Grain prices soar as global inventories shrink

as far as I can tell, are low, but currency debasement or depreciation is rife! 

The phenomena of rising prices in monetary climates such as this are exacerbated by flows into tangibles. All fiat money is 'hot'; investors - corporate and other - are looking for profit, protection and value. The oscillation of money ebb and flow from one market to another, be they bond, commodity, security, or realestate, at the current speed is very destructive.

To demonstrate; at the heart of the current "fiat" system the elite (read Central banks, money centre banks, and governments) fleece us through "seingniorage" and debt creation. This is unnoticed by most, I'd reckon only one man in a million can see the victimisation. We are being fleeced in more ways but this is at the heart.

So, what is Seigniorage?

Let me quote from AE Fekete an amusing story of the Henry The VIII of England.

[quote=Fekete]"Seigniorage and the Plight of Old Coppernose
Let us return for a moment to times when the king counted it among his powers to dilute the purity of the coin of the realm unilaterally. The king wouldn't even bother telling his subjects what he was doing to their money. The longer they could be kept in ignorance about the matter, the greater was the tribute the king could extract from them. Contemporary scholars theorized that this power of the king was of divine origin. They invented the word "seigniorage" to apply to the cut which the sovereign took of gold delivered to the Mint for coinage. For example, if the Mint exchanged one ounce of pure gold for a coin containing only nine-tenth of an ounce, then seigniorage was said to be 10 percent. The beauty of it was that seigniorage could be increased at the pleasure of the sovereign, at least in the beginning, surreptitiously. The new lighter coins were given an identical appearance to that of the old. Then the king could pass on the light coins as if they were full-bodied, defrauding his subjects and his creditors. However, this new source of revenue which the king's scientists have worked so hard to generate turned out to be ephemeral. The people got wise to the fraud and made all light coins subject to an appropriate discount. Still later, they expected the fraud to be repeated even before the newly crowned king had a chance to try his hands at it. So much for the divine right of the sovereign to cheat his subjects and his creditors.[/quote]

[quote]Poor Old Coppernose, King Henry VIII of England, was so nicknamed by his subjects after the success of royal scientists in figuring out a way how to increase seigniorage to 90 percent. No doubt, his predecessors would have done it if they had known how. But there was a problem. Gold diluted by the addition of 90 percent base alloy no longer looked like gold at all. It was the scientists working in the king's pay who invented "clad coinage" (anticipating the American Mint replacing the Kennedy half-dollar, an immensely popular silver coin, with a clad version in 1968). The coins of Old Coppernose were gold-plated copper coins. But as the plating was rather thin, after a few years of circulation the gold wore off at the most protruding part of the obverse, which was the king's nose, revealing the true nature of the core.[/quote]

[quote]Old Coppernose would have loved to increase seigniorage to 100 percent, but the royal scientists failed to figure out how it could be done. For this breakthrough the world had to wait awhile longer, when the bloody overthrow of the monarchy in France opened the way to irredeemable currencies called assignat and mandat - and to the guillotine. But this is another story.[/quote]

From his paper called the [url=http://www.safehaven.com/article-603.htm][b]Tale of the Fourth Lie[/b][/url]

You may well ask how this applies to modern money? Surely our governments and banks don't clip our money? Oh yes they do!

Central banks print notes that circulate as money. When the Central Bank issues the notes its value is only derived from the act of acceptance by the citizens of that nation, not by the act of issuance. It's the acceptance that gives them their face value. As convention all citizens accept the paper at their face value. In order to accept those notes all citizens, individual and corporate, have exchanged real goods and services to the value of 100$. This is the same as saying we've earned the money. It's the acceptance of those notes that gives them value, as the act of acceptance entails exchange of real goods and services.

Lets be generous and assume the paper and the ink cost for every 100$ bill amounted to 10$ of value, that would mean that 90$ of value from every 100$ note seems unaccounted for. But not so it is extracted from citizens and appropriated to the bank. Seigniorage of 90% is the same as saying 90% of the value you produce is taken away from you surreptitiously, but only 10% is left to you.

Further, when money is digital as most is now the production cost of 100$ is smaller still,  indeed perhaps only 2%. This means that the appropriation is now 98% of value. Every time we use this money we allow our pockets to be plundered, our hard work in exchange for a plate of beans.

To add insult to injury, we who give these notes value are made to pay interest on our own created value!

The fact that very few, perhaps one in a million, ever question this inappropriate privilege reveals that this ignorant acceptance has become part of modern discourse.

More in a few weeks.

The ugly face of Ug99

"Keynote speakers at a symposium on rust diseases held in Sydney last week said that a virulent new stem rust known as Ug99 posed a threat to wheat crops worldwide.

According to an international organisation set up to combat the disease, the Global Rust Initiative (GRI), the amount of stem rust now in the world might be very small, but there is about to be a lot more.

Food fears: Being a rich nation is no protection for Japan, which faces the fallout of relying too heavily on foreign food to supply domestic needs.

• Justin Norrie, Tokyo
• April 21, 2008

MARIKO Watanabe admits she could have chosen a better time to take up baking. This week, when the Tokyo housewife visited her local Ito-Yokado supermarket to buy butter to make a cake, she found the shelves bare.

"I went to another supermarket, and then another, and there was no butter at those either. Everywhere I went there were notices saying Japan has run out of butter. I couldn't believe it — this is the first time in my life I've wanted to try baking cakes and I can't get any butter," said the frustrated cook.

Japan's acute butter shortage, which has confounded bakeries, restaurants and now families across the country, is the latest unforeseen result of the global agricultural commodities crisis.

A sharp increase in the cost of imported cattle feed and a decline in milk imports, both of which are typically provided in large part by Australia, have prevented dairy farmers from keeping pace with demand.

While soaring food prices have triggered rioting among the starving millions of the third world, in wealthy Japan they have forced a pampered population to contemplate the shocking possibility of a long-term — perhaps permanent — reduction in the quality and quantity of its food.

A 130% rise in the global cost of wheat in the past year, caused partly by surging demand from China and India and a huge injection of speculative funds into wheat futures, has forced the Government to hit flour millers with three rounds of stiff mark-ups. The latest — a 30% increase this month — has given rise to speculation that Japan, which relies on imports for 90% of its annual wheat consumption, is no longer on the brink of a food crisis, but has fallen off the cliff.

According to one government poll, 80% of Japanese are frightened about what the future holds for their food supply.

Last week, as the prices of wheat and barley continued their relentless climb, the Japanese Government discovered it had exhausted its ¥230 billion ($A2.37 billion) budget for the grains with two months remaining. It was forced to call on an emergency ¥55 billion reserve to ensure it could continue feeding the nation.

The Real Reason for Rising Commodity Prices

February 3, 2011 – An article today in The Wall Street Journal highlights the latest rise in the price of wheat. Blaming bad weather, it notes that the “global wheat market is caught between freezing winds and a sirocco.”
The WSJ therefore warns that “investors should beware of whiplash as weather normalizes.” Given that wheat is “up 13% since the start of December”, it is good advice – if weather were to blame.

The reality is that wheat is being driven higher by more than bad weather. The price of wheat has been climbing since June, a fact conveniently ignored in the WSJ article, perhaps because it doesn’t square with its premise that bad weather is causing higher wheat prices. Are we to believe that the market knew seven months ago that weather around the world today would be so bad that it would impact global wheat output? Or has wheat – which has risen $3.50 per bushel, or 70%, since its June low – been climbing steadily higher over these several months for another reason? And more to the point, why are all commodity prices rising?

For example, since June copper has risen $1.70 per pound, or 59%. Is bad weather to blame?

No, of course it isn’t. Something else is at work here. Maybe wheat has risen more than copper over this period because bad weather really has had some impact on wheat production. But obviously, given that commodity prices are rising across the board, we have to look for other factors that are causing this surge in prices. And we do not need to look too hard. Just consider the money printing – a/k/a “quantitative easing” – by central banks going on all around the world. QE is building up tremendous inflationary pressures in the pipeline of goods and services, which for months now has been showing up in the area most sensitive to monetary debasement, namely, commodity prices.

The WSJ article ends by warning that “political storms could provide a tailwind for wheat prices.” That could be, but right now, the gathering monetary storm is far more important, and there is one easy way to seek shelter – buy physical gold. Look at the correlation between gold and the CRB Continuing Commodity Index in the following chart.


The above chart makes one point crystal clear. Rising commodity prices are not short-term phenomena. Except for a brief deflationary blip in 2008 after the collapse of Lehman Brothers, this CRB Index of 17 essential commodities has been rising steadily all decade – and it is meaningful to note, so too has gold.

So I wouldn’t worry about any shortage of wheat, provided you own physical gold. Farmers will continue to grow produce, and the market in which money is exchanged for food will continue to function as it has since humankind began to interact in commerce thousands of years ago. So regardless what happens to the price of wheat, you will continue to buy bread in the future just like you do today, provided you have physical gold to preserve your purchasing power from the ongoing debasement of national currencies being engineered by governments and central banks.


http://www.fgmr.com/real-reason-for-...ty-prices.html