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LEAP’s prediction record seems to have been spotty in the times I have followed it. They may have an EU view, but that does not make them right all that often when the big dog USA is calling the shots.

We have made a royal mess (as usual) of the Ukraine thing. We pissed away $6 BILLION so far there? for WHAT? Who made THAT dumbass decision? Heck we could give every US food stamp recipient roughly $125 (ALL 47 MILLION of them) and get better bang for the buck than this cluster***k.

And now the Admin wants to “double down” on a guy who has beat them over and over again?

Makes me long for the Bush years… The Bush team may have been stupid, but not stupid enough to poke the “the bear” with a stick.

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My only comments to overpopulation are “that is why I became a farmer”.

Sure, Nicole believes that fossil fuels and credit may destroy me, but my farming plans included buying land that will support cattle under natural rainfall if I cannot grow soy and wheat and whatnot.

I suggest the same to everyone else — buy enough land, even if it is only a couple of acres, that will allow you to plant a garden, or keep some chickens, or whatever, and learn to work it before TSHTF.

While not fully in agreement with Nicole that the credit collapse will come sometime soon, and while I believe we will be able to kick that can down the road for at least another 5-10 years, I also know that oil will be the defining issue, and land has stood the test of centuries as a means to stay fed and alive.

So get some quality land for you and your kids. You may not be around by the time they need it, but they will surely thank you for it!

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Raul,

There has always been this debate about what the definition of inflation is — be it money expansion or prices rising. Richard Duncan notes that in the present economy money = credit, thus there need not be significant expansion of money but credit to accomplish the same goals. Nichole argues that credit will collapse, and while I by no means discount that arguement or that we could see such a collapse, from my POV if mony=credit as Duncan suggests, then the Fed and other central banks can always create more ‘money’ by backstopping more ‘credit’. We may have already seen that collapse in 2008/2009, and have the template for it’s management at hand.– MORE credit.

Yes, eventually that has to come to a halt, but the can kickers are pretty good at kicking the can. I thought much of what we see now would have happened back in 2001. Perhaps they can keep this party going for another 8-10 years, maybe more, maybe less. It certainly is not going to happen tomorrow. Or the day after.

Getting back to inflation, if money=credit, than the printing of credit equals a monetary expansion. To the man in the streets that equals rising prices. The MotS coud care less about rising or shrinking money supply, he care about the prices he pays for stuff v. the wages he earns. To him there is definitely ‘inflation’ — especially after the Obamanation of ObamaCare.

So yes, I understand your definition. I encourage you to see it also in other ways.

D

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Actually pipefit, I see energy allocation in tiers as:

1) politicians and the very well connected (because they are OOOOOHHH so important) he he
2) military and civil police/fire service (so they can keep us all in place or in FEMA camps)
3) farmers and food producers/distributors (to keep the food flowing)
4) strategic transport such as trucking of foodstuffs and railroads for grain movement
5) medical care such as ambulances, healthcare professionals, etc
6) everyone else

[D]

@Nicole,

I am right there with you on the energy issue. However, before the impact of energy gets to the food producers you will see governments around the world cut back energy use to private transport. In fact, look how much driving has “voluntarily” decreased in total miles in the US since the start of “the great recession”. The US in particular is very energy wasteful, and we will find that our wastefulness will be cut off. As I mentioned before, starving people bring down governments, and yo agreed. Pretty much all governments will put in place energy scenarios with rationing, car pools, whatever and ensure that food production is high up on the list. Again, I believe Robert (et al) did a pretty fine job of discussing liquid fuels rationing in “The Impending World Energy Mess” and I encourage you to give it a read. I fully expect that long before I or any other farmers lose access to petro-fuels and derivatives your avge daily LA (or similar) commuter will lose their access. And yes, my input prices will go up significantly, but so will my sale prices because I won’t grow for free.

And yes, I also agree with your credit thesis, but only to a point. Just as we found out far later that the Fed backstopped credit not only on the QT for hundreds of US firms, hedge funds, etc, they also did it for overseas banks, firms, etc. Credit will not totally collapse, it will “reset” and like any reset, there will be winners and losers. Expect the avge Joe to be the loser, as he is always the loser, and the power elite to be the winners as they are always the winners. Again, this is why they are parking their money in fine art, trophy properties, farmland, oil and gas wells, etc. Your avge Joe cannot do such things. He may own his house, and maybe securities which are just paper demands upon a business enterprise that runs on faith in management that oftentimes could care less about anything but making their stock options or bonus payments. Me personally, I would rather own the ‘means of production’ than be on the ends of production. Again, I go back to the FEW. I can live without a new iPad, but I cannot live without the FEW. Your avge Joe condo dweller in Sao Paulo or NYC is hosed. They are dependent upon a tight supply chain. They have no fall back. I have established my fall-back for my family. po1 seems to think that this makes me like GS, but I am only a small time investor/farmer looking at the broader picture. While I don;t want to start chasing cows around again v. growing grains, if I had to that is what I would do. What will that condo dweller do in NYC, eat concrete?

We have been teetering between deflation and inflation for some time. I have told people that we will continue to see “inflation in the things we need. deflation in the things we own”. Food prices continue to rise despite the phony Fed numbers, as do cars (all bought on monthly credit it seems), but try to sell a used boat or similar and prices still have not rebounded. Producers still have a hard time raising prices in a world full of excess labor and limited real growth. You believe that the cenytral banks of the world will fail in their policies to create inflation, but I still have my doubts. They can ALWAYS create inflation if it means saving the banking system. We may see deflation yet again, however the US has only encountered real deflation 2x in maybe the last 100 years. Real deflation would be such a negative for the entire world I would fully expect the Fed, ECB, China, you name it to open the floodgates accordingly. However, none of us really knows what will happen, all we can do is make our best plans accordingly.

Finally, I will agree with you on the entire GMO issue. Frankly, I would celebrate if they were banned tomorrow. Yes my yields would drop, and yes I would make less money every year afterwards, and yes a big part of the Third World would go hungry as a result, but the soils and the planet would be much better off for it., I’m okay with all of that happening. But I doubt it does. Too much money in politics, and too many tentacles form Monsanto et al in the process.

In the end, in the final “Max Max” scenario, if everything goes into the crapper (which will not all happen all at once), I believe I will have done my best to ensure the long term safety and survivability of my family. That is all one can ask for, is it not?

D

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@po1

When did I say I am doing G-d’s work? I am just doing MY work. We’re it not for the thievery of the Fed and the USGov there are other things I could and would do. Maybe those days will return…

But I certainly have my reservations….

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Those battles over food will only be good for us farmers,

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@Nicole

I don’t know about other farmers, but this guy is not levered up at all. All cash all the time.

And I am sure you have plenty to say about wheat and soy! I may grow the stuff, but I sure don’t eat it, and tell everyone I know I don’t think they should either. Paleo is the way to go, but we cannot support a planet on paleo-style eating as we continue to add roughly 75 million people a year to world population. Thus grains are the backstop, if you will.

I do have to say that while I respect your work immensely, I am much more in the Jim Rikards camp regarding ‘finance’, where we will see a new worlds reserve currency status and collapse of the current paradigms. But as he says, this has happened before, and it will not mean the end of anything other than change for the dollar and those who hold them. Hence I am better off owning productive farmland and get its annual ‘dividend’ than financial assets.

Frankly, just as we have seen default in currencies throughout history, we will continue to see selective default going forward. Some by inflation, some will hit the dustbin like those before them and before them. Probably we will return to a commodity based currency system with finance caked by metals, foodstuffs, etc. tangible assets. Why do you think Warren Buffet bought a railroad? Cash is trash. Why are nearly all assets going up in cost (in dollar terms)? Cash is trash. The dollar has no real value, but a mine or farmland or an oil well or a railroad has a lot of value. All the funny money being printed IS getting out ‘into the wild’ via tangible asset purchases. The phony inflation numbers are just that.

We can talk about collapse in asset prices but against what? What’s thedollaragainst gold overtime? Which would you rather hold?

I agree leveraged speculators will suffer greatly at some point. Those of us unleveraged will to suffer at all.

I’m glad I “bought the farm”. Inflation. Cannot destroy my land anymore than it can Warrens railroad.

D

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Hi Variable, let me respond point by point:

@D,

1) Governments will certainly “do their best”, but it may not be good enough

If it came to a total collapse scenario where even governments cannot do their best to
keep it all flowing, pretty much all of us reading and writing here will be dead in no time.
In my case, if my family and I get to our land, we can at least grow cows or other animals.

2) I’m no industrial farmer, but I’m pretty sure having “oodles” of money wouldn’t help my crops grow if there’s no fertilizer/fuel/farm equipment/etc. to buy with it because the financial system has seized up and global trade has come to a standstill. Money without the confidence behind it is basically just excess toilet paper.

Yes, there is SOME truth to that. However the lesson comes from the meltdown in Argentina
where farmers bartered their crops for machinery, etc. The ‘king dollar’ may freeze up but
people still gotta eat, and will trade accordingly. Seed and fertilizer dealers will trade for end
products, machinery guys the same. End product will get traded for fuel, or in the case of
corn or soy, turned INTO fuel.

3) And if the cost of “current” inputs rises? One might suggest you’re speculating that cost structures won’t change dramatically, and thus ironic that you feel speculators should be blown out…

I have no doubts inputs will rise. In fact, I am sort of ‘betting on it’ by owning quality land that
requires LESS inputs to produce crops. I mentioned the cerrado. Those pp in a full blown
crisis would potentially blow out. And their land would become worthless. However those of
us who have quality land would only find our product in greater demand. Thus we could
‘absorb’ the price increases as needed and pass them along. Again, look at what happens
when we have oNE bad crop nowadays in the world.

4) I know where I live in Canada, we’ve unfortunately built a giant “urban sprawl” of houses and concrete over some of our best farmland… I’m sure we’ll realize our mistake soon enough

I am sure you will, as will many others out there. As Joni Mitchell said, “paved paradise and
put up a parking lot…” Again, the question is not so much the land, the question is the
QUALITY of the land. Food is fuel, fuel is food. Quality land will grow ‘fuel’ if need be, junk
land will not.

5) Fair criticisms about vegetables, but perhaps why everyone’s lives are going to have to change once 2000 mile salads as well as grains become no longer affordable for those of us living in large cities or far away from agricultural heartlands

My goal is not to ‘defend’ grains, just to point out what cheap calories they bring to the table.
There is a picture out there of some small town in Switzerland where pretty much every
home has a vegetable garden. Can you see North Americans even begin to try as much?
Doubtful. Realistically too stupid and lazy. Like oil, grains are ‘fungible’ nowadays and
the same almost everywhere. Standardization makes them as tradeable as any other item.

6) There are growing options for us city-folk without backyards (e.g. https://www.freshcityfarms.com/news-events-urban-farming-toronto-local-food-movement/organic-balcony-gardening-101/); while it may be difficult to grow all your produce needs on your balcony, it’s just one part of a bigger solution communities will need to foster in a future that is more about localized solutions

I tell people to go stand on a freeway overpass some day, and just look down at all the traffic
that passes in an hour alone. How much food do we need for all those people? How much
fuel? Where will the fuel priority be? RoberT Hirsch in his book “The coming world energy
mess” believed that fuel will be allocated to food (almost)first. I agree.

7) I’m not sure how strategic any international purchases really are – once finance and trade start to collapse, good luck to the Chinese owners of a hog company here in getting and product shipped over to mainland China (or getting any of their investment back for that matter); what’s much more likely is that the “strategic” Chinese are looking for ways to funnel their ill-gotten wealth out of China, and buying up a US hog farm may fit that bill

No offense, but your perspective sounds like what you’re hoping will happen as opposed to what likely will be. People who have an investment in something sometimes tend to overlook the risks they face and focus on the things that they think will maintain the status quo.

Well, I have never been accused of being an optimist! I got into farming as a strategic edge
not only for the present, but a possible very messy future. One has to remember that in life
it is the FEW (Food, energy, water) that are the most important. So I keep some wood lot
for heat, and this year I will start planting some fruit trees, as well as putting together a
rotating ‘seed bank’ so I have things to plant just in case. Personally I don;t see as dystopian
a future as some of the rest of you. If anything, my greater fear as a grain producer will
always be a large unchecked pandemic or perhaps a world war that encompasses my land.

On the plus side, you seem to be on the right track in thinking about land as a productive asset and one worth passing onto your children and grandchildren. Let’s just hope things don’t get so topsy-turvy in the years to come that holding onto it becomes more difficult than originally thought. And careful about believing to know things to be true as a matter of ‘fact’ – lots of ‘black swans’ out there to ruin all those things we find ourselves so sure of.

Oh no doubt! But if not land, what should one own? Gold? Got that. Can’t keep it all in a
shiny metal. Can only store most food for so long. Live in a armored compound and wait?
Not much of a life there. So i’ll do my farming, make my plans, and hope for the best.

Cheers,
Variable

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I am one of those ‘industrial farmers’ who help bring the world wheat and soy, though I am not doing so on a ‘massive’ scale. Nicole, I see some conflict inyour arguement, and wish to add something (actually a few things)…

1) starving people bring down governments, so governments that wish to remain in power will do their best not to let people starve
2) credit or no credit markets, the food will flow. just as the Fed printed oodles upon oodles of money to stabilize the system, governments will ensure that the food will continue to flow because…starving people bring down governments.
3) people all levered up into land will suffer, and I don;t know about the rest of the world, but the US farmer learned from the days of “FarmAid” and is no longer levered up beyond the cost of current inputs for current crops in most cases. And if the speculators get hosed and blow out, so be it, they don;t deserve to be farming anyway.
4) there is various ‘quality’ land around the world that is farmed. Some like the brasilian cerrado grows much of nothing without intensive inputs (read petroleum), while other land is productive without such intensive inputs. As energy prices go up, the energy intensive farmer is at a disadvantage to the one that has bought quality land with good transportation networks in place to get grains to market.
5) grains are, unfortunately because they are not all that healthy, one of the cheapest ways to feed people. they are fungible and highly transportable, and make great filler for a plethora of other products found on the shelves in the grocery, or as part of the stable foods of many cultures (eg. tortillas). If you take grains out of the equation, you will see mass starvation. It takes 3-7 grain inputs to ‘grow’ one meat output (depending on the animal). And while veggies are good for you, they do not store well, are highly seasonal, and in an expensive petroleum world, the “2000 mile salad” becomes much more of a non-starter than transport of grains.
6) I think it would be great if everyone put a garden in their back yard, but not everyone even HAS a back yard, let alone the inclination to plant veggies. The increasing size of cities worldwide, and the growth of mega-aglands means the avge person is beholden to the petro-grain complex be it for feedlot meat, or their box of Cheerios, Bisquick, or whatever.
7) food insecurity is real, however few think of “food as fuel”, not only for the use of fuel to produce it, but that the food itself can be used for fuel. In addition to what you write, you should see more strategic investments like the Chinese purchase of SmithField Foods, the largest pork producer in the US. Why should they care to own a pork producer? Simple — they can xport finished pork which already has “absorbed” the cost of energy, water, and food, all of which is in short supply in China. It’s cheaper to pack a ship full of hog carcasses than ship 3-7 similar sized ships full of grain, and you get the energy and water involved to boot!

Thus, from my perspective, you will most likely see no large scale collapse in the world food (grain) structure because most years you are only a few weeks away from grain storage silos running dry as you run thru each crop season. And do not forget that South America supplies when North america cannot, etc. Finally, if and when you see yet another ‘bad harvest’ somewhere, as invariably happens, you will see yet another great spike in food stuffs.

Yes, hedge-fund “farmers” paying $10k/ac and up are a little loony to be doing so, assuminga greater fool theory in land price escalation, but land bought at lesser prices can still return 5-10% a year depending on prices in a world where financialized assets return maybe 3-4% if yo are lucky. And history tells you that before the age of FIRE, most wealth was held in “real assets”, not HFT traded digital bits of “paper” ona bookkeeping screen somewhere.

In the end, if my land goes up or down, I care not, as I hope to own it the rest of my life, and for my children to own it as well. No matter what happens to the finance world, I knwo for a fact my family will never go hungry so long as rain falls from the sky. And I’ll take that deal over a share of GOOG any day of the week.

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