Commodity Prices Show the True Stagflation Story

Includes: BAL, CORN, CU, GLD, GRU, JO, SGG
by: James Quinn

Over the weekend I watched dullards on CNN screaming about the dire consequences of deflation. The Federal Reserve and their minions in the MSM are misleading the American public again.

They desperately want to keep inflation high so they can rob you blind and transfer your money to Wall Street banks. Their gameplan is to create mass confusion by wailing about the horror of deflation.

I know it would really be horrible if I had to only pay $2.00 a gallon for gas, less for bread, less for my clothes, and less for coffee. But wait, let’s see what is really happening. For those who like charts, see below. In summary, these are the true figures:

  1. Wheat prices are up 54% since June.
  2. Corn prices are up 26% since June.
  3. Soybean prices are up 13% since June.
  4. Cotton prices are up 20% since June.
  5. Coffee prices are up 36% since June.
  6. Sugar prices are up 38% since June.
  7. Copper prices are up 18% since June.
  8. Gold prices have risen 6% in the last month.

The PPI has been between 4% and 6% for the last 8 months. Does any of this data suggest deflation? The only thing deflating are house prices and your wages.

We do not have deflation. We have entered the beginning stages of stagflation – stagnation and inflation at the same time. We have high unemployment, no economic growth and inflation at the same time.

This is the result of ridiculous macroeconomic policies. The Federal Reserve has caused inflation by permitting excessive growth of the money supply and keeping interest rates at excessively low levels.

The money has flowed into commodities. The government has caused stagnation by excessive confusing regulation, interference in the markets, and manipulation of the housing and labor markets. Continued manipulation and government interference in the markets will surely lead to an inflationary depression.

Click charts below to enlarge

Disclosure: No positions