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Massive Shortage of Commodities Loom on the Horizon

Several months back I warned about supply inflation. Before year's end this type of inflation will ring true and the seeds are set now for the green sprouts to rear their ugly head. These are different sprouts, they are those that the government does not want to see. Most economists are now sounding off about inflation being negligible now and in the near future. But don't believe a word of it. Here are some of my reasons for believing that we are presently entering into a dangerous phase of supply inflation;

1. Incentive for profit has never been more stifling when led by governments failing to ensure adequate credit is available;

2. Massive currency printing ramped up to quash every conceivable out-break of   financial crisis is a disaster in the making.

3. The lack of governments to distinguish between financial crisis and financial credit is too evident;

4. Low productive capacity for essential commodities is being held down with no commercial credit availability.

5. Government imposition of tariffs impede two way international trade;

6. Volatility in currency markets stifles international trade,

7. Bail outs directed toward the wrong sectors of the economy based on the assumption that Keynesian theories will spill over and trickle down to the masses is ill founded. Continued bail-outs such as in the financial institutions, the auto institutions and government service institutions are destined to fail ;

8. Total failure of governments to act in a coordinated fashion to centre upon the real economic issues at hand is all but lost due to allowing side issues like climate control, carbon sequestration and others to clouded decisive actions into no action and thus contribute to further economic malaise;

The financial and auto institutions should have been allowed to work within the existing legal framework without government intervention to cleanse itself. Governments can accommodate but not intervene. Let the private sector look after itself. This would have avoided having to place the financial burden upon our future taxpayers. The more the government takes under its wing the more that it is called upon to make right all the wrongs whether they are the good, the bad or the ugly. The government cannot be all things to all people. There has to be a sacrificial lamb otherwise everybody pays for all of the Madoff's in the auto, financial and governmental institutions.

It is critical for the USA to reverse its political stance toward China. Arrogance and failure to respect your banker brings dire economic consequences. It may now be irreparable.

These and other  imbalances  are the seeds setting fertile ground for massive shortages of commodities that are about to face the nations. The producers will hold from the market place. Those that have to buy for profit from producers will buy more and hoard in order to demand higher prices for resale. And around and around it goes until it's out of control. The US dollar will eventually collapse under its own weight without new economic direction.

LOL Looking after your money.

Disclosure: "No positions"