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Jim Rogers sees inflation despite official denials | New World Seeds & Tubers

This is from a transcript of an interview that Chris Martenson did with Jim Rogers.
I think there’s inflation too, but it sounds more convincing when someone who has more status than I do says so. The theory in the mainstream economic news media is that food processors and grocery stores will take a hit to their profits rather than pass along the rising costs to the end consumer. It’s hard to understand why this is so, but even if they really are that desperate for market share all that would mean is that the ranks of food processors and grocery stores would be thinned out as declining profits and rising costs bankrupted companies that are already squeezed. I think what’s happening however is that grocery bills are rising, and the cost increases are being hidden behind any number of gimmicks, such as shrinking portions. Remember when ice cream came in half-gallons? Locally such does not exist anymore, and most of the containers are down to 1.5 quarts. Those are running over $7. Milk products are getting particularly expensive because livestock feed prices have been rising for any of several reasons including ethanol subsidies.
At the time this transcript was made, Rogers was short US treasuries on the theory that interest rates are on their way up. He recently closed those shorts due to the rebellions now sweeping northern Africa and Yemen, which are likely to trigger a self-fulfilling prophesy of demand for US government debt.

…Jim: Yes. That’s demand. You call it cost push; no, it’s demand. Prices go up because of supply and demand. That leads to inflation. You can call it cost push and inflation or whatever you want, but the costs are going higher because demand is increasing the price of cotton, of sugar, of tin, of cocoa, of everything else. If you cut demand, eventually you can cut the price increases. But you have to cut demand a lot, especially when supply is going down. You can have demand going down and still have price increases if you have supply going down faster than demand. And in many commodities right now you do have supply going down. So you really are going to have to cut demand a lot in order to kill inflation.

Chris: This whole. . .

Jim: When Paul Volcker came to the Fed in 1979, he had to hit us with an ax – with a hammer – to cut demand and cut inflation, but he did so. So far most – well I won’t say most – but some countries are starting to cut to demand. U.S. is not, U.K. is not, Japan is not, but other major countries around the world are trying to cut demand.

Chris: So you’ve touched on another portion of this story for me, which is that there are indications now that certain minerals, sources of energy, fertilizers, and crops, to name a few things, are not in sufficient supply right now to meet projected demand over the next years and coming decades – and some of these are kind of unique in human history, potentially. Tell us your views about resource scarcity and how you think might shape our lives going forward?

Jim: Well, we have shortages of everything developing. There’s been only one lead mine open in the world in twenty-five years. The last lead smelter built in the U.S. was built in 1969. No major elephant oil field discovered anywhere in the world over forty years. So why is everything is going down? That’s going to continue until prices go high enough to encourage new productive capacity. But as I said, it takes ten years to open up a mine these days, on average, around the world. Somebody is going to have to spend lots of money and time to build new nuclear power plants or solar plants or whatever. This all takes time, money – you just can’t snap your fingers and change the world.

Chris: Any concerns about Peak Oil? The International Energy Agency came out and said, “Oops; looks like we’re past Peak Conventional Oil. We’re going to have to make up the difference with all these exotic forms.” ‘Non-conventional,’ they call them. Is that on your radar screen at all?

Jim: I don’t know if there is Peak Oil or not, but I know that known reserves of oil have peaked. Maybe there is a lot of oil out there somewhere, Chris, but we don’t know where it is. If it’s there, it may be extremely expensive to get it. So yes, the known the reserves of oil are in decline. The IEA has been very vocal about that, pleading with governments to listen. And it’s going to get worse before it gets better. And so in the meantime, the prize is going to be how high the price of energy stays and how high it ultimately goes….


One Response to “Jim Rogers sees inflation despite official denials”

  1. Thanks, Jerri.

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