Jeff Reeves on 9 Ways Inflation Hurts, New Keynes Vs. Hayek Rap Video, 55% of American Say Economy is Still in a Depression, and Crispin Odey Predicts 11% Inflation

Interesting article on MarketWatch by Jeff Reeves on the 9 ways inflation is hurting us right now.  Here is a snippet:

2. Pork

Don’t think you can just switch from cow to pig to avoid this trend — pork could see retail price increases of as much as 7.5% over 2010 levels according to the USDA.

3. Grains

Even going vegetarian is more expensive than it was a year ago. Corn prices have doubled, from $3.49 a bushel in July to well over $7.70 currently. Wheat prices have rolled back a bit in recent weeks, but topped 2008 highs in February to set a new record and remain very high currently.

4. Gasoline

The average U.S. price of a gallon of gasoline has jumped about 12 cents over the last two weeks to $3.88, with the highest average price for gas tallying $4.27 in Chicago. This is with oil at $112 a barrel — if crude prices reach 2008 peak levels of $145, four bucks for gas may seem cheap.

Why wasn't Reeves in the room asking Bernanke questions yesterday?  So who is being hurt the most by the type of inflation we are experiencing?  Wal-Mart CEO Mike Duke knows:

 "Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried. "We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact."

Good thing McDonald's just hired all those people right? Per Bloomberg:

McDonald’s Corp. (MCD), the world’s biggest restaurant chain, said it hired 24 percent more people than planned during an employment event this month.

McDonald’s and its franchisees hired 62,000 people in the U.S. after receiving more than one million applications, the Oak Brook, Illinois-based company said today in an e-mailed statement. Previously, it said it planned to hire 50,000.

In brilliant fashion, Robert Wenzel uses this news to point out the atrocities of minimum wage laws:

These are minimum wage jobs and it shows that there are plenty of people willing to work, if they could find jobs. But with minimum wage laws, instead of companies having the opportunity to bid for these people at lower wages, the job seekers are shut out of the labor market.

It's simple supply and demand economics. There are x number of jobs available at the minimum wage, if the number of those willing to work at that wage exceeds the number of jobs available at the minimum wage, then some will not be able to find jobs. Market wages, as opposed to government controlled lower bound wages, means more firms will be able to bid for workers, until the market clears.

And of course Wenzel will probably be labeled an elitist or heartless bastard for advocating such nonsense of allowing people to work for whatever wage they like.  I always love to ask minimum wage proponents if they will really be the one to tell someone "nope, sorry you can't work there for that low of an amount of money, I am looking out for you so instead of working, you can remain unemployed till something else comes along.  What's that? You still want to work for $5 an hour? That is no wage fit for a man, go back to the want ads."

And since I am on the topic of government price controls, look at the success in Russia:

MOSCOW—The world's biggest oil producer Russia is facing gasoline shortages in some parts of the country, as prices are kept artificially low, leading producers to cash in on higher fuel prices abroad.

After gasoline prices rose at the end of last year and another 4% in January, Prime Minister Vladimir Putin in February warned the country's top oil executives against price fixing. Putin accused them of trying to "crudely exact maximum gains" and vowed more oversight of the fuel business, effectively capping prices. As a result, prices declined both in February and March, despite the continued surge in global crude prices. 

"The domestic prices are being held artificially low due to pressure from regulatory authorities," TNK-BP's Chief Financial Officer Jonathan Muir said Wednesday...Fuel shortages are particularly acute in Russia's southern Altai region, where about half of the regions 700 fuel stations have closed, but are also emerging in other areas, including St. Petersburg, Russia's second biggest city, Russian Fuel Union said. 

And don't think of selling crude just yet:

(Reuters) - Syria's banned Muslim Brotherhood called on Syrians to take to the streets to demand freedom, a declaration by the movement said on Thursday, ahead of Friday prayers.

Oh boy, here we go again.

Version 2.0 of the great Keynes Vs. Hayek rap battle just came out today.  It's just as phenomenal as the first  one:

Looks like Keynes' animal spirits are not catching on yet with the public:

PRINCETON, NJ -- More than half of Americans (55%) describe the U.S. economy as being in a recession or depression, even as the Federal Open Market Committee (FOMC) reports that "the economic recovery is proceeding at a moderate pace." Another 16% of Americans say the economy is "slowing down," and 27% believe it is growing.

 So big bank bonuses and a booming stock market aren't exciting Main Street?  Who would have thought?  Oh wait, just watch the above video.  Here is some more less-than-exciting (though expected) news from Crispin Odey's 2011 Q1 conference:

Then the question only is when you get to a position where the West is competitive, we are not going to continue to see wage growth of 1.8% or 1%, because the fact is we are building up this sense in which we are way behind the line in terms of keeping up the cost of living so we anticipate, whether it is 2012 or whether it is 2013, that we will not see a 1% rise, we will see a 8% rise and if we see a 8% rise, 75% of that will come through straight back into inflation. So our forecast is that inflation, far from being 5% at the end of that, it will be at 11%. Which means at that moment interest rates have to rise because that is the moment that the central banks have got that mandate. If interest rates rise from 0% to 7%, you can be sure that at round about 35% to 40% of that rise will make its way again through to inflation.

11% inflation? I don't know if that will pan out, but only time will tell after QE2 ends this June.  I will end with a great list of those countries who are prepared to see such a crisis:

 Go Switzerland!