Forecast: Hyperinflation, Trade Wars, Food Shortages, Another Corporate Bailout & Civil Unrest

As you can see, in addition to imposing over 200% tariffs on Australian wine, China then sought to impose over 80% tariffs on barley, causing Australia to seek a resolution via a WTO dispute.

Just two weeks ago, Yahoo News Finance reported that Canadian families are to pay nearly $700 more for groceries in 2021, indicating major hikes in food prices:

The average Canadian family will pay up to an extra $695 for food next year, as the pandemic, wildfires and changing consumer habits drive up grocery bills to the highest increase ever predicted by an annual food price report.

Rising bread, meat and vegetable prices are expected to lead the overall food price increase of three to five per cent, according to Canada’s Food Price Report 2021 released Tuesday.

For an average family of four, that means a $13,907 grocery bill.

‘We don’t expect a break at the grocery store any time soon,’ said Sylvain Charlebois, lead author and Dalhousie University professor of food distribution and policy.

‘This is the highest increase that we’ve ever expected.’

The 11th edition of the food price report, published annually by Dalhousie University and the University of Guelph, has expanded this year to include the University of Saskatchewan and the University of British Columbia, making it more national in scope.

Researchers said in the study that COVID-19 will continue impacting food prices next year, with the meat industry particularly vulnerable to potential labour shortages, logistics disruptions, food plant and distribution centre slowdowns and shifts in consumer demand.

While meat prices could increase as much as 6.5 per cent overall, the biggest price hike could be for poultry, a supply managed industry in Canada.

Poultry prices are up seven per cent since July, Charlebois said, adding that as production costs continue to rise, so will retail prices. – Yahoo News Finance

I have previously warned that the coming food shortages is part of the reason for the food price increases, together with crop losses and issues with meat processing plants during the lock downs. Zero Hedge recently published an article entitled “Why Albert Edwards is Staring to Panic about Souring Food Prices“ that looks into the commodities index and statistics:

Is it time to worry about food inflation?

The reason this has suddenly become a hot topic is because while overall inflation remains subdued (we will spare a discussion here of why the CPI is purposefully distorted to stay as low as possible – readers can catch up here, here and here), food inflation has been on a tear in recent months. In fact, it has gotten so high that earlier this week Goldman published a report looking at ‘The Recent Spike In Food Inflation’, in which it noted that ‘in recent months, inflation has risen and surprised to the upside across a number of major EM economies (e.g. Turkey, South Africa, India, Brazil andRussia).’ According to Goldman, ‘one of the main drivers of these increases has been higher food inflation, which has coincided with a sharp increase in the price of some key agricultural commodities (e.g. grains, oils and soybeans).’

As Edwards explains, for much of the past decade he – and other Fed skeptics – have railed about the distorting impact of QE on asset prices. And aside from capital markets where the Fed’s intervention has spawned a record wealth divide leading to unprecedented political and social polarization, perhaps the most disturbing episode of such distortion was the abovementioned explosion of food prices that began towards the end of 2010. According to Edwards, many economists – this website included – believe the Fed’s QE2 was the primary cause for the 2010-11 bubble in food prices which contributed to the social unrest and ensuing revolutions in many Arab countries.

This is a problem because in a time when central banks are injecting a record $1.4 billion in liquidity every hour, and when most economists’ attention is now focused on the impact of the Fed’s QE on buoyant equity and industrial commodity prices, Albert says that ‘we should also watch the unfolding surge in food prices very closely indeed – and with trepidation.’

The reason for that is again what happened in early 2011 in Tunisia: That event marked the start of a chain reaction of social unrest around the Middle East and elsewhere that toppled governments and became known as the Arab Spring, Edwards writes and adds that ‘although the narrative of these revolutions had its origins in longstanding grievances and a thirst for democracy, many economists identified rocketing global food prices from the end of 2010 as the trigger. (T’was always so: certainly, higher food prices contributed to both the French and Russian revolutions, and to the 1989 unrest in China.)’

As for whether central banks were responsible for these revolutionary dominoes, Edwards is a bit more nuanced, writing that while they certainly spawned much of the asset reflation observed in late 2010, ‘the truth is that central banks have no control over which financial bubbles will ultimately emerge as they spray QE into financial markets.’ It just so happens that food is one of them with alarming periodicity.

So going back to the facts, Edwards writes that ‘one thing you may have missed recently is that the UN’s Food and Agriculture Organization’s (FAO) widely followed food price index (the basket measures prices for oilseeds, dairy products, meat and sugar)’ which as shown above, has – once again – been surging over the last few months. As noted previously, the FAO food index rose for a sixth month running in November, on pace to hit a six-year high, with Edwards noting that ‘annual inflation in cereals reached 20%, the highest annual rise since mid-2011 when the Arab Spring was in full flow! (see chart below).’

Next, Edwards expands on the superficial Goldman analysis, and points out that the effect of higher food prices tends to be much greater for EM countries that are 1) large net importers of food, and 2) where households spend a greater percentage of their income on food (ie they have a much larger weighting of food in their CPI basket). – Zero Hedge

There are many factors that have contributed to this concern regarding the global food supply and we should be paying attention to what is going on at our local supermarkets. We know that the “powers that shouldn’t be” are also heavily promoting lab grown meat, with Singapore being the first to feature an entire restaurant with this abomination. Clean Meats Australia reports on the implications of this phenomena:

Advancements in biotechnology and gene editing tools like CRISPR are changing the agriculture industry for the better. While CRISPR is being used to produce better crops and sustainable beef, lab cultured meat is another promising alternative.

What does cultured meat mean? Does it taste the same? How is it different from regular meat? We’ll provide you with answers to all of these questions and more.

Lab-grown meat, or cultured meat, is produced through the cultivation of animal cells in vitro. Since lab-grown meats are grown from cells, it’s a solution to the ethical issues surrounding livestock agriculture. Cultured meat is produced in a controlled environment, free from bacteria and diseases.

Despite being grown in a lab, lab-grown meat is close to ‘real’ meat, as it is made from animal cells. Although cultured meats are not yet commercially available, research in ongoing on making these marketable in the next few years.

Lab grown meat is made by the controlled culture of animal cells. Scientists commonly grow cells in the lab, and this process is not too different. While the specifics behind how lab meat is grown in companies is proprietary, the basics behind it consists of keeping cells happy in a culture environment to promote their survival and continued growth.

Lab grown meat starts with animal cells, typically muscle or fat cells, or stem cells that are forced to differentiate into muscle cells. These cells are cultured using the appropriate growth medium that contains nutrients that promote its growth and survival. To aid in the growth of culture as it begins to expand, edible scaffolding is sometimes used. Finally, cells are allowed to divide and expand until ready to use, all the while being monitored consistently for harmful bacterial contamination.

A new wave of meatless meats are becoming more popular since coming to the market in the last few years, however it is important to distinguish that those are not the same as cultured meat. The meatless meats you might be familiar with are plant-based ‘meats’ and contain no animal tissue whatsoever, though can sometimes contain animal byproducts like eggs.

The ingredients listed in a lab meat hamburger would be ‘ground beef’ while common ingredients in a plant-based burger made famous by companies like Impossible Foods or Beyond Meat include soy, beans, tofu, vegetables, grains, mushrooms, and other non-meat products.

Cultured meat is not synonymous with vegetarian or vegan-safe foods, as it contains animal cells. While lab cultured meats are not vegetarian, they provide a more friendly alternative for those who choose to refrain from eating meat because of animal cruelty or environmental reasons. – Clean Meats Australia

This article makes clear that subtle incremental advances in this direction have been occurring since 1998, with the powers that be shepherding the conditions that will bring about their imposition on us. They promoted these lockdowns in order to destroy small businesses, including farms, because they want a global food shortage. This is all about getting rid of animal agriculture. They have alluded to this in their own white papers going back years.

Hyperinflation

The final issue I want to tackle in this article is the problem with simply printing money, ad infinitum. Contributing directly to the devaluation of the U.S. Dollar, arbitrarily printing money has caused our nation to amass over $27 TRILLION dollars in debt that we will never be able to pay back. Just last month, Zero Hedge reported that Central Banks will add liquidity worth 0.66% of global GDP on average, every month in 2021:

Earlier today we explained why Morgan Stanley’s chief equity strategist Michael Wilson voiced concerns about the continuation of the ‘overcooked’ equity rally, expecting a drawdown into year end for the simple reason that ‘both fiscal and now monetary policy have become reactive rather than proactive. For markets, that becomes the itch that needs to be scratched–i.e. market pressure is necessary and likely to get Congress and/or the Fed to act.’

And yet, once the coming period of volatility is over, Morgan Stanley sees the bull market continuing with the S&P expected to rise another 10% over the next 12 months.

Why? The answer is simple, and is the same one explaining the market’s rally over the past decade: the unprecedented liquidity injection by central banks since 2009.

As Morgan Stanley’s chief rates strategist Matthew Hornbach wrote in a note this morning, while conceding that ‘unforeseen obstacles to a buoyant risk environment will arise’ he said that ‘current central bank policies are aimed at softening those blows, and will be effective at doing so.’ Indeed, as Hornback predicts, ‘not only will central bank balance sheets continue to expand’, with the Morgan Stanley  strategist expecting G4 central bank balance sheets to hit just why of $30 trillion in two years, up from $25 trillion currently. 

An important feature of 2021 will be the liquidity underlying economic growth. Why is liquidity important to macro markets? It both greases the wheels of transactional finance and changes the opportunity set available to investors. When it comes to liquidity, our focus is on both ‘narrow’ and ‘broad’ measures, as defined by Goodfriend (2000). And we expect both types of liquidity to expand in 2021.

Liquidity will come from continued central bank QE…

Central bank purchases of private sector assets (government bonds, corporate bonds, agency MBS) feature heavily in both types of liquidity injection. Exhibit 7 shows our monthly QE projections for the 8 central banks we think will be active in 2021.

We expect these 8 combined to remove US$304 billion of securities ($238 billion of which will be government bonds), on average, from private markets every month in 2021. Unsurprisingly, the Fed and the ECB will remove the most securities each month, in US dollar terms. 

While these are staggering numbers, consider that the IIF now sees total global debt rising from $277 trillion at the end of 2020 to a grotesque $360 trillion by 2030, over $85 trillion from current levels. – Zero Hedge

It doesn’t take a financial expert or genius to figure out that these numbers are not sustainable. This is a centrally planned economy, NO DIFFERENT from any corrupt communist system, and this constant central bank intervention causes investors to lose confidence in the U.S. Dollar, clearly the goal. Seeking Alpha reported and predicted in October of this year that hyperinflation is coming:

Definition: Hyperinflation is the condition whereby monetary authorities accelerate the expansion of the quantity of money to the point where it proves impossible for them to regain control.

It ends when the state’s fiat currency is finally worthless. It is an evolving crisis, not just a climactic event.

This article defines hyperinflation in simple terms, making it clear that most, if not all, governments have already committed their unbacked currencies to destruction by hyperinflation. The evidence is now becoming plain to see.

The phenomenon is driven by the excess of government spending over tax receipts, which has already spiralled out of control in the US and elsewhere. The first round of the coronavirus has only served to make the problem more obvious to those who had already understood that the expansionary phase of the bank credit cycle was coming to an end, and by combining with the economic consequences of the trade tariff war between China and America, we are condemned to a repeat of the conditions that led to the Wall Street crash of 1929-32.

For economic historians, these should be statements of the obvious. The fact is that the tax base, which is quantified by GDP, when measured by the true rate of the dollar’s loss of purchasing power and confirmed by the accelerated rate of increase in broad money over the last ten years has been declining sharply in real terms while government spending commitments continue to rise.

In this article, it is documented for the dollar, but the same hyperinflationary dynamics affect nearly all other fiat currencies.

To understand why hyperinflation is already with us is to know what constitutes hyperinflation. It is not rising prices, or a condition that exists when prices increase above a predetermined rate: rising prices are the consequence of both inflation and hyperinflation. As Milton Friedman put it, inflation is always and everywhere a monetary phenomenon, though he spoiled it by continuing, ‘…in the sense it is and can be produced only by a more rapid increase in the quantity of money than in output.’ [i] He was wrong on that last bit, conflating the price effect with the increase in the quantity of money. When even so-called monetarists are imprecise about inflation, let alone hyperinflation, it is hardly surprising public confusion is widespread.

There can only be one definition of hyperinflation, and that is the one headlined above, which you won’t find in any textbook. There is even no definition of it in von Mises’s Human Action, only of inflation, and that is more a description than a definition. And since it is a relatively recent phenomenon of unbacked fiat currencies, hyperinflation was never defined separately from inflation by classical economists. The difference between inflation and hyperinflation cannot be distinguished by degree either.

The progression of annualised monetary inflation from under 6% before the Lehman crisis, to 9.6% subsequently until March this year, and 65% in the thirty weeks since is clear from the chart. If the monetary authorities have the knowledge, the mandate, the authority, the ability and the desire to stop inflating the currency, we would not describe it as hyperinflation, instead deeming it to be no more than a brief period of exceptional inflation before a return to sound money policies.

But sound money was emphatically discarded in 1971, when the post-war Bretton Woods agreement was finally abandoned – not that the monetary regime at that time was in any way sounder than Adam’s fig leaf was an item of clothing. For the fact of the matter is that sound money in America was arguably abandoned long ago, with the founding of the Fed at Jekyll Island before the First World War.

As a means of funding government deficits, inflation is capable of being stopped by cutting government spending and/or raising taxes. But, now, a one-off increase of 65% of narrow money is to be followed by another massive expansion already in the wings. The hope is that that will be enough, just as the original 65% increase in M1 was hoped to be enough to ensure a V-shaped recession would be followed by a return to normality.

The early stages of a hyperinflation are always seen by the monetary authorities as the only policy to pursue. They convince themselves that there are either no consequences, or that they can be controlled. An example of the genre is found in a paper by Michael T Kiley, a senior Fed economist.[ii] In August, he concluded that the lack of further room to cut interest rates to deal with the coronavirus requires quantitative easing to a total of 30% of GDP, or $6.5 trillion, to offset the lack of room for manoeuvre on interest rates. Kiley writes that about $3 trillion had been enacted between end-February and end-June, leaving a further $3.5 trillion to come. If we assume the full $6.5 trillion stimulus is enacted by next February, then the increase reflected in narrow money could be to more than double it.

Kiley wrote his paper before the second coronavirus wave commenced. He was modelling an economic contraction measured in real GDP of just 10% in the second quarter (actually 9.5% – not to be confused with the annualised rate reported at 32.9%). But, as I pointed out in last week’s article, with monetary inflation running at such a rate, a dollar last February is not the same as an inflated dollar next February, being diluted on Kiley’s figures by $6.5 trillion. The consequence is some extremely damaging intertemporal shifts, as described in the Cantillon effect, whereby ultimately both productive workers and the poorest in society lose savings, salaries and social security benefits through loss of the dollar’s purchasing power for the benefit of the government, its agencies, and big business. – Seeking Alpha

I highly recommend everyone go and read the rest of the Seeking Alpha article. They are a constant for me, in my own financial analysis and I check their website at least twice a month for no-nonsense financial news. To summarize the piece in layman’s terms, what the central banks are doing now will inevitably cause hyperinflation, which according to the article is already here now. The central banks have now meddled to a degree that the market doesn’t in any way resemble reality. By intervening and adding liquidity, they are making it impossible to determine the actual state of affairs of the finances of the American people. Because of the lockdowns, businesses have been prevented from operating while the banks continue to print money. This causes the GDP to be inflated by the increase in the money supply. This then causes an erosion of the U.S. Dollar’s purchasing power. The central bank has been deliberately reducing the value of the U.S. Dollar for decades, and trying to cover it up.

The above image shows how this has been systematically done. It was not a mistake, nor was it done accidentally. This is why hyperinflation is perhaps unavoidable at this point. The cost of living has continued to rise, while the value of the dollar has declined. Wages have remained stagnant while government liabilities and expenditures continue to climb. This is a house of cards. This is the sort of thing we see in socialist governments when things start to get bad. Think Venezuela.

Closing Thoughts

I understand that this article is sort of long and tedious. I believe it is important that I share my forecast and thoughts about the coming year with our readers so that they may prepare. We know that a grand solar minimum is coming and the elites are aware of this and setting up the climate change narrative so they can make green and “sustainable” investments their next ponzi scheme and scam. These things like windmills don’t really work. The climate is indeed changing as part of an historical cycle. The grand solar minimum will cause the weather to get colder and as a result we will see more crop losses.

We’ve known for decades that China and Russia and some others are the enemy, but seldom reduce the clash in raw terms. Here we have a world moving rapidly towards that clash in realities we have never before seen so clearly. The goal of the enemies of free people is to destroy the United States of America in order to subjugate us so their globalist plan can proceed. With our Constitution, We The People are the only holdout.

Currently we see incremental moves toward their final goal. Partnering with the world’s globalists and after we’re neutered, the WIDER goal is to depopulate the world via disease, artificial scarcity and outright euthanasia. A topic for another article.

Food prices will continue to go up, as the supply chain suffers disruptions and the effects of the lockdowns continue to be felt. Both of the so-called “stimulus” bills were in fact mostly corporate bailouts and they are not enough to help struggling Americans who are currently losing everything. All of these things are converging, along with the vaccines and insane tyrannical mandates being imposed on people around the world, that is contributing to social unrest. These conditions form a powder keg that could explode at any moment. We will continue to see trade and food wars, as the elites push to bring forth the multi-polar world order. The west is being setup as the boogeyman to take the blame as the fall guy. Meantime, the elites move forward with the Belt and Road projects, and the build-up of the Pan-Eurasian superstate. China and Russia are working together to undermine the Petrodollar system and Israel is vying to be a high-tech superpower.

Learn how to garden, make sure you have a bug-out location and plan in place. Try to find local people in your area with whom you can possibly trade good and services. Stay grounded in the Lord and read the Bible. It is healing and provides wisdom. Diversify your investments and look into foreign markets. Invest in businesses that are not part of the new world order and that are trying to provide real solutions. Make sure you have taken a self-defense class and maybe learn a trade as college degrees become useless. There are many people with bachelor’s degrees who cannot find employment. Learn something like blacksmithing or electrician work. Try to become more self-sufficient and less wasteful.

Let the Lord be your guide in the months ahead. Stay grounded in Christ and you will be fine, no matter what happens.