Here’s an idea for the economy

In an article about inflation and the Fed, a news item that is popping up all over is the fact that as we initiate more independence through ethanol production, the food bill is rising.

But for nearly five years, food and fuel prices have done a lot more rising than falling, and some economists say they have become a sustained source of inflationary pressure. With forecasts calling for strong global economic growth, international competition for commodities such as oil, corn and other grains is heating up, driving the price increases. Another factor is renewed interest in ethanol, which is causing increases in the price of corn, which is used to make ethanol in the United States. That, in turn, makes meat, eggs and dairy products more expensive because corn is a primary feed for cows, chicken and other livestock.

This is the way it works, but the old model we still have in place are those large farm subsidies. If farmers are finally able to make a profit on their crops of corn, doesn’t it make sense to stop the subsidizing- and maybe give some tax back to the people?

Of course, that huge bureaucracy in the farm industry isn’t going to roll over easy. Maybe not at all. but it is an idea, right?

Back to inflation…

He [Laurence H. Meyer, a former Fed board member ] said there may be “an emerging consensus” to aim for a 12-month change in consumer prices that is “close to but below 2 percent,”

They are talking about the possible change in the way the Fed figures inflation…starting to add in those pesky rising gas and food prices. Digging into this info, it tells us that oil prices are going to continue to be a problem so long as we are dependent on fossil fuels to the extent that we are. I think this rationalizes the transitional difficulties within the development of alternative fuels. It always amounts to this: somewhere big changes need to be made, and while no one wants to willingly make those changes, the circumstances are going to require they be made. Whenever faced with that sort of economic reality, the best thing to so is assess and tighten the belt and gird up the loins to do what is necessary.

New answers will cost us the old guard… but they promise a better outcome. Think “Where is the cheese, NOW?”

One thought on “Here’s an idea for the economy”

  1. Of course if demand for food stays the same and you start reducing the amount of food available then the price of food will rise. The amount of corn that will be diverted to ethanol in the short term does not bear thinking about… there’s more on the economic effects of biofuels on the big biofuesl blog. Check it out

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