tag:blogger.com,1999:blog-2948538160252327076.post1613993377013591645..comments2023-11-02T15:48:50.381+00:00Comments on UK Bubble UK Economy: The food price shock - lets talk timing before we blame the weatherAlice Cookhttp://www.blogger.com/profile/05753570123987780947noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-2948538160252327076.post-24825125813317092912011-02-09T08:34:05.327+00:002011-02-09T08:34:05.327+00:00LetThemEatCake & james c,
LTEC is indeed righ...LetThemEatCake & james c,<br /><br />LTEC is indeed right, though I am not sure if they are suggesting speculation is a bad thing or not; if so then I disagree and here's why.<br /><br />They are actually two groups of pricing at play here: food commodity prices & money supply, the latter being inversely proportional roughly to interest rates.<br /><br />As a consequence price signals essentially indicate at the moment quite a simple message: "BORROW BORROW BORROW!" Ultimately this is where LTEC's speculators come in, chasing any bubble they can find to turn a buck in the face of a rapidly declining returns on investments thought safe over the last 2 decades.<br /><br />Who's to blame? In my view blaming speculators is redundant, akin to blaming a cheetah or running fast or a cow from chewing cud; we all react instinctively to THE EXACT SAME SIGNALS; why would we have accumulated so much debt over the last 2 decades otherwise?<br /><br />Ultimately we are reacting to <i>false</i> signals sent out by politicos and central bankers with a collective bent to making us think we are prosperous, hence keeping them in power.Tomrathttps://www.blogger.com/profile/15442487511149915434noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-27167859070594455312011-02-08T21:15:22.263+00:002011-02-08T21:15:22.263+00:00James C.
The low interest rates (and the QE) mean...James C.<br /><br />The low interest rates (and the QE) mean that people cannot get high returns on their capital unless they invest in some bubble that isn't bursting. The idea going around is that commodities are the current bubble of choice. So investors ( aka speculators ) are playing monopoly with basic foodstuffs which is leading to higher prices. The contrary argument seems to be that speculators do a good thing because they drive up the price of things in short supply whereby intending purchasers buy something else until supply and demand are matched. The downside is that poor people - particularly those who spend a high proportion of their income on basic foods are being starved.<br /><br />I seem to recall reading once that more governments have been overthrown because the price of bread went up than any other reason.LetThemEatCakenoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-59940510376610984992011-02-08T19:00:02.388+00:002011-02-08T19:00:02.388+00:00What is the mechanism by which low interest rates ...What is the mechanism by which low interest rates are meant to increase food prices?james cnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-87390029105223866452011-02-08T13:29:29.634+00:002011-02-08T13:29:29.634+00:00And Alice as I linked to Tim Worstall's articl...And Alice as I <a href="http://www.adamsmith.org/blog/international/on-the-return-of-policy-based-evidence-making/" rel="nofollow">linked</a> to Tim Worstall's article at the ASI in your original piece the jury is pretty much in as to the usefulness of speculators in mitigating MAJOR supply shocks, though I would concede that you are dead on the money when it comes to low interest rates not helping; my guess is that this is exacerbating the problem at the extreme poverty end of the spectrum all the way up to those living on fixed incomes - costs going up relative to debt repayment/interest on savings etc.<br /><br />Problem is as interest rates as with the money supply are central-bank controlled, we are unlikely to see this particular needle grasped.Tomrathttps://www.blogger.com/profile/15442487511149915434noreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-62139783053240816132011-02-08T11:48:00.431+00:002011-02-08T11:48:00.431+00:00trilogy system ticonderoga ticonderoga cased dixon...trilogy system ticonderoga ticonderoga cased dixon pack williams custom soft inventor history mouth mouth fruits http://www.sinceshopbuy.tk<br />http://www.centertodaydeals.tkAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-63232652838855535732011-02-08T10:02:48.962+00:002011-02-08T10:02:48.962+00:00You cannot discount the fact that at around 2008 t...You cannot discount the fact that at around 2008 the use of grains for bio-fuels became physical reality. The policies had been in place for several years previously, but the production plants were only just coming online. The EU set a target for a % of bio-fuels to be included with fossil fuels - this target is only now being achieved. Unless the policy is changed, thats a considerable chunk of food production that's not available for eating.<br /><br />Chuck in the Western States starting to print money around the same time, several big harvest failures, the prospect of higher demand from Asia, and the rise in food prices is easy to explain.Jimnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-34506629968633903102011-02-08T09:41:37.581+00:002011-02-08T09:41:37.581+00:00You say commodities, that haven't experienced ...You say commodities, that haven't experienced supply side shocks have also experienced a price increase, you are however disregarding the effect of substitution. If the price of coke triples, I and most others will end up buying more substitues, like fanta for instance.<br /><br />cheersAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2948538160252327076.post-48421991206118068482011-02-08T07:44:23.611+00:002011-02-08T07:44:23.611+00:00I think that there is a confluence of factors, but...I think that there is a confluence of factors, but Asian growth could still play a role.<br /><br />Growing Asian food consumption could have hit some kind of critical level, which then manifested itself as a sudden emergence of higher food prices.<br /><br />But overall the main culprit is devaluation of the western currencies. I wonder what your chart would look liked priced in gold?Robert Dudeknoreply@blogger.com