Tuesday, August 30, 2016

It just all sucks.

"Food Deflation Driving "Least Profitable Year In 20 Years" As Farmers And Grocers Get Crushed".

You know when Zero Hedge does a negative article on food deflation, we are well and truly fucked. If you ever read ZH, deflation is only good and people who say anything otherwise are nuts. Sure consumers find relief, but the offset is that businesses get killed. And that is a bigger deal than the savings the consumer gets. When a business gets killed there is a trickle down effect. But every time the price of something goes down (like gas) people scream that this will be great for the economy. Great I tell you!

This is 2009 type stuff. Even then they would not admit we were in deflation. A few weeks ago Mr S and I were in the store and I asked him - what is up with milk? He was like - what? They are having a sale on milk and a couple of weeks ago a store was having a buy 2 get the third free on milk sale, I say. I can't remember the last time I've ever seen that. Well it turns out what farmers have so much milk now they are just dumping it into the fields, and that is why the Obama administration felt the need to buy up a ton of cheese and donate it to food banks.

When it gets to the point of food deflation we are really in the throws. It's the last thing to react. And I'm not sure the dollar will not get a bit stronger, causing a little more deflationary pressure. It's been hard to tell how this was going to go the past few months. The dollar has been going sideways. So the deflationary downside risk was much less. But if the dollar start moving back up - all bets are off.

I think the dollar decides this election.


2 comments:

Anonymous said...

Fun fact, if you're a farmer they generally pay you about 20 percent of the store price for raw milk. DF

she said: said...

Doesn't seem right to have to put up with all that bullshit for only 20%.