These inflation figures might surprise you. While Bernanke and the boys at the Fed seem most concerned about deflation, the prices of everyday items were off to the races in 2010. Thanks to a very helpful article over at WiseBread, we see that prices of nearly everything we use on a daily basis rose substantially over the past 12 months, some even doubling.
You should go to the original article for a more detailed breakdown, but here is a list of the major price moves of 2010. Remember, these are the price movements of the past twelve months alone:
- Oil - ⇑ 25%
- Gasoline - ⇑ 24%
- Corn - ⇑ 53%
- Sugar - ⇑ 29%
- Cotton - ⇑ 109%
- Coffee - ⇑ 64%
- Lumber - ⇑ 47%
- Gold - ⇑ 26%
- Silver - ⇑ 73%
I don't think anyone can claim that we're not in a constant cycle of bubbles now. The housing bubble has burst, so now the Fed is inflating commodities. Actually, commodities have been inflating for the past decade, but things have really accelerated since QE1 and QE2. This spells big problems on the horizon.
When you combine increased food production prices with increased transportation costs, you run into a situation where (primarily) American speculators are causing the poor of the world to starve. It may be an unintended consequence, but violence and food riots in developing nations will be a byproduct of wrongheaded Fed monetary policy.
When will the Keynesians ever learn?