Global Economic News
Hyperinflation on the Way, Spreading from Raw Materials Markets
Jan. 13Way above the official "inflation rate" of 1.2% in Germany, prices of iron ore, other ores and metals, as well as fuels and mineral oil products, were up 14% in December, against the same month in 2009prices reaching almost the peak level of December 2008. A far more alarming trend is occurring in cereals, feed grain, and seeds, where wholesale prices jumped by two-thirds in December 2010, against December 2009although the usually cited "bad harvests" and Russian forest fires have definitely not caused a drop of world agricultural production by two-thirds; the reason for the price hikes is clearly something elsehyperinflation.
Lyndon LaRouche commented today: "Of course there's hyperinflation. They take waste paper, use it as a security, and then the interest rates go up, the charges go upnot necessarily the interest rates as suchbut the amount of charges go up. So what do you expect? It's just financial inflation, plain financial inflation. Nothing else."
Bloomberg wires also report that "everyone from mining equipment makers to airlines, and even consumer electronics manufacturers, are entering the new year with new cost pressures, as well as new opportunities that a commodity bull market affords." Cotton prices almost doubled last year. Corn and wheat prices jumped about 50%. Keeping in mind that experts usually take 50% as the threshold from "normal" inflation to hyperinflation, the scene on the world corn market is already thereand one also has to take into account that almost 40% of harvested U.S. corn goes into biofuels, not to feed either people or livestock.
Copper reached a record last week, after gaining more than 30% last year and doubling the year before. And crude oil is near its highest level in more than two years. "The effect may soon be apparent in company results, as they show whether raw materials prices have hurt bottom lines," Bloomberg writes. So far, many manufacturers have kept the price of products about the same, but simply shrunk the packagea trick that won't work for too long. At the end of this road, sales prices at the stores will have to keep up with "developments" on raw materials markets.