Re: Cheap food is coming to an end

[Jim Devine <jdevine03@xxxxxxxxx>]

raghu wrote:
> It is hard to imagine that a "substantial demand shift" is
> simultaneously underway across all possible commodity classes (oil,
> food, metals), asset classes (stocks, real-estate) and even services
> (college tuitions, medical care). It seems to me that a monetarist
> explanation (i.e. money supply increases) is much better than a
> supply/demand based explanation.

the "monetarist" explanation does not make any sense without supply &
demand. There can easily be a world-wide aggregate demand increase
without an increase in the money supply. After all, these days
corporations often do transactions using government bonds (T-bills),
which are not part of the money supply.

> The CPI does not seem to support a
> monetarist theory but if I am not mistaken, the CPI conveniently
> excludes food, energy, medicine and just about any item that cannot be
> imported from China.

the CPI does NOT exclude food, energy, or medicine. Maybe you're
thinking of the "core" CPI, which excludes volatile energy and food
prices as a effort to gauge the trend of inflation. It does not
exclude medicine, because medicine prices are not volatile. Rather,
they simply ratchet up (until there's some significant institutional
change).
--
Jim Devine / "The price one pays for pursuing any profession or
calling is an intimate knowledge of its ugly side." -- James Baldwin