Joel Bowman

Faithful and unfaithful readers alike will have noticed a recurring theme in our recent reckonings. We refer, of course, to inflation; that insidious, noxious tax which appears to be gushing out of every economic orifice in the land, but that, somehow, fails to register as even a drip on the government’s official inflation-o-meter. Curious, no?

Regular reckoner, Chris Mayer, identified inflation as the “wrecking ball” of 2011 in his column “Inflation’s First Phase”. Eric Fry addressed it in both “When Stock Market Rallies Validate Effective Monetary Policy” and “Tracing the Fed’s Vital Role in the Decline of the US Dollar”. And our Reckon-in-Chief, Bill Bonner, touches on it in some fashion, on most days.

In fact, most people in possession of at least one of the five basic human senses seems to see, feel, hear, taste or smell inflation’s foul presence. Which means that those trained specifically to keep an eye (ear, nose, etc.) out for it – and who so adamantly deny its existence – are either blessed with a sixth “masking” sense to which the rest of us are not privy…or that they are simply senseless morons, blinded by the light of their own academic brilliance.

Most likely, inflation will continue to be…and not to be. In other words, those manning the controls in the government’s “Ministry of Information” will continue to churn out numbers that agree with whatever qualitatively-eased, policy-of-the-month they are pursuing. Meanwhile, the rest of us will continue to weather the adverse consequences of these econo-commands as they express themselves in the form of everyday higher prices.

This time last week, we heard from some of our frontline reporters across the United States. Fellow reckoners wrote in from grocery stores and gas pumps around the country to lend some of their own boots-on-ground perspective.

Alas, this academically-defined non-inflation is also pushing up prices in other parts of the world. But fear not. We have eyes (ears, noses, etc.) in those parts, too. And so, without further ado, we present a handful of reader mail from some international Daily Reckoning reader posts…

First up, here’s what reader B.L. had to say:

“I currently live in Singapore and travel throughout Asia Pac, Central Europe, ANZ, and was back in the US over Christmas/New Year’s. I see food inflation everywhere I go. [In] Singapore the prices have risen noticeably since I’ve been living there, which was April of 2010. When I was in the US – North Carolina – I was shocked by the food prices when I bought groceries for two families for New Year’s Eve and day. Combine the food prices with the fuel price rise and I can see why so many American families are getting support for food from good ole Uncle Sam.

“In places like China or India, where food makes up a huge % of a families cost to live – over 50% versus less than 10% for the middle class in the US – they are really feeling the pinch.

“Lots of reasons, but very scary for those of us that have to eat – oh wait, that is all of us last time I checked on the human condition.

“Keep up the good work.”

Sticking in the East for a bit, here’s what another reckoner had to say:

“Here in Thailand, inflation is running high.

“On January 1st, 7/11 mini-marts, of which there are thousands across the country, increased all their prices by 10%.

“Hotel rates, mostly in the 4 and 5 stars categories, are going through the roof, 25 to 50% higher than a year ago.

“Restaurants of all kinds regularly increase their prices.

“Overall, the national inflation rate is certainly in the double digits.”

Thailand? But why would prices be rising in Thailand? Another reckoner, based in that (offensively gorgeous) part of the world offers some thoughts:

“The millions of dollars flowing into Thailand form your neck of the woods is causing real problems with food prices and more noticeable is the increase in washing powder, soap etc. These too are increasing due to the raw material costs.

“Cambodia and Vietnam are feeling the winds of change also. I live here in Thailand 6 months a year then go home to shitty Britain to fish for trout. I was in Cambodia last week. My friend has just opened a small guest house there and we both went to see friends in Vietnam. Same problem; big inflows of money.

“I hope this adds a new thinking to your insight into inflation.”

But what about Japan, the leader in all things DEflationary? Reckoner Gary?

“I live in Japan, and have observed over the past year, food prices have gone down. In fact, prices have been about the same for many years. Last year flour was about Yen 230 a kilo, this year about Yen 150. Living on a fixed income, I must say, I like DEFLATION much more than INFLATION. So tell me, why is Bernanke trying to increase my food costs – doesn’t he have my interests at heart?

“The US system is broke, financially, economically, morally, education, etc. And with all the partisan fighting in government, Republican vs. Democrats, secret agendas, it isn’t going to get better. I think the best solution is to just let all those banks and zombie companies crash and burn, and we start over again.”

Hmm…but what about this… Another email from The Land of the Setting Sun? This one from Reckoner Matthew:

“One small slab of mozzarella cheese imported from Germany costs about 600 Yen, or 7.26 US doll hairs. A small pack of blueberries from Chile costs about the same. These items have become extravagances for consumers.

“How about gasoline? Just filled up my car with a tank of the stuff. Converting liters to gallons and Yen to USD, I paid 6.64 dollars/gallon (high octane, mind you) at today’s exchange rate.

“Try guessing what will happen to the USA when prices get to this point? Here in Nipponville, everyone’s numb to it all.”

And in Australia, Reckoner Ronald:

“The cost of our city-supplied water has tripled in the last ten years. In the last 29 years, the local daily newspaper has quadrupled in price and the TV weekly magazine is up 625%. But petrol (gasoline) is ‘only’ up 308%.”

How about in Europe? Reckoner Paul?

“After taking 2 weeks holiday around Christmas, I returned to my commuting routine to my office in Hamburg, Germany. Between the station and my office, I usually pick up breakfast at one of many bakeries. Between 18 Dec. 2010 & 3 Jan. 2011, my breakfast cost went up on average 3%. Oh My! 10 cents more for my apple turnover or chocolate croissant!”

And finally this observation from Buenos Aires, where your editor experiences daily the effect of government-induced non-inflation…

“Argentina is a good example of food inflation. Meat (main food for most locals) is now 100 % more expensive than a year before, as a result of government controls and policies against production, just in order to maintain local prices in line. Result: less production, less consumption and less exports of an Argentine symbol. Is this a recipe to be applied in other countries?”

A big thanks to everyone who wrote in with frontline reports on the effects of inflation that, we are told, doesn’t exist.

Joel Bowman
for The Daily Reckoning

Joel Bowman

Joel Bowman is a contributor to The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

  • Krakondack

    The insidious thing about the CPI is that people only have so much money to spend, and when things get too expensive they can’t afford them and don’t buy them. The CPI then assumes that they don’t WANT them and doesn’t classify it as inflation. At best, the CPI only measures how much people are spending, not what they can no longer buy.

  • bw

    Funny Bernanke said there was no inflation.
    The world wide revolts have nothing to do with that non existent inflation I am sure.

  • Naveen

    The following link is handy with regard to inflation and printing of money.

Recent Articles

Here’s How to Get Out of a Horrible Trade

Greg Guenthner

An asteroid strike, terrorist attack, extreme weather, riots, the Patriots following NFL rules-- or earnings estimates that completely miss the goalposts-- are all events that can “shock” the price of stocks. Dems is the breaks, as they say.

Peter Thiel Explains What Backs the U.S. Dollar

Chris Mayer

In a recent interview, Peter Thiel gave a simple and clear explanation of what gives the U.S. dollar its power. “It surprised me,” writes Chris Mayer, “because I had not heard anyone but fringe economists give it. And yet it is the key to understanding modern money.” Chris revisits the idea… including some radical ideas “that will change the way you think of money and the economy forever.”

Could Steak Really Cause Arthritis?

Stephen Petranek

Can you really eat more salt? Is arthritis caused by steak? Are artificial sweeteners really Satan’s sugar? Stephen Petranek comes clean about 2014’s wackiest health recommendations in his new series on “The Truth About MD Warnings.”

The Currency Wars’ “Pearl Harbor”

James Rickards

The most dramatic battle yet in the currency wars took place last Thursday. It was the financial equivalent of a Pearl Harbor sneak attack. Jim Rickards has the full story... what it means moving forward... and a lesson for all gold investors...

Why Oil Can’t Stay Cheap

Byron King

As consumers, you want to see low prices at the pump. But for investors who've been riding the American fracking boom, are these low prices a death knell? Byron’s advice to you, as an investor with exposure to energy stocks, is to not panic in the face of short-term market turmoil. And Byron’s got two picks primed to rebound…

Now’s the Time to Buy Housing Stocks – While They’re Cheap

Greg Guenthner

So let me point out one of the new clues for you: construction hiring is actually on the mend after years of decline. Contractors added 48,000 jobs in December, according to the latest numbers. Full-year numbers were also better than expected, clocking in at 9-year highs. Why is no one talking about that?