Tuesday, June 17, 2008

Up on the Farm

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said in a speech Monday that the Fed should be prepared to raise rates as the risks of weaker growth diminish. But Mr. Lacker, who is generally hawkish on inflation, also suggested a willingness to hold rates steady for now, by noting that inflation expectations haven't gone "adrift."

"We seem to have dodged this risk so far," Mr. Lacker said. "Inflation expectations are higher than I would like, but are relatively stable.”

—The Wall Street Journal

Yes, we know, the expression is “down on the farm.”

But this weekend we had the good fortune to spend Father’s Day on a horse farm in a quiet, wind-swept valley in Northern California, helping feed all manner of chicken, goats and assorted other livestock, while eating strawberries so sweet they tasted like M&M’s.

And there is nothing that is “down” on the farm in the last year or two.

Chicken feed has doubled. Hay has doubled. Grains are through the roof. It’s so bad the local cattle ranchers are feeding their cattle straw—which is otherwise used as bedding in horse stalls.

Whatever “inflation expectations” Mr. Lacker of the Fed is seeing in his cozy office there in Richmond, on the farm the last word out of anybody’s mouth would be “stable.”

Jeff Matthews
I Am Not Making This Up

© 2008 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes investment advice, nor is it a solicitation of business in any way. It is intended solely for the entertainment of the reader, and the author.


tirebiter_g said...

And I just dropped $200 for a computer that would have cost $1300 a few years ago.

Anecdotal evidence isn't of much use if you want to dispute the accuracy of the CPI.

infoage said...

In Southern Cal this week, I had my first $5/gal gasoline "fill-up." Well, not really a fill-up, as my Visa card (for some unknown reason) stops out at $75 at the pump. Had to swipe it again to "fill-er-up."

Put a remarkable $20 into my motorcycle this past weekend. Going to try feeding it straw next...

alex said...

You left out the cost of gas and diesel. My horse farm in PA feels the full effect of price increases in all direct costs. Bedding has doubled in 4 years. Grain is up 50% or more in the last year and hay costs are out of sight.
Additionally, rising overhead costs put additional pressure on the business.
Anyway, feel free to visit. We're 90 miles from Manhattan. www.saddlevalleyfarm.com

Jeff Matthews said...

Tirebiter: How many days a week are you buying new computers? How many days a week are you eating? Or filling up your car?

Anecdotal evidence is actually all there is that's of use, at the end of the day.

It's the theoretical stuff they churn out in Washington that isn't worth a dime.


PhillipCharles said...

I have never read the words 'cozy' and 'Richmond' in the same sentence, but I like it. And since my only experience with the RIC is I-95, I should reconsider my impression, I suppose.

This blog never fails to provide new and fresh, thought-provoking perspectives.

jerry said...

This is awful. Like most things it all seems to be going up. This is exactly why our food prices are going up. to feed a family of 5 at home has almost doubled in cost in the past 3 years.

Tahoe Kid said...

If gas prices keep going up I may have to SELL my computer!

matt said...

Which may get you 3-4 fill-ups at best...