DBA Food Inflation Update - Danger Zone
Back in Dec 2019, I had posted a warning about food inflation just prior to Covid.
Nov 2021 I once again warned about food inflation as it broke a major 11-year channel
While overall agriculture prices are not as high as they were back in 2011, (at least not yet) the
rate of change is just as important. While most of us may sport bitch a bit about food prices in
developed nations, that is not true in emerging nations. There is a rule of thumb that when food
to income ratio exceeds 60%, social unrest is just around the corner. We saw that back in 2011
with Arab spring. When food prices rapidly rose 56%. Today it is up 58% in the same manner.
Will we see Arab Spring 2.0 in other parts of the world break out?
So far we have seen Turkey, Lebanon, and Sri Lanka collapse their currencies with no foreign
reserves to stabilize their currency and runaway headline inflation. While black market FX
reaching hyperinflation levels. We are also seeing eastern Europe on the brink of war.
Coincidence? Maybe or maybe not. What we are sure of is that if food prices keep rising
the misery index will put us deeper into the danger zone for social unrest in a period that is
already starting from a very fragile state worldwide.
This economic perspective is hardly if ever presented at least as a contributing factor to social unrest
and regional conflicts. As someone who has literally traveled all around the world, I assure you poverty
is rampant and food prices matter a lot.
With the chart pushing higher with no end in sight I personally find it worrisome.
Charting as a tool is much more than just trading and investing. It is important in our everyday lives in the
decisions we make. At least in my view.
Nov 2021 I once again warned about food inflation as it broke a major 11-year channel
While overall agriculture prices are not as high as they were back in 2011, (at least not yet) the
rate of change is just as important. While most of us may sport bitch a bit about food prices in
developed nations, that is not true in emerging nations. There is a rule of thumb that when food
to income ratio exceeds 60%, social unrest is just around the corner. We saw that back in 2011
with Arab spring. When food prices rapidly rose 56%. Today it is up 58% in the same manner.
Will we see Arab Spring 2.0 in other parts of the world break out?
So far we have seen Turkey, Lebanon, and Sri Lanka collapse their currencies with no foreign
reserves to stabilize their currency and runaway headline inflation. While black market FX
reaching hyperinflation levels. We are also seeing eastern Europe on the brink of war.
Coincidence? Maybe or maybe not. What we are sure of is that if food prices keep rising
the misery index will put us deeper into the danger zone for social unrest in a period that is
already starting from a very fragile state worldwide.
This economic perspective is hardly if ever presented at least as a contributing factor to social unrest
and regional conflicts. As someone who has literally traveled all around the world, I assure you poverty
is rampant and food prices matter a lot.
With the chart pushing higher with no end in sight I personally find it worrisome.
Charting as a tool is much more than just trading and investing. It is important in our everyday lives in the
decisions we make. At least in my view.
Real Macro Economic Investing
patreon.com/Realmacro
patreon.com/Realmacro
Real Macro Economic Investing
patreon.com/Realmacro
patreon.com/Realmacro
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