President Joe Biden casually dropped a bombshell during a NATO emergency summit news conference. The president revealed that “real” energy and food shortages are coming to a supermarket, utility, and gasoline station near you, exacerbating the current inflationary crisis spiraling out of control in the US.
“It’s going to be real. The price of the sanctions is not just imposed upon Russia. It’s imposed upon an awful lot of countries as well, including European countries and our country as well,” Biden told reporters, adding that his administration is working with other European markets to dismantle trade limitations to alleviate supply chain issues impacted by the situation in Eastern Europe.
This was a considerable warning at a time when the supply chain fiasco has resulted in a myriad of problems for businesses and consumers in the US and across the globe. The annual food inflation rate is 7.9%, the national average for a gallon of gasoline is $4.24, and crude oil is back above $110 per barrel.
Not only is Russia the world’s largest energy exporter and Ukraine a substantial transit route for Moscow to ship its products to the rest of Europe, but both countries are also major producers of wheat. Kyiv recently confirmed that the military conflict had significantly impacted the nation’s planting and harvest. The European Union has been hamstrung in retaliating against President Vladimir Putin since it is immensely dependent on him for energy, a reliance that has intensified as Old Man Winter refuses to make an exit. Moreover, the Kremlin is now demanding that “unfriendly countries” purchase energy from Russia in rubles.
Overall, as Liberty Nation noted in 2020 and 2021, the food and energy crises were inevitable in the fallout of the COVID-19 pandemic and without the war in Eastern Europe. This was evident in the broad-based February consumer price index (CPI) report, with nearly everything higher. Other factors could be emphasized, including the green agenda and central banks creating trillions of dollars in response to the public health crisis. Once again, the politicians, bureaucrats, and central bankers have left citizens in the cold.
Are Higher Coffee Prices Mocha You Crazy?
Prices for fertilizers – nitrogen, phosphate, and potash – have been soaring this year. From Russia halting exports to skyrocketing energy prices, fertilizer costs are growing. And this is hurting farmers, which then affects consumers, especially java addicts. Farmers in some of the world’s largest coffee-producing markets warned that they are struggling to afford higher fertilizer costs, turning to organic waste rather than conventional solutions. This, they purport, could result in lower bean harvests in the coming months.
The International Coffee Organization (ICO) recently warned that global coffee output would fall 2.1% this year to 167.2 million bags, adding to the expanding worldwide supply deficit. Last month, the Bureau of Labor Statistics (BLS) reported that coffee increased 10.5% year-over-year, with roasted and instant accelerating 10.9% and 8%, respectively. May coffee futures on the US ICE Futures exchange have rallied roughly 72% over the last 12 months.
In other words, coffee-dependent professionals and students pulling all-nighters will need to prepare for shrinking supplies and higher prices. Or, as Fatima Ismael, general manager of the Nicaraguan coffee cooperative Soppexcca in Jinotega, recently told Bloomberg: “The situation represents a mega emergency for our members.”
Is This What It Feels Like When Doves Cry?
The hawks have feasted on the doves at the Federal Reserve. It has been nearly two weeks since the Federal Open Market Committee (FOMC) convened for its much-anticipated March policy meeting, where it raised interest rates by 25 basis points for the first time since 2018. Many market analysts chuckled at this decision, asserting that it would not be enough to tame four-decade high inflation. However, since the powwow of Powell and Co., several officials ostensibly had second thoughts on this tepid rate hike.
Fed Chair Jerome Powell was the most prominent individual, revealing that the central bank might need to be more aggressive to quash the personal consumption expenditure (PCE) price index, the producer price index (PPI), and the CPI. But a growing number of doves have started to change their minds about adopting a slow-and-steady pace to tightening monetary policy.
New York Fed Bank President John Williams warned that a half-percentage-point increase in the benchmark rate might be warranted if inflation conditions do not improve. San Francisco Fed Bank President Mary Daly revealed that “everything is on the table” in May, including a 50-basis-point jump in the effective fed funds rate. Cleveland Fed Bank President Loretta Mester believes the financial markets could endure “front-loading” rate hikes, suggesting that the policy rate should be 2.5% by the end of 2022.
Goldman Sachs recently raised its forecasts for interest rates, penciling in 50-basis-point rate hikes at the May and June policy meetings amid skyrocketing inflation. The Wall Street titan also estimates that the benchmark rate will be in the 3%-3.25% range by the end of the Fed’s hiking cycle, higher than the market pricing of 2.5%-2.75%. With the Mar. 25 movement in Treasury yields, investors are bullish on higher interest rates.
No matter what happens, the Federal Reserve System has lost all credibility. That is if the more than century-old institution had any left.
~ Read more from Andrew Moran.
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