Higher Food Prices Are Not Due To Incompetence. It’s Happening By Design.

No one needs to be told about the impact of higher prices for food, gasoline, and other essentials. The price hikes are everywhere; there’s no way to avoid them.

This is not limited to luxury goods or resorts. The price hikes are for beef, chicken, eggs, milk, and bread – things you buy and consume every day. The question is, why?

There are two main theories of why inflation emerges (and, no, money printing is not one of them; at least until the inflation is already well underway).

The first view is called cost-push inflation. This comes from the supply side and is caused by outright shortages, seller manipulation, embargos, or supply chain disruptions.

The second view is called demand-pull inflation. This comes from consumers who perceive that prices are going up and rush to buy goods before the price goes up even more.

Of course, the two kinds of inflation can interact. What happened in the 1970s (and may be happening now) is that the inflation started on the supply side with energy prices, and then spread to the demand side as consumers formed lines at gas stations in a rush to buy whatever they could. The gas lines soon morphed into a rush to buy everything as soon as possible. It’s at that stage of the demand-pull inflation that excess money printing can make things worse.

Now, evidence is emerging that there’s a third source of inflation, although it’s hard to believe. The third source is when the government intentionally sabotages the economy to achieve some ideological goal that’s unpopular. As described in this article, that’s exactly what the Biden administration is doing now.

The ideology, in this case, is the false science of climate alarm. Biden’s minions are so afraid of CO₂ emissions (which have no proven links to normal climate change and pose no existential threat), that they have curtailed the production of natural gas. But natural gas is a main component of fertilizer.

The natural gas ban had led to a shortage of fertilizer, which has meant reduced plantings by farmers and higher input costs in situations where the fertilizer is available.

Once the reduced food output from the farmers is harvested, it has to be transported by trucks that use diesel fuel which is also in short supply and is much more expensive. These fertilizer price hikes and transportation fuel price hikes translate into higher food costs at the counter.

Biden doesn’t care because he’s pushing an ideological agenda based on false science. The problem with ideology is that true believers are immune to the facts. So, investors should expect the situation to get far worse until Biden and his ilk are gone.

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