I Predicted This
Three years ago, I predicted:
More recently, according to an article in, of all places, the Telegraph (seen via, of all places, National Review Online):
If stagflation is back, we can expect to see crackpot economics to go with it:
The Malthusians will claim high commodities prices prove they were right after all. They will also claim unemployment is due to population growth outrunning job growth. (Isn't it amazing how they only seem to be right immediately after lots of funny money has been printed?)
Let's see… The U.S. prints up lots of funny money, which winds up overseas, bidding up dollar-denominated commodity prices. This is considered to be the results of overpopulation (maybe an overpopulation of stupid but industrious financiers).
The world population has surged 18pc since 2000. Meanwhile, except during the global financial crisis of late 2008 and early 2009, the cost of food has steadily risen. The suggestion is that, just like the market for oil and metals, food and other “soft commodities” have become locked in a “super cycle”, the implications of which are only just beginning to be understood….This trend, as with so much else these days, is being driven by the rise of India, China and the other large emerging markets. As incomes in these hugely populous countries keep rising, their new middle classes are rapidly shifting from a vegetable to an animal-based diet. Meat is an extremely crop-intensive form of protein, as any vegetarian will tell you. So this massive wealth-driven Eastern diet-switch is fuelling the demand for soft commodities.
Not only by encouraging the switch to biofuels, but also by exacerbating food production and distribution costs, high oil prices can drive up food prices too – even though only oil is non-renewable. Last week, global oil markets tightened further, with Libya’s production now down at least 1m barrels per day – around 1.3pc of global production. As a result, futures contracts scraped $120 a barrel and UK petrol prices climbed above £1.30 a litre.
I must admit there are other causes of weird commodity prices: We have been burning corn in our gas tanks instead of fossil fuels and fossil fuels in our power plants instead of uranium. To make matters worse, there's the promise of more idiotic regulations in the future.