No Minister

I’ll take Manic Pixie Dream Girl for 5% inflation, Alex

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The latest statements out of the dairy companies show the biggest monthly leap in payout prices that I can recall, greater even than the big boom of 2013/14.

And farmers vividly recall what happened next; the biggest crunch dairy farmers have ever experienced, which is why I’m looking at their forecasts of similar pricing into 2023 and taking those with a grain of salt.

Everybody likes to see a steady increase in value for what they produce, a steady growth in wage and salaries or other income.

But nobody, at least nobody with a sense of the future, wants to see these sorts of rises because they’re not real in the sense of steady increases in the number of your customers or their increased valuation of your product or service, or perhaps just their steady increase in wealth that makes them less penny-pinching.

No, these sorts of price increases mean that something is very wrong with the system. That money is floating around out there and being thrown at assets and commodities because in our bones we know it can’t last.

Milk is not in that graph but it should be. Farmers had a good sense of what was coming before most economists did, when we saw the price pressures building in 2021. We know from our history that we’ll benefit from inflation before anybody else because commodities go first – but we also know that it will bite us (and everybody else) in the ass later on, as the pressure feeds into the costs of fuel, fertilisers and a hundred other things needed to run a modern farm. Today’s bumper profits and excess cash flow can vanish real fast under those circumstances.

Still, it’s better than being in the situation of a wage and salary earner, especially in the lowest brackets. Those poor bastards are getting screwed right now and it is going to get worse and all the increased minimum wage and WFF kerfuffle is not going to count for much.

That note about the suspension of trading in Nickel forwards is not due to some fundamental problem obtaining Nickel but because some Chinese billionaire and his giant Nickel processing company found himself stuck with an $8 billion loss on short positions he took.

This is going to get worse before it gets better and I hate to tell you this, but in the short-term there’s not much that governments can do about it. They have lit the fuse, as usual, but the it’ll be the marketplace that clears the crap out of the way in its usual, brutal fashion.

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