The Power Groups in every country are trying to hide the inflation from their populations. But their efforts are totally in vain.
As we see in Egypt and all the Muslim countries of North Africa and the Middle East people are rioting. These people cannot afford to buy bread. Although they live in dictatorships they wouldn’t care, and they have not cared, so long as food and clothing was affordable. But, today, food prices have gone beyond the reach of the average Muslim consumer.
It is “Food Inflation” that brought the protestors to the streets–not dictatorship. Those few dictatorships where the people have enough money to buy necessities and some luxury goods have not seen rioting.
NOT ONLY IN THE MIDDLE EAST
In China food inflation is growing daily.
Here is an excerpt from Bloomberg about China:
“Inflationary pressures haven’t abated and China has already entered into an era of structural inflation,” said Liu Li-gang, an Australia & New Zealand Banking Group economist in Hong Kong. He sees “more monetary policy tightening ahead.”
“The acceleration in inflation reflects rising rents, a 48 percent surge in money supply in two years and increasing domestic demand in the nation that’s replaced Japan as the world’s second-biggest economy. Policy makers may front-load monetary-policy tightening in the first half of the year as inflation remains elevated, according to JPMorgan Chase & Co. and Morgan Stanley”.
“In the inflation data, producer-prices climbed 6.6 percent, the most in eight months. Consumer-price inflation has exceeded the government’s 2011 target of 4 percent for four months.”
- THE U.S.
In the U.S. drivers are seeing gasoline prices going up daily. American gasoline is made from Brent Crude Oil. Although World Crude Oil is at $85.00 a barrel, Brent Crude Oil is at $102.00 a barrel, and rising.
Americans are being told by their Government to expect a 10 percent increase in the prices of clothing.
Why? Because the price of Cotton has jumped to $188.00 a pound. This is a rise of THIRTY PERCENT in six months.
Corn prices have doubled in the last six months!
Why? The oil companies are buying corn to make ethanol gasoline. In addition, the droughts and floods and freezes have reduced the total crops.
Corn is used in all cereals and also to feed livestock. Meat will follow the price inflation.
- THE U.K.
Here is an excerpt from Reuters concerning U.K. inflation:
“British consumer price inflation surged to double the Bank of England’s target in January, official data showed on Tuesday, raising pressure on the central bank to look seriously at increasing interest rates.
The Office for National Statistics said that the rate of consumer price inflation rose to 4.0 percent in January, in line with economists’ forecasts, from 3.7 percent in December.”
- LATIN AMERICA
Latin America is the home for 21 countries, whose populations are mired in poverty. Governments are entirely dictatorial or run by select families.
Because of the extreme poverty, inflation will cause rebellions in many countries.
Here is Reuter‘s take on inflation in Latin America:
“A global surge in commodity prices is pushing food costs higher across Latin America, posing a dilemma for policymakers scared by memories of runaway inflation in a region where widespread poverty means food typically accounts for a fifth of the average household budget.
“In Brazil, food prices rose 9 percent in the year through November, well above the general inflation rate of 5.6 percent. In Mexico, the annual pace of food inflation rose to 4.1 percent in November, more than triple the rate two months earlier.”
WHAT IS THE CAUSE OF WORLD INFLATION?
The cause of any Economic Phenomenon can always be explained by THE LAW OF SUPPLY AND DEMAND.
Prices are always dependent on changes in SUPPLY or changes in DEMAND.
The supply of commodities in the world has fallen in the last five years.
Weather has been the major factor. We have seen droughts and floods on every continent. This is the result of Global Warming and will only get worse.
Because the world’s population is constantly growing, land is taken from agricultural purposes and used for development of housing for the increased population.
Agricultural Investment is decreasing. Investors can profit more by buying government bonds where governments are pumping currencies into their money supply. These investors are in for short term gains. They are not interested in risking their capital on situations where a change in the weather could destroy their investment.
The increase in population is a two edged sword. Not only do people reduce the supply of food by taking up the space to grow crops; they also increase the demand for food by adding more mouths.
In China and throughout Asia manufacturing is growing because of Cheap Labor. More and more Asians are leaving poverty and moving into the working class where they have sufficient money to buy food and other goods.
China now produces and sells more cars than the world’s former leader, the U.S. This new PEOPLE’S WEALTH is good for the equality of the world population, but it pushes prices up by increasing demand.
The Muslims of the world are beginning to topple their dictators.
The Muslims want to share in the oil wealth that exists in the Middle East and the agricultural wealth that exists in Indonesia and other Islamic countries in Asia.
The Muslims are succeeding. The sheer weight of their numbers is causing old dictators to run away, hoping to keep their fortunes, but giving up the sources of their present income.
This is increasing purchasing power in The Muslim World and thereby creating more demand and higher prices.
WHAT TO DO?
The simplest solution for the average investor is to buy Gold. In certain countries, buying land is also a good investment.
One principle is paramount: Get out of Fiat Currency or Paper Money. Paper Money has nowhere to go but down!