The Fed's Wealth Effect Redux!

The following chart shows the producer price index for intermediate foods and feeds divided by the index of the average hourly earnings of private production and nonsupervisory employees. The low point was achieved in May of 2002 (represented as 1.0 on the chart).


Click to enlarge.

Stick a fork in it. The old trend's over. Welcome to the new trend. Who doesn't like higher asset prices?

Not all of these price increases are making it down to the consumer of course. Value is "added" by heavily processing the food, placing it in cheap boxes and cans, slapping a well known brand name in colorful print on the outside, and then marking up the price. We may not have infinite global food supplies well into the distant future, but at least we have an ample supply of presentation!

September 20, 2013
Our Chat With Jeremy Grantham

Now, however, the outspoken Yorkshireman, who is chief investment strategist at GMO, is making headlines with a new prediction: Dire, Malthusian warnings about environmental catastrophe. To hear him tell it, the world is running out of food. Resources will only keep getting more expensive.

November 13, 2013
Experts: world's soil is at risk

“Recent satellite surveys have shown a one per cent decline in the world’s farmed and grazed area every year over the past quarter of a century, due to a combination of land degradation and urban sprawl,” says soils expert Professor Roger Swift of the ASC and University of Queensland.

What would Carl Spackler say though?

And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.

Not everything is inflating of course. Take Redux for example. Some miracle drugs are not all they are cracked up to be apparently.

Redux: The Miracle Weight-Loss Drug

Mass Market Paperback from $0.01

I'm not trying to imply that the Fed's miracle drug won't work over the long run. No, sir. ZIRP is all but guaranteed to restore all lost prosperity and then some! Common knowledge! Everyone knows it! Trapped in ZIRP like the Japanese isn't a long-term curse, it's a long-term blessing! Genius!

See Also:
The Fed's Wealth Effect (Musical Tributes)

Source Data:
St. Louis Fed: Custom Chart