Food inflation is inflation.

From Peter Grant. Given this, look at your food bills: and note that it only takes one bridge out to cause food shortages.. Yes, we stocked up. Yes, the prices were highere.

Keep inflation in the front of your mind. Mr. Hansen identifies a current year-on-year food inflation rate of 30.7%. That’s frightening – but not unexpected. It may get much worse. As I’ve said here repeatedly, we’re in for a severe dose of inflation, possibly even hyperinflation (which may or may not be “transitory”, as some observers have hopefully suggested).

Look for evidence like that provided by Mr. Hansen. The mainstream media may ignore it, but we do so at our peril. It’s easier to prepare for a problem (as best we can, anyway) when we can see it coming, than when it catches us unawares. I fear most Americans will be caught unawares, because most mainstream media and most politicians are maintaining a deafening silence about what’s happening.

It’s worth noting that the floods have wiped out at least a decade of farm development in Canterbury, a year after a similar flood did the same thing to Southland. So the regions where we will be able to grow food come spring may be decreased. But farmers will sort themselves out.

The reserve bank, however, is making things worse. The NZ dollar is not a reserve currency. There is a limit to how much risk others can tolerate, and how much debasement of currency an economy can absorb.

The Reserve Bank (RBNZ) says quantitative easing and the use of term lending facilities will remain “mainstream” monetary policy tools that will continue to be used in the future.
The RBNZ started doing quantitative easing in March 2020 by buying mostly New Zealand Government Bonds via its Large-Scale Asset Purchase (LSAP) programme.
In December 2020, it also started providing banks with cheap funding to help them keep borrowing rates low via its Funding for Lending Programme (FLP).
Both programmes are mainly aimed at boosting inflation and employment. The RBNZ is due to stop making regular bond purchases via the LSAP in June 2022, and is due to stop making FLP funding available to banks in December 2022.
However, RBNZ Head of Financial Markets Vanessa Rayner said, in a speech delivered on Wednesday, these previously “unconventional” monetary policy tools will “likely remain mainstream for as long as global central bank policy rates remain at, or near record lows”.
Rayner noted that with the Official Cash Rate (OCR) already rock bottom, the RBNZ (like other central banks around the world) has “less space” to cut rates. There is also a “limit to how negative rates can go before causing adverse side effects”.
“This means that other tools that utilise the [RBNZ’s] balance sheet have become an important part of the ‘package’ of monetary policy instruments that global central banks have turned to.”

You can rort the consumer price index. You can deliberately freeze wages: you can change the basket of goods, or include manufactured goods that are cheaper than they were. Or you can further inflate money and increase taxes on property and income, which is what NZ is doing. That, historically, ends really badly.

But you cannot eat a car or computer… or a service.

The real inflation is food inflation, and it is happening.

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4 months ago

I would be more comfortable with QE if the purpose was to retire debt, not to allow more borrowing. At the end of the day if my money was worth less but there was no more debt, OK. As it is, governments seem to use it to increase spending, usually with even more debt on top of the increased spending, but less than it would otherwise have been. Wow, that was a convoluted sentence.