I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
Rightly or wrongly, I still think the natural outcome of asset deflation, a weak dollar policy and a slowing economy is a higher cost of living. Sure the price of electronics and other unnecessary stuff may plunge, but the owners of real & necessary goods & services are not going to let the fed steal their wealth. They are better off hoarding their own goods rather than exchanging them for a depreciating dollar.
Hoarding begets hoarding. Wanna bet the fed can spot this bubble.
Yeah, we do seem to be in that mode now. I'm not 100% convinced my girlfriend was fully on board with my hoarding ways but the rice shortages had her wondering if we might not want even more.
That also swayed me a bit (in connection with Costco's rice warning).
I don't see any harm in hoarding a few sacks of rice. Same with bunch of sealed five gallon water bottles. It's even recommended by the Dept. of Homeland Security.
Heck, I'm down to my last half bottle of Hi-Karate aftershave - I should have hoarded when I had the chance.
Just wait until Oprah starts talking about the high price of food. Stampede!
I read today (forget where, maybe someone else here saw it) the Fed has to be careful about creating "future inflation expectations." Once future inflation expectations grip an economy they are very hard to undo. Further, future inflation expectations can become self-fullfilling.
I thought to myself, WTF!?! Where has this person been that last 6 months? Dear God help us if the next week's Fed report has the line, despite of rumors of rice hoarding in Indochina we feel future inflation expectations are contained.
This afternoon, I went to Walmart in Westminster, CA and I was surprised to see them have sacks of rice at the front entrance with signs for only 5 sacks (I only noticed the number "5" -- I didn't read the details on restrictions).
Wal-Mart, UK stores ration rice sales http://www.theaustralian.news.com.au/story/0,25197,23591506-23850,00.html
The move by the world’s biggest retailer, which owns Asda, constitutes the first time that food rationing has been introduced in the United States. While Americans suffered some rationing during the Second World War for items such as petrol, light bulbs and stockings, they have never had to limit consumption of a key food item.
This is where I have to say I smell a rat. I think the grocery stores are trying to induce people to stockpile. Americans are not big rice consumers. I think with all the news reports about restrictions and limits in SEA, the merchants are thinking to themselves, hmmm, maybe if we put it on an end-cap with a hasty-looking laser printed sign saying "limit 100lbs per customer", we'll get a bunch of people buying 100lbs.
Grocery stores know well that listing an item on "sale" 2 for X induces people to buy qty 2 even though they sell qty 1 at the exact same per unit price as qty 2.
Commercial bakers say they are stocking up on specialty rye and gluten flour because of fear that supplies are dwindling. And Costco's chief executive said the big-box retailer is thinking twice about letting customers buy multiple pallets of flour to preserve supplies.
One more thought. I also tend to believe the story because I have hoarded rice personally and I offered up the theory months ago that strong sales at Costco were being driven by hoarding behavior.
Stag,
ReplyDeleteWelcome aboard!
Rightly or wrongly, I still think the natural outcome of asset deflation, a weak dollar policy and a slowing economy is a higher cost of living. Sure the price of electronics and other unnecessary stuff may plunge, but the owners of real & necessary goods & services are not going to let the fed steal their wealth. They are better off hoarding their own goods rather than exchanging them for a depreciating dollar.
Hoarding begets hoarding. Wanna bet the fed can spot this bubble.
MAB,
ReplyDeleteHoarding begets hoarding.
Yeah, we do seem to be in that mode now. I'm not 100% convinced my girlfriend was fully on board with my hoarding ways but the rice shortages had her wondering if we might not want even more.
That also swayed me a bit (in connection with Costco's rice warning).
Stag,
ReplyDeleteI don't see any harm in hoarding a few sacks of rice. Same with bunch of sealed five gallon water bottles. It's even recommended by the Dept. of Homeland Security.
Heck, I'm down to my last half bottle of Hi-Karate aftershave - I should have hoarded when I had the chance.
Just wait until Oprah starts talking about the high price of food. Stampede!
I read today (forget where, maybe someone else here saw it) the Fed has to be careful about creating "future inflation expectations." Once future inflation expectations grip an economy they are very hard to undo. Further, future inflation expectations can become self-fullfilling.
ReplyDeleteI thought to myself, WTF!?! Where has this person been that last 6 months? Dear God help us if the next week's Fed report has the line, despite of rumors of rice hoarding in Indochina we feel future inflation expectations are contained.
AllanF,
ReplyDeleteFuture inflation expectations are contaminated. That's what they should say. If they say it quickly and mumbled maybe nobody would notice.
This afternoon, I went to Walmart in Westminster, CA and I was surprised to see them have sacks of rice at the front entrance with signs for only 5 sacks (I only noticed the number "5" -- I didn't read the details on restrictions).
ReplyDeleteIt's not just the warehouse club stores anymore.
DannyHSDad,
ReplyDeleteWal-Mart, UK stores ration rice sales
http://www.theaustralian.news.com.au/story/0,25197,23591506-23850,00.html
The move by the world’s biggest retailer, which owns Asda, constitutes the first time that food rationing has been introduced in the United States. While Americans suffered some rationing during the Second World War for items such as petrol, light bulbs and stockings, they have never had to limit consumption of a key food item.
Uncharted territory.
This is where I have to say I smell a rat. I think the grocery stores are trying to induce people to stockpile. Americans are not big rice consumers. I think with all the news reports about restrictions and limits in SEA, the merchants are thinking to themselves, hmmm, maybe if we put it on an end-cap with a hasty-looking laser printed sign saying "limit 100lbs per customer", we'll get a bunch of people buying 100lbs.
ReplyDeleteGrocery stores know well that listing an item on "sale" 2 for X induces people to buy qty 2 even though they sell qty 1 at the exact same per unit price as qty 2.
AllanF,
ReplyDeleteI don't smell the rat on rice. I don't think the hoarding at Costco was driven by individual consumers but rather restaurants.
I suspect Americans are becoming bigger rice consumers. I am. Further, our Mexican American population is growing rapidly.
And lastly, I tend to trust Costco more than most retailers. If they say people are hoarding rice I tend to believe them.
http://consumerist.com/384208/whats-the-deal-with-all-this-rice-and-flour-hoarding
Commercial bakers say they are stocking up on specialty rye and gluten flour because of fear that supplies are dwindling. And Costco's chief executive said the big-box retailer is thinking twice about letting customers buy multiple pallets of flour to preserve supplies.
In a nutshell, I believe the story.
One more thought. I also tend to believe the story because I have hoarded rice personally and I offered up the theory months ago that strong sales at Costco were being driven by hoarding behavior.
ReplyDelete