“The fast inflating price of food and fuel is dangerous, and may have far-reaching societal consequences, hungry people are not happy people” — Paul Ebeling
Food prices have been inflating fast since March 2020. The rise is up a lot compared to 3 prior yrs.
The official January 7, 2021 release from the Food and Agriculture Organization explains the situation in detail.
The FAO Food Price Index (FFPI) averaged 107.5 pts in December 2020, up 2.3 pts or 2.2% from November, marking the 7th month running of consecutive increases.
And according to the data grain has risen in price 50% over the last 6 months.
In fact, according to our official source, food price inflation has risen each month by at least 3.5% Y-Y since April 2020 at home and away from home.
And December did not show any signs of that trend letting up. Keep in mind, we are talking about food, this is real inflation.
This is what we expect to see when the Fed’s easy-money policies support bubbles in the housing, stock and credit markets.
When prices go up, people economize.
Gas prices too high? Drive less.
Electricity bill higher than last month? Stop playing with the thermostat, install LED bulbs.
But when food prices go up, people do not eat less.
Price increases on this core necessity affect everyone, and represent a dangerous escalation should they get out of hand.
Riots over food prices have occurred regularly throughout history. The last time the world saw widespread unrest thanks to food price inflation was during the run-up to the Great Recession.
Now we are not talking about 3rd-world countries. Almost 15% of Americans could go hungry, thanks in part to State government mitigation efforts in response to the virus casedemic chaos, .
Investment guru Ray Dalio writes that the US could be on the brink of some kind of major civil conflict. In Chapter 9 of his book The Changing World Order, he claims we are at Stage 5 of 6, which is the stage just before a civil war or revolution disrupts the old regime.
After that, he notes the cycle starts again at 1, and the whole process “typically takes 100 years, give or take...”
There’s a lesson in this John Maynard Keynes quote, “The market can stay irrational longer than you can remain solvent.”
The same idea applies here: A bad situation can hang on the brink of catastrophe without toppling into utter disaster for far longer than even the sharpest analysts might estimate.
So, the thing do now is not to dwell on gloom and doom scenarios, but to take the steps necessary to ensure you and your family will thrive regardless of the rest of the world’s situation.
Step back and assess your situation. Then do what you can to make yourself and your family resilient to market forces and government whimsey.
No matter what happens to food prices tomorrow, you can put yourself in the best position possible before things go sideways.
Examine your portfolio, consider your exposure to risk and diversify assets That could include shifting some savings to gold and silver.
The Big Q: Why?
The Big A: Because when the paper asset markets start to burn tangible physical assets endure and shine very bright in the ash. As Gold is Still the Safe Haven
Have a healthy week, Keep the Faith!