Inflation and Food

You know its coming! As long as the Federal Reserve can print money to fund our massive debt, the value of the dollar will continue to diminish. What I find fascinating is that the follies of the United States out of control government spending are easily summed up by the definition of the word “inflation”.

Inflation is the loss of constant purchasing value of the dollar, caused by an increase out of ‘thin air’ of the supply of money and debt creation by the financial system.

That pretty much sums it up. I’ve written in the past on the concerns of a weak dollar. I’ve also pointed out how inflation can devastate a country’s standard of living. But since then, we’ve managed to spend more money under the Obama administration in one year than we have under all the administration preceding him. And guess what...they are not done. Stimulus II is on its way while the Stimulus I bill of $700 billion plus has yet to simulate. So when will we know that the Fed’s funny money is taking it’s affect on your purchasing power? Just keep an eye on food prices. Throw in one of the coldest winters in the nation’s history and not even global warming can save the Florida citrus crops.

Inflation is not oriented around a singular event. You need some help. Let’s start out with the Fed. According to the National Inflation Association, in 2009, “monetary inflation was created by the Federal Reserve’s zero-percent interest rates to drive up the prices of U.S. stocks, without dramatically increasing the prices of U.S. consumer goods”. The NIA went on to report that 2009 was a brief moment of euphoria, before a rapid increase in the prices of food, energy, clothes and other necessities Americans need to live and survive.

Of the 3.53% GDP growth the government reported in the 3Q, 42% was accounted for the “Cash for Clunkers” program. That’s why on December 22nd, the U.S. Bureau of Economic Analysis revised the 3Q GDP growth to 2.24%. In other words, if we don’t have the “Cash for Clunkers” thrown in the figures, the U.S. is still contracting. The current rate of U.S. inflation based on the U.S. government’s reported CPI (Consumer Price Index) on a year-over-year basis is 1.84%. However, the NIA believes that the U.S. government’s CPI index is understating inflation and real price inflation in the U.S. is already well above 5%. The CPI index is no longer calculated based on Americans maintaining the same standard of living, but is instead calculated based on an expected continual decline in the standard of living in America.

Throw in a continuing California drought along with a meddling EPA, the cost to stock your refrigerator just became more important to you than making the mortgage payment. When you have a federal government hostile to the free market system, you shut down the very mechanism that will grow us out of this mess. Printing funny money isn’t so funny when you need a wheelbarrow full to buy a head of lettuce. And with that, I’ll see you on the road.