More Price Ramps Ahead

By James Crum

Over the last few months, the Federal Reserve has purchased billions of Treasuries in an attempt to lower borrowing rates to alleviate unemployment and avert deflation. That was the plan.

Not all is well with the plan or its execution. As data points line up, one may even be excused for asking out loud if the Federal Reserve is actively engaged in destroying the middle class here and everywhere else on our planet. From what we see, they are driving our fiscal clown car off a cliff.

The recently released BLS import and export report simply confirms what many of already knew was happening or was going to happen. Prices everywhere on nearly everything of substance are going up dramatically. In terms of worldwide economic significance, introducing major price ramps into the supply chain of basic goods and services during an economic slowdown is a very bad idea but is also a sign of the times.

The 04-12-11 BLS News release: U.S. IMPORT AND EXPORT PRICE INDEXES -MARCH 2011 is chock full of evidence showing how an eroding dollar and rocketing commodities are affecting everything we purchase and import and what we sell overseas to our trading partners.

These increases in the basic inputs into the world wide economy are truly staggering. I have provided an excerpt below:

Fuel Imports: The price index for import fuel jumped 9.0 percent in March, the largest monthly rise since a 16.0 percent advance in June 2009. Fuel prices increased 28.7 percent for the year ended in March, driven by a 36.6 percent advance over the past six months.

Agricultural Exports: The price index for agricultural exports rose 2.3 percent in March, led by a 9.2 percent increase in corn prices and a 10.5 percent advance in cotton prices. Agricultural prices rose 34.0 percent over the past year, the largest 12-month increase since a 39.7 percent advance in July 2008. Rising corn and cotton prices, up 77.7 percent and 153.8 percent, respectively, were the largest contributors to the 12-month increase in agricultural prices.

Our addiction to spending is causing problems everywhere, not just here in the United States. Let me be quite clear: Folks, these are truly huge increases. Nothing good can come from this and it is a safe bet that more price increases or margin collapse is already baked into the cake that is coming our way.

Update from Thomas Lifson:

John Melloy of Fast Money points out that using the old, pre-1980 measure of inflation, we already have inflation over 10%:

Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter. (snip)

"Near-term circumstances generally have continued to deteriorate," said John Williams, creator of the site, in a new note out Tuesday. "Though not yet commonly recognized, there is both an intensifying double-dip recession and a rapidly escalating inflation problem. Until such time as financial-market expectations catch up with underlying reality, reporting generally will continue to show higher-than-expected inflation and weaker-than-expected economic results in the month and months ahead."

Over the last few months, the Federal Reserve has purchased billions of Treasuries in an attempt to lower borrowing rates to alleviate unemployment and avert deflation. That was the plan.

The 04-12-11 BLS News release: U.S. IMPORT AND EXPORT PRICE INDEXES -MARCH 2011 is chock full of evidence showing how an eroding dollar and rocketing commodities are effecting everything we purchase and import and what we sell overseas to our trading partners.

These increases in the basic inputs into the world wide economy are truly staggering. I have provided an excerpt below:

Fuel Imports: The price index for import fuel jumped 9.0 percent in March, the largest monthly rise since a 16.0 percent advance in June 2009. Fuel prices increased 28.7 percent for the year ended in March, driven by a 36.6 percent advance over the past six months.

Agricultural Exports: The price index for agricultural exports rose 2.3 percent in March, led by a 9.2 percent increase in corn prices and a 10.5 percent advance in cotton prices. Agricultural prices rose 34.0 percent over the past year, the largest 12-month increase since a 39.7 percent advance in July 2008. Rising corn and cotton prices, up 77.7 percent and 153.8 percent, respectively, were the largest contributors to the 12-month increase in agricultural prices.

Over the last few months, the Federal Reserve has purchased billions of Treasuries in an attempt to lower borrowing rates to alleviate unemployment and avert deflation. That was the plan.

These increases in the basic inputs into the world wide economy are truly staggering. I have provided an excerpt below:

Fuel Imports: The price index for import fuel jumped 9.0 percent in March, the largest monthly rise since a 16.0 percent advance in June 2009. Fuel prices increased 28.7 percent for the year ended in March, driven by a 36.6 percent advance over the past six months.

Agricultural Exports: The price index for agricultural exports rose 2.3 percent in March, led by a 9.2 percent increase in corn prices and a 10.5 percent advance in cotton prices. Agricultural prices rose 34.0 percent over the past year, the largest 12-month increase since a 39.7 percent advance in July 2008. Rising corn and cotton prices, up 77.7 percent and 153.8 percent, respectively, were the largest contributors to the 12-month increase in agricultural prices.

Update from Thomas Lifson:

John Melloy of Fast Money points out that using the old, pre-1980 measure of inflation, we already have inflation over 10%:

Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter. (snip)

"Near-term circumstances generally have continued to deteriorate," said John Williams, creator of the site, in a new note out Tuesday. "Though not yet commonly recognized, there is both an intensifying double-dip recession and a rapidly escalating inflation problem. Until such time as financial-market expectations catch up with underlying reality, reporting generally will continue to show higher-than-expected inflation and weaker-than-expected economic results in the month and months ahead."