The speech you are reacting to is tomorrow and hasn't been given yet. The Harris campaign has been leaking bits of it to focus group the nation's reaction and the MSM.
There is a very simple explanation of more than half (maybe two thirds) of grocery inflation -- the cost of energy to get the foodstuffs to the damn store.
Neither Whole Foods nor Kroger has a dairy farm or a fish pond or a vegetable patch in their parking lot, so everything has to come by truck. Many trucks are refrigerated. These trucks get poorer mileage and you have to power the refrigeration.
Most grocery stores cycle through fresh food 2.5 times per week. It is a constant churn. We recently had a weather disturbance in Savannah and trucks were delayed for 3 days. You could see the shelves becoming barren in front of your eyes and then a day later they were full again.
When the Biden admin began its Day One War on Energy, the cost of transport went up. Just look at gas prices -- Biden spurred the highest gas prices in US history and diesel was even worse.
At the same time, both the Feds and certain states (talking to you, California and Gov Newsom) imposed a plethora of new regulations that had the result of deleting a large portion of the oldest and most cost effective trucks from the marketplace.
If a new POTUS were to immediately get rid of these regulations and spur energy exploration and production -- including nuclear as a replacement for fossil fuel electricity -- the transport component would dampen with the price of gasoline.
Groceries are a very low margin business and it is tied to both import (vegetables and fruits from Mexico as an example); and, it is very competitive.
It is also based on crop timing. I was in Kansas a couple of weeks ago and bought fresh corn -- shucked and packaged -- for $0.25/ear in packages of 4. Why so cheap? Farmers were already harvesting corn locally.
Inflation will not go to zero, but it can go back to 1.4% as it was the last month of Trump's admin. It will take some time, but it definitely can be done.
And, no, the solution does not invove Soviet style price controls on anything. Just discussing that wildly disavowed notion lowers the IQ of the entire discussion.
"Most grocery stores cycle through fresh food 2.5 times per week."
Quasi-related, but Chicago's clown prince the Mayor is proposing that the city fight "food deserts" with three municipally-owned and operated grocery stores.
We all know this will be a complete financial fiasco, but given the importance of proper food storage and handling, I can't imagine the amount of food that will be spoiled (and probably sold) due to the transcendental incompetence and corruption of the modern Chicago Machine. Would not be surprised to see outbreaks of salmonella, listeria, and a host of other food borne maladies.
I notice that only socialists and communists desire for the state to own businesses. They think that it's "so easy" that "why not put that money in the government coffers?"
The reason they are this naive is because they have never operated a business before. And, most of their donors are very wealthy, successful people. So they figure that if THOSE people can do it, why can't they?
They don't understand any of it. It's like we have college kids running our governments at all levels.
Good topic. Unfortunately, the average voter/consumer is probably a little to lazy to figure out how this all works on their own, and has zero patience to read about it and learn (TL;DR), so they easily buy into the "price gouging" story and the emotions it stirs within them. I certainly don't need to point out that she intends to tackle this issue ". . . on day one", even though she and uncle Joey have had 3+ years to fix it. People are feeling it now, so why make 'em wait longer? Reminds me of "we have to pass it in order to know what's in it".
All I was getting at is too many US residents of voting age may fall for the ruse that the situation can only improve (food/goods prices lowered) with KH at the helm cuz she'll be tough on the "greedy" food/goods makers. Yet they don't see the irony of KH (with FJB) already in the position to supposedly fix it, but choose not to right now.
Therein lies the problem. Not knowing the "why" is going to get us tyrannical people who will betray our founding principles to put in all of the anti-market rules that will destroy the golden goose.
I think people inherently understand it, but start to believe the "ugly" portrayal of market forces by our communist politicians because people like to pick a side (good vs. evil). It makes for a good story.
Unfortunately, North Carolina is one of those states that saw a large influx of former Northern States' residents, especially blue States and their Democrats, moving south and they have taken some of their politics with them.
The grocery business has very thin margins and Kamala Harris is barking up the wrong tree, as usual.
Before that, it was a one-party state, like most of the South, and Dems were fairly conservative. There's been lots written more recently that reimagines that history and those folks in unrecognizable directions, and lots written before that which I haven't read but could be just as wrong.
I grew up in it and it's simple truth. Not "conservative" in the small government semi libertarian definition to which most might default today. Fairly conservative as in wanting to be left alone, instead of suffering ever-increasing federal interference; still on our farms or one generation off the farm; more rural, more traditional, more resistant to new ideas just because they were new, more likely to settle issues on smaller scales rather than bringing government officials into every private sector and private life issue. More integrated, to be honest, because we were all poorer and had more in common with each other than outsiders.
Right now it's hard to remember, and younger people don't seem to be able to imagine, life before the root of all evil took hold. "The personal is political" was the camel's nose that has eradicated every private, internal, non-publicly-scrutinized part of life, and yes totalitarian is the proper word for that. The South used to be different, even NC was very different, within living memory. The influx of outsiders has taken over the Dem label but there are lots of good folks who grew up thinking Dems were the good guys so... I don't know how many have figured it out yet. I guess we'll see.
All seriousness aside, wrt inflation and its root cause, excessive, price insensitive, govt spending.
There's a very, very good reason there are no onion futures contracts. First, it's the only market Congressionally banned in the US. Second, it took two "Chicago Wise Guys" to generate that response from a relatively conservative Gerald Ford and the rest of his elected Reps, at that time.
Now if you're a former trader, on the other hand, it's a hysterical bit of "floor" history that could ONLY have been pulled off by two traders.
These people are economic illiterates. I think economic illiteracy is largely why someone becomes/remains a Democrat. They don't understand markets, business and economics, so they assume that it needs to be "fixed."
I never understood why Americans largely believe on one hand that they would never have a surgeon without an MD operate on them, but they would allow someone with not even one class of economics to run a centi-trillion dollar economy.
People say, "well, I'd like to sit and have a beer with that guy, so I'll vote for him."
What?
It's a flaw in democracy, but I'll take it over elitists who think they know everything and want to control everything about my life.
But, come on folks, wake up. Kamala Harris doesn't have a clue. And no, her "advisors" don't have a clue either, because she hires people like her. I remember reading that the Obama administration had the least amount of people in the private sector in the history of our government. Democrats since have just built on that, hiring credentialed ivy leaguers with law degrees or social justice degrees.
Richard Dawkins noted many years ago that no one can consider himself educated unless he understands basic economics, statistics, and evolutionary biology. Harris is obviously 0-for-3 there.
Nixon embraced wage and price controls despite both George Schulz and Milton Friedman telling him it was disastrous. And he was a sharp guy. If Harris wins I'll look on the bright side: the hit the market will take will present buying opportunities until someone numerate is elected president (or can at least influence policy.)
What a catastrophe for prosperity and liberty it will be if Harris prevails in November.
Thanks Jeffrey for another good column. While I've been in the financial sector (banking and commercial real estate) my entire life, I'm not familiar with the commodities industry and always have been flummoxed by the U.S.'s habit of subsidizing farming and the production of food products. As a limited-government, free-market type of person, I'm philosophically opposed, but would love to get an explanation on what we could expect from liftin all subsidies from you, as I have grown to highly value your opinion and thoughts. We just moved to NC from Pa. Milk here is 25 percent cheaper. But ground meat - who can afford a ribeye anymore? - is 25 percent more expensive. Go figure.
It might be where the slaughterhouses are and it might not be. The Chinese own the largest hog operation in the world (Smithfield) and de facto own the grain farms that supply feed to the hog operations.
Read history prof William Kennedy's book Freedom From Fear and he explains why FDR did price supports for farmers. He wanted their vote. Price subsidies in the peanut industry result in a jar of peanut butter being 50 cents more than it should be....and that data is from around 2005. Farmers dump some crops and destroy them to keep supply low due to govt controls. Cherry farmers in Michigan/Wisconsin are a prime example https://www.countryliving.com/food-drinks/news/a39390/this-michigan-farmer-was-forced-to-dump-perfectly-good-cherries/ (Snopes says all the facts aren't exactly true in this article, but the thrust of it is true.....)
As part of the Jim Jeffords "flip" negotiations, milk pricing was changed from the geographic US milk herd "center" of Eau Claire, WI. Prices , reflected transport cost from that center. The "Jeffords Deal" shifted that schedule to not only Vermont* as the "Transport Cost Center", but that the "Standard Grade" of "Deliverable Milk", the term of standard contract, had a higher milk solids basis, which reflected the predominance of the Vermont* herd of Jerseys, versus Wisconsin's predominant Holstein herd (if I have that right), which may have more actual milk by volume, just with lighter solids.
You know what’s more unaffordable than food? Real estate transaction costs. And in 2 days a civil lawsuit “settlement” goes into effect in which buyers are supposed to pay their own agent commissions instead of sellers. And the effing realtors have already drawn up their contracts to circumvent the settlement. So sellers are still going to pay all the commissions that are still going to be the highest in the developed world. When it comes to actually dealing with cartels, the entire vast regulatory apparatus of the federal government is still worthless.
Real estate transaction fees are a monopoly that should go the way of Charles Schwab and stock brokerage commissions.
There is an archaic pricing mechanism that is fighting as hard as it can to retain the traditional 6% -- 3% to the seller's broker, 3% to the buyer's broker -- cost.
That 6% is out of step with the use of tech in real estate.
There is no doubt that certain brokers have a keener marketing sense, better sales administration, and a superior sense of the market price, but that is not worth 6%.
Agreed. I'm selling a client's house, good part of town, it'll go for 3.5. The house was in disrepair. Listing agent project managed a full interior remodel, and landscaping. Is that worth 105k commission for two months of work? Probably.
If the house was pristine, little work required, I'd have probably bumped commission down to 2%.
Regarding North Carolina. Current Dem Gov Roy Cooper is fairly moderate. The majority of Repubs in power are extreme. The current Repub Gov candidate has a lot of baggage and is extreme. I'm not sure Dem candidate Josh Stein can play moderate like Roy Cooper. As an independent but conservative leaning voter, I have liked having Cooper there to at least attempt to prevent total extremely conservative Repub control over our State government. Many rational conservatives such as Dale Folwell our current Treas are being pushed out by the extremists. I would rather have gridlock than have the Repubs control the Gov, Lt Gov, and the Council of State. Yes, lots of Yankees moving in have provided influence here as well.
What is fun to see is how they simply have thrown off any pretenses of being anything more than week-kneed marxist in every single thing they do. Though to be honest, they have been far more transparent about this over the last 90 years because they are given cover by the mainstream media. Very few people actually digest these speeches as a whole and so they rely upon the useful idiots of the MSM to do that for them.
Something that tells us all you need to know is the massive shrinkage of political ads over the last sixty years due to the inability of people to have the patience to see an add through and digest it that is more than 20-25 seconds long. We have a population of people on the whole who have almost no factual grasp of history over the last 120 plus years and have never read the manifesto and prefer to simply rely upon their "emotional intelligence" to guide them.
The two biggest single contributors to our massive inflationary expansion over the last 90 years has been the exponential growth in regulations, primarily at the federal level, and the explosion of the federal tax code. These two things have compounded costs in a myriad of ways for companies to do business and furthermore have killed almost any notion of actual free market competition between companies in the same business. Yes going off the gold standard made all of this worse from a cost perspective, but now it just takes more monopoly money every year to pay for something than it used to.
This is what happens when a candidate has spent no time working in the private sector.
Kamala Harris is exactly the person her resume and life story suggests she would be. There are no mysteries.
JLM
www.themusingsofthebigredcar.com
The speech you are reacting to is tomorrow and hasn't been given yet. The Harris campaign has been leaking bits of it to focus group the nation's reaction and the MSM.
There is a very simple explanation of more than half (maybe two thirds) of grocery inflation -- the cost of energy to get the foodstuffs to the damn store.
Neither Whole Foods nor Kroger has a dairy farm or a fish pond or a vegetable patch in their parking lot, so everything has to come by truck. Many trucks are refrigerated. These trucks get poorer mileage and you have to power the refrigeration.
Most grocery stores cycle through fresh food 2.5 times per week. It is a constant churn. We recently had a weather disturbance in Savannah and trucks were delayed for 3 days. You could see the shelves becoming barren in front of your eyes and then a day later they were full again.
When the Biden admin began its Day One War on Energy, the cost of transport went up. Just look at gas prices -- Biden spurred the highest gas prices in US history and diesel was even worse.
At the same time, both the Feds and certain states (talking to you, California and Gov Newsom) imposed a plethora of new regulations that had the result of deleting a large portion of the oldest and most cost effective trucks from the marketplace.
If a new POTUS were to immediately get rid of these regulations and spur energy exploration and production -- including nuclear as a replacement for fossil fuel electricity -- the transport component would dampen with the price of gasoline.
Groceries are a very low margin business and it is tied to both import (vegetables and fruits from Mexico as an example); and, it is very competitive.
It is also based on crop timing. I was in Kansas a couple of weeks ago and bought fresh corn -- shucked and packaged -- for $0.25/ear in packages of 4. Why so cheap? Farmers were already harvesting corn locally.
Inflation will not go to zero, but it can go back to 1.4% as it was the last month of Trump's admin. It will take some time, but it definitely can be done.
And, no, the solution does not invove Soviet style price controls on anything. Just discussing that wildly disavowed notion lowers the IQ of the entire discussion.
JLM
www.themusingsofthebigredcar.com
"Most grocery stores cycle through fresh food 2.5 times per week."
Quasi-related, but Chicago's clown prince the Mayor is proposing that the city fight "food deserts" with three municipally-owned and operated grocery stores.
We all know this will be a complete financial fiasco, but given the importance of proper food storage and handling, I can't imagine the amount of food that will be spoiled (and probably sold) due to the transcendental incompetence and corruption of the modern Chicago Machine. Would not be surprised to see outbreaks of salmonella, listeria, and a host of other food borne maladies.
That's fricking hilarious and frightening at the same time.
I hope you are following the news from Chicago, as every time someone says "this can't get worse," Brandon and the DSA say "hold my kombucha."
Now they are talking about "reimagining Lake Shore Drive." Lord knows what kind of lunacy will come out of this.
I notice that only socialists and communists desire for the state to own businesses. They think that it's "so easy" that "why not put that money in the government coffers?"
The reason they are this naive is because they have never operated a business before. And, most of their donors are very wealthy, successful people. So they figure that if THOSE people can do it, why can't they?
They don't understand any of it. It's like we have college kids running our governments at all levels.
The dumb college kids at that!
But why repeat yourself…
Since about 1990 the entire point of schools from K thru PhD is to matriculate communists.
Ees good comrade, no?
Communism ben bery bery bad to people, si senor. Make uh da people bery hongry and skeeny.
Good topic. Unfortunately, the average voter/consumer is probably a little to lazy to figure out how this all works on their own, and has zero patience to read about it and learn (TL;DR), so they easily buy into the "price gouging" story and the emotions it stirs within them. I certainly don't need to point out that she intends to tackle this issue ". . . on day one", even though she and uncle Joey have had 3+ years to fix it. People are feeling it now, so why make 'em wait longer? Reminds me of "we have to pass it in order to know what's in it".
The average voter consumes groceries daily. They don't need to figure out the why as long as Trump can get them to focus on the what.
JLM
www.themusingsofthebigredcar.com
All I was getting at is too many US residents of voting age may fall for the ruse that the situation can only improve (food/goods prices lowered) with KH at the helm cuz she'll be tough on the "greedy" food/goods makers. Yet they don't see the irony of KH (with FJB) already in the position to supposedly fix it, but choose not to right now.
Therein lies the problem. Not knowing the "why" is going to get us tyrannical people who will betray our founding principles to put in all of the anti-market rules that will destroy the golden goose.
I think people inherently understand it, but start to believe the "ugly" portrayal of market forces by our communist politicians because people like to pick a side (good vs. evil). It makes for a good story.
I've actually heard people say that they can't understand why everything still costs so much now that inflation has gone down.
Kamala is probably in that same mindset.
Unfortunately, North Carolina is one of those states that saw a large influx of former Northern States' residents, especially blue States and their Democrats, moving south and they have taken some of their politics with them.
The grocery business has very thin margins and Kamala Harris is barking up the wrong tree, as usual.
but before that, it elected Dems statewide.
Before that, it was a one-party state, like most of the South, and Dems were fairly conservative. There's been lots written more recently that reimagines that history and those folks in unrecognizable directions, and lots written before that which I haven't read but could be just as wrong.
I grew up in it and it's simple truth. Not "conservative" in the small government semi libertarian definition to which most might default today. Fairly conservative as in wanting to be left alone, instead of suffering ever-increasing federal interference; still on our farms or one generation off the farm; more rural, more traditional, more resistant to new ideas just because they were new, more likely to settle issues on smaller scales rather than bringing government officials into every private sector and private life issue. More integrated, to be honest, because we were all poorer and had more in common with each other than outsiders.
Right now it's hard to remember, and younger people don't seem to be able to imagine, life before the root of all evil took hold. "The personal is political" was the camel's nose that has eradicated every private, internal, non-publicly-scrutinized part of life, and yes totalitarian is the proper word for that. The South used to be different, even NC was very different, within living memory. The influx of outsiders has taken over the Dem label but there are lots of good folks who grew up thinking Dems were the good guys so... I don't know how many have figured it out yet. I guess we'll see.
All seriousness aside, wrt inflation and its root cause, excessive, price insensitive, govt spending.
There's a very, very good reason there are no onion futures contracts. First, it's the only market Congressionally banned in the US. Second, it took two "Chicago Wise Guys" to generate that response from a relatively conservative Gerald Ford and the rest of his elected Reps, at that time.
Now if you're a former trader, on the other hand, it's a hysterical bit of "floor" history that could ONLY have been pulled off by two traders.
https://en.wikipedia.org/wiki/Onion_Futures_Act
Edited out of that wiki? The excess onions were dumped in the Chicago River, very much not changing the scent at that time in history.
Gerald Ford led the legislation against onion futures!
ICHTST
These people are economic illiterates. I think economic illiteracy is largely why someone becomes/remains a Democrat. They don't understand markets, business and economics, so they assume that it needs to be "fixed."
I never understood why Americans largely believe on one hand that they would never have a surgeon without an MD operate on them, but they would allow someone with not even one class of economics to run a centi-trillion dollar economy.
People say, "well, I'd like to sit and have a beer with that guy, so I'll vote for him."
What?
It's a flaw in democracy, but I'll take it over elitists who think they know everything and want to control everything about my life.
But, come on folks, wake up. Kamala Harris doesn't have a clue. And no, her "advisors" don't have a clue either, because she hires people like her. I remember reading that the Obama administration had the least amount of people in the private sector in the history of our government. Democrats since have just built on that, hiring credentialed ivy leaguers with law degrees or social justice degrees.
‘Credentialed, but poorly educated,’ as Glenn Reynolds likes to say.
Scary thing. They have a clue and know exactly what they are doing.
The inevitable result of price controls is: shortages.
Always.
Price controls always cause shortages or worse
Collapse of the U.S. FFOOD SYSTEMS
Richard Dawkins noted many years ago that no one can consider himself educated unless he understands basic economics, statistics, and evolutionary biology. Harris is obviously 0-for-3 there.
Nixon embraced wage and price controls despite both George Schulz and Milton Friedman telling him it was disastrous. And he was a sharp guy. If Harris wins I'll look on the bright side: the hit the market will take will present buying opportunities until someone numerate is elected president (or can at least influence policy.)
What a catastrophe for prosperity and liberty it will be if Harris prevails in November.
It’s far beyond idiotic. It’s evil. They know what they are doing which is that are trying to enslave or kill us.
Thanks Jeffrey for another good column. While I've been in the financial sector (banking and commercial real estate) my entire life, I'm not familiar with the commodities industry and always have been flummoxed by the U.S.'s habit of subsidizing farming and the production of food products. As a limited-government, free-market type of person, I'm philosophically opposed, but would love to get an explanation on what we could expect from liftin all subsidies from you, as I have grown to highly value your opinion and thoughts. We just moved to NC from Pa. Milk here is 25 percent cheaper. But ground meat - who can afford a ribeye anymore? - is 25 percent more expensive. Go figure.
It might be where the slaughterhouses are and it might not be. The Chinese own the largest hog operation in the world (Smithfield) and de facto own the grain farms that supply feed to the hog operations.
Read history prof William Kennedy's book Freedom From Fear and he explains why FDR did price supports for farmers. He wanted their vote. Price subsidies in the peanut industry result in a jar of peanut butter being 50 cents more than it should be....and that data is from around 2005. Farmers dump some crops and destroy them to keep supply low due to govt controls. Cherry farmers in Michigan/Wisconsin are a prime example https://www.countryliving.com/food-drinks/news/a39390/this-michigan-farmer-was-forced-to-dump-perfectly-good-cherries/ (Snopes says all the facts aren't exactly true in this article, but the thrust of it is true.....)
As part of the Jim Jeffords "flip" negotiations, milk pricing was changed from the geographic US milk herd "center" of Eau Claire, WI. Prices , reflected transport cost from that center. The "Jeffords Deal" shifted that schedule to not only Vermont* as the "Transport Cost Center", but that the "Standard Grade" of "Deliverable Milk", the term of standard contract, had a higher milk solids basis, which reflected the predominance of the Vermont* herd of Jerseys, versus Wisconsin's predominant Holstein herd (if I have that right), which may have more actual milk by volume, just with lighter solids.
*I stand corrected. Northeast Dairy Compact.
https://slate.com/news-and-politics/2001/08/how-does-sen-jeffords-keep-vermont-s-cows-solvent.html
I am daily educated on the interwebs. Thank you.
JLM
www.themusingsofthebigredcar.com
And local taxes. Forgot that part.
You know what’s more unaffordable than food? Real estate transaction costs. And in 2 days a civil lawsuit “settlement” goes into effect in which buyers are supposed to pay their own agent commissions instead of sellers. And the effing realtors have already drawn up their contracts to circumvent the settlement. So sellers are still going to pay all the commissions that are still going to be the highest in the developed world. When it comes to actually dealing with cartels, the entire vast regulatory apparatus of the federal government is still worthless.
Real estate transaction fees are a monopoly that should go the way of Charles Schwab and stock brokerage commissions.
There is an archaic pricing mechanism that is fighting as hard as it can to retain the traditional 6% -- 3% to the seller's broker, 3% to the buyer's broker -- cost.
That 6% is out of step with the use of tech in real estate.
There is no doubt that certain brokers have a keener marketing sense, better sales administration, and a superior sense of the market price, but that is not worth 6%.
JLM
www.themusingsofthebigredcar.com
I am going into a transaction now, and know the full effects. On the other hand, a good agent is worth paying a commish to.
Agreed. I'm selling a client's house, good part of town, it'll go for 3.5. The house was in disrepair. Listing agent project managed a full interior remodel, and landscaping. Is that worth 105k commission for two months of work? Probably.
If the house was pristine, little work required, I'd have probably bumped commission down to 2%.
Regarding North Carolina. Current Dem Gov Roy Cooper is fairly moderate. The majority of Repubs in power are extreme. The current Repub Gov candidate has a lot of baggage and is extreme. I'm not sure Dem candidate Josh Stein can play moderate like Roy Cooper. As an independent but conservative leaning voter, I have liked having Cooper there to at least attempt to prevent total extremely conservative Repub control over our State government. Many rational conservatives such as Dale Folwell our current Treas are being pushed out by the extremists. I would rather have gridlock than have the Repubs control the Gov, Lt Gov, and the Council of State. Yes, lots of Yankees moving in have provided influence here as well.
What does "extreme" mean? What does "rational" mean?
-->"was put in place by FDR to buy farmers’ votes in the 1930s."
Some things never change. The politics of voting buying remains--and the policies used to buy those votes remain.
What is fun to see is how they simply have thrown off any pretenses of being anything more than week-kneed marxist in every single thing they do. Though to be honest, they have been far more transparent about this over the last 90 years because they are given cover by the mainstream media. Very few people actually digest these speeches as a whole and so they rely upon the useful idiots of the MSM to do that for them.
Something that tells us all you need to know is the massive shrinkage of political ads over the last sixty years due to the inability of people to have the patience to see an add through and digest it that is more than 20-25 seconds long. We have a population of people on the whole who have almost no factual grasp of history over the last 120 plus years and have never read the manifesto and prefer to simply rely upon their "emotional intelligence" to guide them.
The two biggest single contributors to our massive inflationary expansion over the last 90 years has been the exponential growth in regulations, primarily at the federal level, and the explosion of the federal tax code. These two things have compounded costs in a myriad of ways for companies to do business and furthermore have killed almost any notion of actual free market competition between companies in the same business. Yes going off the gold standard made all of this worse from a cost perspective, but now it just takes more monopoly money every year to pay for something than it used to.
"Extreme Republican" What a joke. What are they going to do? Leave you alone?