Tuesday, February 28, 2012

A Report from the Grocery Store

An EPJ reader emails:
Love your site. Spend too much time reading it.

I don't talk too much about economics and what's coming with my wife. Stresses her out too much. However, she does know my general perspective on things and that I spend time reading your site and lewrockwell.com

Last night she came home and shared with me that the price of ground beef is north of $4 (she said to the penny - I don't remember). But then continued that she's seeing significant changes in many items she regularly purchases. This worries her.

I told her that I'm not surprised.

Just thought you'd be interested in another data point. People who aren't thinking about this stuff all the time are starting to notice.

Although, as I understand, there is a competing perspective out there. : ) I think Krugman's warning that deflation is really what should should concern me.


  1. I thought all the austrians still think its the deflation that we should worry, and not "hyper inflation" (even plain high inflation), right ? mr. wenzel do you agree.

  2. I am in the same boat as the author of this.

    I went to Chipotle for lunch a couple of days ago. I hadn't been there for at least a couple of years. I ordered a $6.50 burrito that used to cost a little more than $5. The Chipotle employee who made my lunch used about a small child's palm size amount of beef vs. the adult palm sized amount I use to get. Also, I think the size of the tortilla has been shrunk since I last visited.

    We've all heard stories of previous generations suffering through rationing during wars & crisis. I think this is just the beginning of our generations trials in austerity. However, I predict this will not be reported in the mainstream as it is supposed to go unnoticed. Instead, we will get mainstream blather about how diaper prices dropped one week and that the population is shrinking in stature due to climate change vs. the more apparent lack of an abundant protein fortified diet.

    Over a prolonged period this could produce a society with the different economic classes having dramatic physical disparities. In other words, it is an elite's wet dream.

  3. Just a note on ground beef. I am very close to that market and will say this, if you like lean ground beef I would buy what I could now if you find it on sale because it is highly unlikely to be found any cheaper as spring and summer nears. It may be cheaper to buy chucks or other cuts and grind them yourself as a shortage of lean boneless beef develops further.

  4. I have been noticing for some time that even while the package prices creep upwards, the size of the packaging has been getting smaller as well (undoubtedly to hide how fast things are really going up.) I'd say that we've already been in a period of high inflation and that we are heading into hyper-inflation.

    Stock up while you can. Just don't let the "authorities" notice, though, or you may be declared a criminal "hoarder" down the road.

  5. The tension between inflation and deflation has been subject number one for several years now. The deflation, of course, is actually just deleveraging of higher-order goods and is not deflation at all. Printing more money will not do any good since the structure of production is so warped due to malinvestment and excessive regulation that lenders are worried about the prospects of getting paid back. Add to that the massive inventory overhangs of those higher-order goods (production equipment, housing, etc.) and you have those connected through the government getting richer at the expense of the rest of us (through the Cantillon Effect, since the gov is actually spending money).

    Buy assets that will hold their value now. It is the pieces of paper and digits that people think will be able to command resources in the future that will lose their value. In the extreme, inflation becomes a deflation as no one will want whatever money is around. Then you have to start over with new money.

    Don't know if the PTB will let it get that far, but it's going to get ugly either way.