Find fertile soil in this perfect storm
In today’s Money Morning…the gaslighting of the audience is as usual…a perfect storm…where does this take us?…and more…
The prize for the most disconnected take last week goes to financial media Bloomberg.
Check out the offending tweet:
No meat for the plebs on less than $300,000 a year, I’m afraid. It’s lentils for you now!
The article even talks about letting your pets die to save money on vet bills.
I mean seriously?!?!
Unfortunately, as I will explain shortly with a very disturbing chart, cost of living pressures could be about to get ballistic.
But first, let’s see why stupid media like this is at least partially responsible for this mess…
Gaslighting the audience is business as usual
What’s most infuriating about the Bloomberg article is the idea that it’s somehow our fault for the out-of-control price spikes.
And – in their words – we must’reconfigure our consumption‘.
Of course, there is no mention of the extreme actions of central bankers in recent years. No mention of the historically low interest rates and extreme monetary interventions that flooded the world with liquidity.
It’s simply “our fault” – those earning less than $300,000 – for wanting too many unnecessary luxuries.
Like a piece of steak.
Or a pet…
This elitist view is symptomatic of Bloomberg and other mainstream financial outlets.
The sad truth is that they are only mouthpieces for the halls of power.
In fact, I made the mistake of watching Bloomberg’s “Opening Bell” segment while at the gym last week (thinking it would help catch up on the markets while I’m was training).
Instead, I was treated to a series of breathless reporters covering various “important” political meetings.
G7 meetings, round tables of EU ministers, Fed Bank minutes…
They had solemnly recanted various diplomatic statements spitting from said meetings as if they were Holy Scripture.
No questioning of pushed narratives, no smart skepticism or accountability of those responsible.
Instead, they would ask their favorite Wall Street analysts to talk about what that comment or comment meant.
I quickly remembered why I never look at this trash.
It’s basically a board game where people want to appear important, alongside those who support them to look smart.
The problem these days is that many of these “important” people think they are gods. They think they can solve the world’s problems with divine legislation.
And the mainstream press seizes it. It doesn’t matter that they are wrong most of the time.
Remember when we were told inflation was “transient,” for example?
Now that’s ‘lentils’ for you.
Which brings me back to the most disturbing chart on the hyperinflation front that I have seen to date…
A perfect storm
Of course, inflation was never going to be transitory.
The Russian-Ukrainian conflict certainly does not help. But it’s a convenient excuse for what central bankers had already misunderstood.
Don’t forget that.
Although the conflict exacerbates things, there is no doubt about it.
Not only because of its well-documented impact on oil prices, but also on wheat.
Russia is the world’s largest wheat exporter, accounting for 18% of the world’s supply. And Russia and Ukraine together represent 25.4% of the world supply.
That’s a lot of threatened supply in the short term that will affect the price of staples like bread, grain and beer.
But that’s not the disturbing chart I encountered on Friday.
No, it was this:
Make no mistake, this parabolic graph of fertilizer prices is very bad news for everyone, especially the poorest.
A blog post by Doomberg (a much better source of financial information than Bloomberg, in my opinion!) had a particularly worrying view.
‘The storm caused by the European energy disaster has merged with the hurricane of consequences stemming from Russia’s invasion of Ukraine, forming the genesis of a generational food crisis that will leave few unscathed.‘
‘The coming crash in the world’s food supply will be caused by a similar phenomenon in virtually all contribution in agriculture – they are all reaching historic highs simultaneously, supply availability is shrinking across the spectrum and the time to reverse the worst consequences to come is rapidly running out.‘
You can read the whole article here.
But the reasoning is quite simple to follow.
Many fertilizer products are derived from natural gas. So when natural gas prices go up, so do they. Plus, many of these fertilizers come naturally from gas-rich Russia.
Unfortunately, this is not the only agricultural cost that is rising rapidly.
Diesel is also another important input for commercial farmers, and this is also growing rapidly.
And in today’s technology, even the global chip shortage is having an effect on farming operations.
‘Jim Boyer, a farmer from Emmet County, had a similar personal anecdote. He’s waiting for a $40 emissions-related sensor for his tractor, and he’s not sure if it’s coming soon.
‘“I can’t drive this tractor – a quarter million dollar piece of equipment – because I can’t get this sensor,” he said.‘
A perfect storm for soaring food prices?
Where does this lead us?
To be honest, I’m not too sure.
What I’ve learned about the markets is that it’s a complex game of action and reaction.
And there could even be investment opportunities for Australian energy companies, fertilizer producers and farmers in all of this.
It’s a fertile place to dig, in my opinion.
But what I do know is that many of these current problems have been exacerbated by bureaucratic interference from elitist politicians, acclaimed as usual by their lackeys in the media.
For example, the current energy problem in Europe has always been an imminent accident.
I’m all for action on climate change, but you can’t be myopic about it. You have to look at the full spectrum of results, and it’s clear that ideology has overtaken reality on this front.
I mean, what did they think leaving Putin in charge of their energy needs would lead to?
Then there is the fact that central banks over the past decade have created debt-ridden economies and zombie industries that cannot survive on their own.
This is why people like Bloomberg constantly report on the political class as if they were all that matters to the economy. In a way, that’s exactly what the bureaucrats created, but it should never be that way.
Finally, increasingly hyper-partisan politics has created deep divisions between and even within countries, just to allow elites to take advantage.
Are free markets perfect?
But I think we are learning in real time the cost of a bureaucratically run economy. And it seems clear to me that we’ve leaned way too far in that direction.
Maybe it will take an all-powerful food crisis to open our collective eyes to what is really going on?
I hope not…
Editor, silver morning
Ryan is also the editor of New financial investor, a monthly advisory aimed at helping investors gain the edge as decentralized finance and digital money take over the world. To find out how to subscribe and see what Ryan is saying to his subscribers right now, Click here.