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Liberal_Jihad_Cover.jpg Forward USA

Wednesday, December 12, 2012

Government Intervention, As Always, Distorts Economic Markets

The Wall Street Journal in its December, 12, 2012, online edition reports:

“Sales of land used to grow crops are surging, with owners capitalizing on a sustained rise in real-estate values driven by low interest rates and historically high prices for corn and soybeans.”

This is a repeat of the phenomenon that occurred during the destructive stagflation of the 1970s, when money was channelled into fixed assets such as farmland as an inflation shield.  Farm prices, by 1982, collapsed, leaving farmers bankrupted by unsustainable debt, when the Fed under Paul Volcker stopped creating fiat money and stopped inflation.

The farmland price picture today is further distorted by Congress’s ill-advised mandate for use of ever-increasing amounts of ethanol as a gasoline additive.  Not only does that not reduce so-called greenhouse gas production, it also diverts large acreage from production of other foods, driving up their prices. People around the world have to reduce their food consumption, while farmers in the United States are hit with higher feed costs.