Energy prices affect the production of fertilizers as well as costs related to food distribution and farm machinery use.
"We really saw the (food index) declines in Q4 2011 as being anomalous and related more to sell offs from the threats posed by the European macroeconomic situation rather than agricultural fundamentals," he added.
The FAO index - which measures price changes for a basket of cereals, oilseeds, dairy products, meat and sugar - rose in February and January.
A U.S. government report last Friday with its lower than expected estimates of grain stocks and falls in soybean and wheat plantings, added to concerns about global grain supplies and fuelled a rally in U.S. and European grain futures.
Corn and soybeans are set to be the major drivers on world grain markets until new crops are harvested with strong price swings prompted by weather changes in major producing countries, Abbassian said.
More price volatility could come if U.S. farmers decide to plant more soybeans lured by high prices, he added.
U.S. soybean futures rose about 7 percent in March and gained about 17 percent in the first quarter of this year spurred by concerns about tight supplies as drought hit South America and smaller U.S. plantings were expected.
On the physical markets, whose prices FAO uses to calculate its food index, the average monthly price of U.S. soybeans jumped to $519.43 a tonne in March from $487.31 a tonne in February, the FAO's database showed.
But FAO's Abbassian said prices could still fall in the second half of this year with new crops easing market tension and driving full-year average prices below record levels of 2011.
The FAO is also expected to update its world crops view on Thursday

China is FED Up and Doesn't Want To Import Our Inflation.

Rampant issuance of dollars by the United States is saddling China with "imported inflation", Chinese commerce minister Chen Deming was quoted as saying by state media on Wednesday.

"Given the current situation, companies have thought ahead and prepared for exchange rate fluctuations as well as an increase in labour costs," Chen said, according to the state-run China Business News.

"But because the issuance of dollars is out of control, and international commodities prices are continuing to rise, China is confronted with imported inflation, which has created major uncertainties for businesses," he said.

The comments came ahead of a meeting of the US Federal Reserve next week at which the central bank is expected to announce additional stimulus measures.

While critics in the United States accuse China of artificially undervaluing its currency to give exporters an unfair advantage, Beijing says Washington is foisting its economic woes on the rest of the world by printing more money.

Beijing pledged in June to let the yuan trade more freely and the currency has since strengthened slightly, but US and European policymakers say it could be undervalued by as much as 40 percent.

At the weekend, Group of 20 finance ministers meeting in South Korea pledged to "refrain from competitive devaluation of currencies" and aim for "more market-determined exchange rate systems".

Jittery financial markets were looking for a strong stand from G20 members against beggar-thy-neighbour currency policies, in the leadup to a November 11-12 summit in Seoul.

Chinese Finance Minister Xie Xuren urged "major reserve currency countries to take responsible economic policies", with the dollar sliding on expectations that the Federal Reserve would launch even bolder monetary easing.

China's central bank on Wednesday set the central parity rate at 6.6912, weaker than the 6.6762 on Tuesday. The yuan can trade up or down 0.5 percent from that mark.

A Note on the Recent Increases in the Spot Price of Gold

Saying that high prices constitute inflation is like calling downed trees a hurricane. Hurricanes *cause* downed trees, but in and of themselves, downed trees do not constitute a weather event.

...Same with rising prices. There is a cause for rising prices, and it is called inflation. Inflation, as the name suggests, involves an increase — in this case, in the number of currency units in circulation.

Here's a personal and timely example: when I moved to my current residence some five years ago, I was delighted to find a Wendy's a mile or so away. For me, that was a near annual "treat" (more accurately, a not entirely unpleasant convenience), and the possibility of making it bi-annual was seen as a reasonable alternative for those evenings involving the odious prospect of cooking a meal after 9p. At that time, a half-pounder with cheese was a little over $4.50 including fries and a medium beverage. The other day it was almost $7.80 for the same item. Same burger. Same cheese. Same bun. Same fries. Same cup. Same diet soda.

What changed?

There is an enormous amount of additional dollars now in circulation that were issued in 2007, 2008 and 2009 that are finally reaching the consumer marketplace. Initially intended to bail out (i.e., indemnify) the bad loans and faulty reasoning of politically-connected bankers, this money is now swirling around like leaves in a windstorm.

Our central bank, the Federal Reserve, controls the amount of units in circulation at any given time; its decision-making process is quintessentially political. So to provide the "illusion of affluence," greater money in circulation enables people to experience a false sense of security and a false sense of wealth, because they measure wealth by counting single units. (I will not get into the reality that the Federal Reserve is a private corporation functioning as a government-backed industry cartel for now.)

Friedrich von Hayek won the 1974 Nobel Prize in Economics for demonstrating the political foundations of the business cycle in central banking practices.

If you want to see what happens when this situation picks up pace, when the political pressures to make "payments" is seen as a "solution" to a political problem, you can read about what transpired in 1922-1923 during the Weimar Republic (as well as in the new Austrian Republic during the same years)...


OR you can sit down and open up your Monopoly game.

Instead of issuing everyone the amount of money stipulated by the rules, divide up the ENTIRE bank, and then start playing.

What happens is the almost immediate appearance of a feeding frenzy — players feel rich and ready to assume risk. The prices on the board were established to work with a fixed amount of money. Once players realize that they have to buy everything they land on, if only for defensive purposes, you begin to see how things devolve. This is a rough approximation of the current reigning mentality among flush investment pros, hedge fund managers, and bankers.

As the game unfolds, luck determines who lands on premium properties and when they can accumulate houses and hotels. It also determines who falls through the cracks. Pretty soon, all it takes is one or two "visits" to a property with a hotel, and one player is wiped out. The inevitable end is a WEALTH TRANSFER. And it is a wealth transfer that punishes thrift, industry, and all the virtues that make a close-knit, loving family hard to keep together.

Right now, our bipartisan ruling class is effectively running a wealth transfer game, and political clout up for sale to the highest bidder: you can rig your own market by writing the "regulation" and pretending it is for "socially responsible" causes (such as race, health care, gender, environment, whatever...).

There is no "luck" to this game. It is rigged by the exchange of favors, and cheap money for power. And as we have seen, year after year, generation after generation, politicians are had for pennies on the dollar. They can be had super-cheap! And the great thing is, they "sell" the rigging as a "liberal" benefit! That is, it is all done in the name of "the people."
The cynicism is so awful that it sours my stomach just to listen to the neo-Dickensian idiots complaining about "the rich." It is not a class warfare that is going on — it is a political élite that has written the rules to suit it's own agenda. While extolling the needs for a generous and prosperous middle class, our statist élites are systematically demolishing the working classes of this country through the strangulation of regulatory legislation.

To return to the main point of this exercise, the primary reason why gold and silver are rising in price is that it has become painfully evident to those same élites that there is a precipitous rupture in the purchasing power of each unit of money, and that gold — precisely because it can NOT be inflated (there is an objective, geological as opposed to political reality that obtains with precious metals) — can allow them to hold on to what they own and not let the wind blow away their leaves. Gold has returned to its 6,000 year role as a stable fixture on the shifting landscape of exchange — a repository of value.

THAT is what money IS.


Or what it is supposed to be.

Our currency is no longer money. The dollar is a "money coupon" — you can buy money with our currency, but you can buy less and less as time goes on, and the Fed's dollar Ponzi scheme unwinds.

Wealth WILL be transferred to people who own commodities that either maintain value through sustained demand (oil, wheat) or through limited supply (gold, silver, uranium). You still have a small choice in this matter, believe it or not.

My personal guess is that gold will sling up to its inflation adjusted price of the previous historic price high (ca. 1980), which is around $2,400 in no time at all, perhaps a year or two. Perhaps sooner.

If you want to imagine related future scenarios that make this look mild, Google the ERISA laws and contemplate how a legally mandated Boomer selling frenzy of 401k's starting in 2016 will impact commodity prices.

Here's why I am such an ardent proponent of a gold-backed money supply: only such a system offers us protection from the political manipulation of the symbol of our labors, our time, our sweat, our efforts, our planning, our self-sacrifice, our love for our children, our concern and respect for our parents, and our care for our own physical selves.
Money is a symbol of everything we value in life — and we have outsourced our money since 1913, and lost over 97% of the value of what our ancestors enjoyed.

And why?

Cui bono?

Just some thoughts about our politically-contrived wealth destruction machine in Washington.

Contributed by Iconologist 2010

Preserve and Protect

You may think that I am speaking about the Oath of Office; sworn by millions of Americans. But it's worded slightly differently. "Uphold and Defend" is the way that the Oath reads. The following should, however, carry the same weight at a personal level.

I'm talking about Preserving and Protecting your personal "wealth" and that of those you hold most dear to your heart. Be it large or small. Be what it may, is no matter. It is yours and yours alone. It does not belong to the Federal Government, or God forbid, The Federal Reserve Bank. (though both will try to wrest it from you) .

Since it's inception, the FED (Federal Reserve Bank) has been working diligently to steal every dime you earn and make you an "interest slave" to the banking industry. All the while our Federal Government (FGov't) has also been making you a "tax slave"; both nefarious schemes arrived on the scene during the Wilson administration. Odd. (Wilson, an avowed "progressive" i.e. communist, and racist doesn't quite fit the mold of today's Democrat, but I digress, or do I) . Since the inception of the FED in 1913 , the US Dollar, which had a fixed value, based on the Coinage Act of 1792, has lost 98% of it's value. How does that happen? Well, the FED pumps money into the economy by means of Fiat Creation, resulting in an inflated money supply, which is of course, actual Inflation.

The Coinage Act of 1792, set an exact rate of exchange for Dollars to Gold and Silver. If the Treasury of the USA had enough gold and silver to back all of the dollars printed on paper, then a stable currency existed. Today, that is absolutely not the case, by a ratio of nearly 45:1. There is approximately 45 times as much paper in circulation as there is gold in reserve.

Gold and silver have specific historical commodity value. In ancient Rome, a "gold coin" (which for the sake of argument we will call an ounce) would buy a fine suit of clothes or 300 loaves of bread. Today, with gold at $1300 per ounce, it still has exactly the same purchasing power or commodity value. The dollar, however is falling fast.
In 1909, when the dollar was tied to gold, that commodity and the dollar where one and the same. Gold, $21/oz. The Dollar was "worth it's weight in gold". A 1909 Ford Sedan was $850 or 40 oz of gold. Today a comparable automobile, the height of fashion, new to market, and the height of technology is relatively the same price. Take a BMW 3 series auto. Really kind of run of the mill, by comparison to the level of technology in 1909 terms, but still 40 oz of Gold.

If you want to "Preserve and Protect" there is only one way. Precious metals of historical commodity value. Gold or Silver.

But, if you buy gold and silver, you must do one thing. Take delivery. Never buy paper promises of gold and silver on demand.