Tuesday, August 23, 2016

If this doesn't scream deflation, I don't know what does.

Honestly, I'm mostly over talking about deflation. I think very soon inflation will be much more problematic than the risk of deflation. This economy has so much pent up demand I'm a little scared. This whole thing is going to switch on a dime the minute we get a less repressive admin. However.... this article caught my eye.

The US government is buying 11 million pounds of cheese because no one will.

"The US cheese market has had a significant oversupply problem for most of the year because foreign buyers have looked elsewhere for their dairy products as a result of the strong dollar. Previous to this slowdown in exports, many farmers had ramped up their production due to record high prices."

(emphasis mine) FYI - The dollar has basically been trading sideways the past few months.

The last time the government intervened in the cheese market was during the depths of the Great Recession. It's just crazy how long it takes for this to run it's course through the economy. The dollar started getting stronger about a year and a half ago. So it's taken that long to filter all the way down to food deflation. Which obviously the government will not allow. Although, it didn't really help that much the last time they bought fancy cheese to give to food banks.

I love cheese. But I also grew up on government cheese. I'm a welfare baby. It came in long blocks. The idea that poor people get fancy cheese these days is crazy@. I actually talked about it way back here in 2009.  I even hunted down a link that shows what government cheese used to look like. You should read my previous post because I'd forgot that the reason why Obama and Reagan did this was to keep farms from going under.

I know everything "is perfect" but governments rarely do this kind of thing. This is a glimpse into the real economy.

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