Wednesday, April 16, 2008

Three Charts

This will be a simple post. But it will graphically show just why inflation is a problem, and likely to continue a problem, despite the headlines you are going to hear today about inflation being "tame" (according to your governments statistics):

First up, rice. Have you wondered about those rumblings of food riots around the world? This is why (h/t Bondad for charts):

And of course you already likely know about oil:

Finally, thanks to Bush and his maavelous ethanol stupidity, we have corn:

Why is this happening? It's kind of funny, but I blame Nixon. Yes, Richard Nixon. By "opening up China" he started a ball rolling towards China becoming a far more modern, capitalistic society. With a freer market, Chinese citizens now want the same kinds of prosperity enjoyed in the west. Except that there are like twenty gazillion Chinese. Add to that the Indians who also have the gall to want to live like Americans and you have a supply problem.

Just a quick note on corn. I have recently discovered that I am allergic to corn (and wheat). Corn has, hands down, been the most difficult item to remove from my life. It is in EVERYTHING. Food you know, but think about the products that use corn starch or corn syrup? It's like everything. But also consider things like hygiene products (shampoo, toothpaste) or medications like Claritin? Yeah, ironically I take took claritin to reduce allergies and the first inactive ingredient on the label is corn starch.

I highlight this because, like oil, as the price of corn skyrockets, the costs to produce virtually all products will also increase dramatically.

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