Reaping the Whirlwind
Fox News reports: ‘USAID Chief says food shortage crisis will “hasten transition” to green energy’:
‘Biden official Samantha Power told ABC’s George Stephanopoulos that fertilizer shortages would push farmers to more green, “natural” solutions like manure and compost.
‘Speaking of the global consequences of Russia’s war with Ukraine, the Biden official said that fertilizer shortages would provide farmers the opportunity to “hasten” their “transition” from fertilizer to more “natural” resources.’
It made us wonder: Has this woman ever been on a farm?
We looked her up. It turns out she’s an Irish woman who moved to the US and — in the tradition of Eliza Lynch, who, in the 1860s, allegedly egged on her lover, the Paraguayan president, to get into a devastating war with three of his neighbours at the same time — has caused nothing but trouble. And no, there’s no record of her ever having the slightest stain of manure on her boots. Instead, she has moved from one political appointment…one hack assignment…and one richly carpeted meddle to another…up and up…
The only bright spot in her entire record is when she called Hillary Clinton — off the record — a ‘monster’, for which she later apologised in order to get back in the monster’s good graces.
It’s the money, stoopid!
In the real world, no farmer is eager to hasten his transition to more natural resources. He struggles with the real world of wind and weather, rising costs, and encroaching regulations…just to earn a living. He would be happy to do so if he could spread manure on his farm instead of chemical fertilisers. But everything has a cost…and a return on investment. There are no free lunches in the farmers’ world. And no tractor yet invented is powered by a windmill.
Prime farmland in England is now selling for 9,000 pounds (about US$11,000) per acre. For reference, the equivalent price in Argentina is less than a third of that. But land prices are going up everywhere. And the Financial Times reports that there’s a new kind of buyer on the scene — a hedge fund manager who is either trying to preserve his capital or improve his lifestyle.
One of the unique features of the current wave of inflation is that it’s not limited to one currency or one nation. Making a long story short, the US ‘inflated’ its currency. Other nations had to inflate theirs too or risk a trade disadvantage; a ‘strong’ currency means higher costs, which make exports more expensive.
The easiest way to stay competitive was simply to link one’s currency to the dollar. As the dollar lost value against goods and services, so did your own currency. At one point, the Trump administration even accused China of ‘currency manipulation’ — simply because the yuan, linked to the dollar, followed the greenback down.
The result of all this currency inflation is consumer price inflation almost everywhere. From Bloomberg:
‘Euro-area inflation climbed to a fresh all-time high, raising pressure on the European Central Bank to remove crisis-era stimulus and lift interest rates.
‘Consumer prices were up 7.5% from a year earlier in April, in line with the median estimate in a Bloomberg survey. A gauge excluding volatile items such as food and energy jumped to 3.5%.’
And a special source of hurt is likely to come — warns the Biden Administration — from the farm.
Here’s the Financial Times:
‘Commodity prices have spiraled following Russia’s invasion of [the] Ukraine. The two countries supply about 30% of the world’s wheat and are big producers of organic seed, chicken feed and fertilizer.’
Dear readers may jump to the conclusion that this is a great time to be a farmer. Farmers will make ‘windfall’ profits, perhaps?
Alas, there’s more to the story…and it ain’t that nice. While farm output prices have risen, farm input prices have risen even more. The Consumer Price Index in the US is rising at an 8.5% rate. But the ‘agflation’ rate — fuel, fertiliser, and animal feed — is going up at almost 30% per year.
This is bad news for almost everyone. For farmers, it means tighter margins; they will reduce expensive inputs — fertiliser herbicides and pesticides. And yes, of course, they will switch to lower-cost, ‘natural’ inputs if they can. But the consequence will be lower yields. That is to say: less food…
The New York Post:
‘President Biden on Thursday warned of global food shortages as a result of the Russian invasion of Ukraine — predicting that the war would upend global wheat supplies.
‘Russia and Ukraine jointly supply about a fourth of the world’s wheat exports.
‘“With regard to food shortages, yes we did talk about food shortages. And it’s going to be real,” Biden said at a press conference in Belgium after attending meetings of NATO and G7 leaders.’
Rich people like Samantha Power and the rest of the US’s nomenklatura may not notice the food shortages. But poorer people will — especially the nine million or so desperate people who starve to death even in a good year.
Yes, dear reader…now coming into focus is the whole scope of the Fed’s crackpot flimflam.
They shut down the economy, supposedly to save lives.
The lockouts reduced output.
They then tried to replace the missing output with phony ‘printing press’ money.
The new money caused inflation.
Inflation drives up food prices, causing millions of people to die.
And the elite look on the bright side, it helps hasten the Green Transition.
For The Daily Reckoning Australia