Stratfor: Food Price Fall Temporary

Intelligence firm Stratfor just posted a report that supports our stagflation thesis, arguing that the lull in global food prices is temporary. The commodity charts they posted are disconcerting — there’s no evidence yet that the rising price trends of this decade are at an end.

This is important to U.S. consumers because it implies, as we’ve been arguing, that inflation will still be a problem in globally ‘tradeable’ goods, meaning food and energy prices could remain stubbornly high relative to falling incomes and a loss of financial wealth (we believe this mixed message may be embedded in the disparity between low Treasury yields and a still elevated gold price).

This is important to developing markets because it portends further social unrest, at a time when public sector competition for financial resources is intensifying globally — the U.S. will earn no good will abroad from its growing absorbption of global savings into Treasury securities. This is a shadowy parallel to the 1930s, when major political blocs found themselves in an intense competition for natural resources that eventually led to war (no, we’re not predicting a global armed conflict over financial resources — not yet, anyways).

URLs:

http://www.stratfor.com/analysis/20081204_global_food_prices_temporary_fall

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