Tuesday, March 26, 2013

Has the Inflation Genie Escaped? "Every nation is about nine meals away from a revolution"

Really good charts spotted at Market Daily Briefing that reflect the real costs of Ben Bernanke's magical printing press, which is spewing out dollars at an unprecedented clip.

Food is important, especially when you don't have it. The rule of 3s says "3 minutes without air, 3 days without water, 3 weeks without food" but another saying is, "every nation is about nine meals away from revolution."

It was posited here that the Arab Spring was due in no small part to high food prices for peoples whose food budgets started out at around 40%. For instance, the Egyptian government had a food price support in place, and when global prices rose, it became too expensive for them to run. Down went the Egyptian government, after being in power for 40 years. Check out the "Food" column in the table below and you'll have a sense.

The CPI that a population feels when prices move depends on where it spends. In the US, the food spend is 7% of our income. So if the food price index moves from 125 to 225 (an 80% move) as it did in 2006-2008, we would see a CPI impact of about 6%. For people whose food budgets account for 46% (such as the average Pakistani), they would see a CPI impact of 36%.

Since Barack Obama took office, the real price of food has increased about 40 percent.

Combined with Bernanke's ZIRP (Zero Interest Rate) policy -- which makes it extraordinarily difficult to generate income on savings accounts, CDs and money markets -- lower- and middle-class senior citizens are among the hardest hit by the irresponsible deficit spending instigated by Barack Obama, Nancy Pelosi and Harry Reid.


www.pointsandfigures.com said...

part of this also is the expansion of the food stamp program which subsidizes the food market. Grocery stores in Chicago which have a higher percentage of customers using food stamps have higher prices than other ones.

Barry Popik said...

Oh, all right. This saying is a challenge for the ol' penniless and dying American etymologist. It's at least from 1906:

"Every nation is about nine meals away from a revolution."