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| I believe several other considerations require some thought. (1) During the 1973 bull, soybean prices were not allowed to seek a market value due to the embargo & (2) in 1975, with large export sales & weather prob. an embargo also interrupted price discovery. Now, we have several factors in play: (a) a huge supply of ex-usa dollars, (b) genuine demand (c) sold out producers (d) dislocation of supply & (e) other factors such as price controls in some countries which can contribute to leakage --we have a world requiring food, feed & energy supplies & very low carryouts & previous to 1972 had huge government stockpiles of grain on top of the price. While we are, I am sure, overdoing this thing, nothing thus far has interferred with the price discovery process unlike anything since price controls were lifted following WWII. Our production has become very inelastic and even moreso since our food is purchased in a form packaged, sanitary, convenient and the actual cost of the product or ingredient is a small part of the total cost. Who knows where soybeans would have been priced in 1974 if the embargo would not have been put into place? Unless some new thinking comes to the table & solves some of our economic structural challenges, this next round of inflation could make the 70's miniscule in comparison. Sharply reduced interest rates, to me, do not appear to address these structural challenges.
Edited by SeniorCitizen 2/5/2008 21:51
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Will anything stop this rally?
