Food Inflation; Our Inner Magpie; Feed the Pig.

File this under projects that I wished I had started two years ago. . . I wish that I had created a shopping list of basic staples: coffee, sugar, milk, butter, bacon, eggs, flour, cereal, chicken, turkey, beef and pork. (I'm purposely leaving out vegetables.) On this list, I would unitize the staple (per pound, per dozen, per gallon), and chronicle the cost change quarterly. Oh well.

If I were to put my futurist hat on (its made of tin foil!), I would say that food inflation has the potential to be one of the most serious, global social/economic issues that we will likely face in the future.



From the BLS, you can create this chart--or any chart on specific prices--by following the BLS link in the sidebar. You can see this how this chart is produced here:

If I'm reading the above chart correctly, farm product prices have increased 39+% since Jan of 2006. Of course, you know that, because your food bill has gone up.

Grain price increases are far reaching as you know: beer, cereal, flour, tortillas, livestock feed. Further, these grains are the nutritional base for foreign hunger programs. While so much of Wall Street is enamored with the notion of more middle class consumers (for goods), these middle class consumers need to consume food. A marvelous poetic justice (a nice retribution for the avarice that William B notes in the comments section of the previous post) for our business tycoons will be our newly minted consumers dealing with extraordinary food inflation taking away precious dollars for trinkets.

I think that the most significant thing that I'll see in the final third of my life is our country's declining political and economic hegemony. I've mentioned it here before. I grew up when America's might and right was unparalleled.

We talk much in this country about our love of freedom. (Warning: I'm working up to a point) Mark and I have been watching the HBO series, "John Adams". I read McCullough's excellent biography. I read Adams' and Franklin's biographies back to back, with full expectations that I would enjoy the Franklin biography better. That was not to be. I was captivated by Adams. I also remember vividly the crappy politics that were played--another reminder that nothing ever changes.

The production (which I can proudly say was filmed in our beautiful Virginia, capitalizing on the Williamsburg) with its wonderful actors (Paul Giamatti and Laura Linney) reminds me of the incredible weight of the deliberations to assert independence--and the extraordinary uncertainty of the outcome. It does give me comfort to know that whatever befalls humanity, we have an amazing capacity to dig deep and find what is best in us.

My point. I'm developing this gradual awareness that we've jeopardized our country's economic freedoms (hard deliberated, hard fought and hard won by our independence patriots) through our constant strivings to sate our desire for bigger, newer, shinier, pricier. . . . We've done that through borrowing--not through true wealth creation--at least not on behalf of the consumers. NG notes the media as playing a role in shaping our views. I'd amplify 'media' to include the barrage of advertisements. The media assaults us daily to shape our role as consumers and creating these 'ideals' of how we should look, dress, live, eat and leisure. Nothing is more efficient than advertising in finding your and my inner magpie and seducing it with the lure of shiny objects.

I'm sure that you've seen the "Feed the Pig" campaign.

I just researched it and was happy to learn that it is sponsored by the AICPA. We've squandered so much of our wealth in our consumption beyond our means. Our current crisis is a credit crisis. We have debt without adequate underlying asset values or means to repay. Rather than having net assets (assets greater than liabilities) we have net debt. You know that equation. Somehow that hole gets filled--and the filling of it generally means lost jobs and loss of owner/shareholder value.

My point is not to be dark and pessimistic, but at some point in time we have to realize that we need to ignore our inner magpie and feed the pig. It is a sea change, and such a change in behavior will (1) take time to take hold--unless it is forced through a shock which may well be the case; and (2) will have long lasting ramifications for industry, both ours and the worlds.

The Bernstein article touched on that a bit. I hope that you take time to read it.