I tuned into The Takeaway at 7:10, while waiting for the bus. The topic was food inflation, and the hook was whether common American breakfast foods would be luxuries in a few years. Coffee, orange juice, grains, sugar all have risen sharply. An analyst from the NY Times, Louise Story, noted that common measures of inflation exclude food and energy, which amused the radio hosts, but said that was something economists debate a lot. She discussed whether Bernanke's Quantitative Easing 2 was to blame for rising food prices, thus for the revolutions in Tunisia, Egypt and unrest throughout the Arab world. Bernanke denies that, claiming that a weaker dollar means a stronger Egyptian currency for buying food. Story blames, "a little bit global warming, a little bit economic recovery, a little bit politics." 

I put John Michael Greer's article, Overcoming Systems Stupidity, in the news section yesterday. He notes that, "Plenty of factors feed into the surge in food costs, but one major factor is a string of failed harvests in some of the world’s important grain-producing regions, which in turn has been caused by increasingly unstable weather."

The Takeaway links to a Fortune Finance article How inflation is turning breakfast into a luxury item :

Here are the 6-month price percentage moves in some of the things people need to live with:

    * Cotton = +125.7%
    * Sugar = +82.6%
    * Corn = +59.0%
    * Coffee = +41.4%
    * Rice = +40.5%
    * Oats = +36.6%
    * Copper = +36.1%
    * Lumber = +33.8%
    * Oil = +25.1%

In the next Takeaway segment, one Arab analyst, Brookings fellow Tarik Yousef, said the dissatisfactions with Mubarak's regime preceded the food scarcity. Egypt, he says has underperformed for twenty years in jobs, education, infrastructure, and health issues. Tarik used the magic word, "Infrastructure," but I really perked up when Max Rodenbeck, Middle East correspondent for The Economist, said that in many ways the economic pressures are affecting the more well-to-do Pro-Mubarak crowd more than the anti-Mubarak protesters.  "One of the things that the government managed to do in the last ten days of unrest, is to paint a picture of the protesters being the reason behind economic problems." It certainly sounds like those thugs are from an Egyptian version of our own Tea Party.

Both analysts agreed that Middle East governments will stockpile food and fuel to head off future revolts, which will drive up Western prices in a manner that reminds me of Jeffrey Brown's Export Land Model. Brown predicted that oil depletion effect would precede the actual peak of production as oil-producing countries reserved oil for their immediate future.

Later, reporters interviewed a woman in the street, who provided the title of my post, "He's been there for thirty years. Since I was fifteen, so we are used to him. But it's only the last ten years that are really collapsing. This generation, the thirty year generation doesn't know what is famine, what does it mean when you don't find something to eat? They don't know it."

I put Stuart Staniford's Early Warning article, Misflation, in the news section a few days ago. Staniford feels that we are seeing both commodity inflation - because demand for commodities exceeds supply - and labor deflation - because supply of labor exceeds demand. In America, we have always paid a lot for certain foods because we also pay for processing, handling, inspecting, packaging, and a lot of advertising. So while the commodity prices of the raw foodstuffs are going up globally, all those labor prices are being forced down locally by vendors like WalMart. Buying generic or store brands even forces down the cost of advertising.

So, on the one hand, we have oil prices clearing their throats as though thinking about attempting a new run at a peak, and we have food commodities higher than any time in the last thirty years.  And yet, we have prices of finished goods very weak.

It seems like the theme is the the world has not quite enough resources to run society as currently configured, but overcapacity in the ability to turn resources into finished goods (relative to subdued final demand, anyway).  Hence we have inflation in commodities, but deflation in finished goods.

One might also call it Mixflation, or Camoflation, as I did, or perhaps Overpopuflation, but discussion is finally becoming more evident in the general media.