Death comes to us all. Life's but a walking shadow | This conversation has focused on money supply and the lack of reponse. Chris I think you need to look deeper at the fundamentals of the economy itself for your answer. Fundamentally our economy is driven by consumer demand. No amount of government spending, no amount of business expansion can continue in the absence of this demand. One of the consequences of almost every recession and depression is that some percent of the work force never returns to work. These people become a burden on the economy until they die not because they don't work but becaused they don't contribute to demand but do demand resources. That percentage of "not working and not looking for work" is not measured and much larger than we imagine.
Despite what we all want to believe philosophically about the virtues of hard work and self-reliance the reality is that what Larry Summers says is correct. It was expected that stimulus would lead to business expansion and in turn ignite consumer spending. However most of that easy money from the stimulus has simply been funneled into the stock market and other investments (farmland) inflating prices but not the selfsustaining demand needed. The economy is like a giant balloon that can't inflate because of the holes.
One of those holes was the price of farmland. And once the stimulus slows or stops farmland prices will inevitably decline.
I really don't see anything that we as farmers can do but strictly control our costs, that means understanding our individual cost-of-production (COP) and not planting a crop unless the price can reliably exceed the cost of production. Some of us may try the gambit of growing corn (or soybeans) at a loss but that won't last more than a couple of years. Either the price of seed, fertilizer and other inputs declines quite sharply or acres will have to.
I'm sure there will be other opinions, I'll be curious to hear them. |
You all know a lot but are we going into deflation?
