The Devastation of Market Distortion is Coming Home to Roost

Wholesale Food Prices Highest since 74′

Food Stamps Surge in West

These two headlines are quintessential examples of the perennial cycle of government intervention.  They offer a vivid portrayal of how the Democrats perfidiously inflate the price of food so that the maximum number of people will be dependent upon their food programs, thus granting them a permanent electoral constituency.


Obama and the Democrat economists have championed a monetary policy of quantitative easing (QE2) over the past few years as a means of reviving the economy.  These economic “experts” felt that by abusing the Fed’s mandate to ostensibly print extra money and offer negative real interest rates to banks, the stock market would surge and spawn an economic recovery.  It was all for the benefit of Main Street, of course.

In addition, these same selfish market interventionists have perpetuated the ethanol mandates, subsidies, and tariffs that have wreaked havoc on the global food commodities market.  As much as 40% of domestic corn is being diverted for the use of ethanol, an extremely inefficient fuel source.  The promulgation of this ineffective fuel source, along with Obama’s war on all other efficacious energy sources such as fossil fuels has in turn spiked the cost of transportation of food.

Now, the socialist chickens have come home to roost.  After months of QE2 and years of fatuous ethanol and energy policies, food prices are near record highs.  The Labor Department reported today that the wholesale measure of food prices, the Producer Price Index (PPI), rose 1.6% in February:

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February — double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.


Astoundingly, the same arrogant economists who dismissed our fears of government induced inflation are continuing to intransigently deny reality.  This from Reuters:

Economists said given the lofty level of U.S. unemployment and lack of wage-driven price pressures, they did not expect the strong producer prices to pass through to consumers on a large scale.

“You are seeing inflation on the goods side, you don’t see it on the service side. This is a service economy and inflation will be driven more by wages and to this point wages are reasonable,” said Levitt. “But on Main Street, you will certainly feel the shock whether it is at the gas pump or the supermarket.”

Reuters has the nerve to dismiss future inflationary concerns, even though they assert in the same article that the 1.6% PPI “gain was more than double economists’ expectations.”

While the surge in food and energy inflation might have exceeded “economists'” expectations, it was presciently foreseen by free market conservatives. Last November, the “unintelligent” Sarah Palin asserted that “everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher.”  Although liberals scoffed at her warning, most Democrat politicians knew exactly what she was predicting.  They thrive upon economic chaos created by their interventionist policies, especially when they affect the “little guy”.


Here’s why.

During the three years of interventionist policies (both Republican and Democrat) from 2008-2011, the number of Americans on food stamps rose from 27.2 million to 44.1 million.  Over 13% of Americans are now dependent on the government for their vital food needs.  The market distorting policies of the left are achieving their desired result; more dependency on government and the political stewards of its programs.

The same way they purposely induce high energy prices in order to manipulate everyone into relying on public transportation, they cheerfully inflate the cost of food in order to perpetuate their dependency on entitlement programs.  The fact that government corporate cronies at J.P. Morgan make as much as 64 cents profit per food stamp debit card is just another ancillary benefit of regressive food costs.  The intrepid progressives never shy away from the reciprocal campaign donations from the evil corporations.

For years, Democrats have succeeded in their prosecution of class warfare by convincing enough voters that Republicans were indifferent to the plight of the poor and “working class”.  The record high food and energy prices resulting from Obama’s war on the free market have provided Republicans with a unique opportunity to educate voters on the virtues of limited government and the vices of socialism.

It is not sufficient for conservatives to merely denounce socialism and declare their support for tax cuts and budget austerity.  As conservatives, we must complete our sentences by articulating how and why the very economic ills those entitlement programs are created to address-were originally caused by government intervention.  We must edify how it is the free market-free of mandates, subsidies, tariffs, and special interest deals that is inherently benevolent to “the little guy” by providing him with the cheapest possible products and services.


We must decimate the fallacy that Republicans only care for corporations.  Every conservative leader must show how it is interventionists who have instigated monetary policies that benefit Wall Street and legislative programs that promote special interests, to the detriment of the non-lobbyist connected American worker.  They must eloquently assert that while free market policies don’t punish corporate interests, they don’t grant them gratuitous favors either.

At some point, more voters will realize that there is nothing wrong with the motive for profit and the desire to become prosperous.  Then, they will intuitively understand that it is better to live in a world where you can earn a paycheck from a prosperous corporation which operates autonomously from government, than one in which you are granted a food stamp from a government subsidized corporation.  We simply need a leader who will use the economic depredation of socialism to articulate this to the voters.

If someone as “uninformed” as Sarah Palin gets it, there must certainly be somebody with towering intellect within the GOP who can take her primitive message and run with it in 2012.  Or is there?

Cross-posted to Red Meat Conservative


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