Russell, I first started really thinking about this after listening to your podcast in March 2021 with grant Williams. It was a very good discussion. You said that cbs are political animals (agree) and that food price inflation disproportionately impacts poor people (agree) and hence will result in a political will to increase interest rates. We are living this now. You then said that it’s this increase in interest rates in the past which catalyses market crashes and Ponzi schemes being found out. The dynamics being asset prices being bid you by more and more debt gets reversed and the Ponzi scheme falls apart. I would be interested in what you see as canary in coal mine here as it is is different in every cycle. What do you think are the unique “Ponzi schemes” this cycle which aren’t obvious. (As fellow Aussie, Aussie housing is probably a stand out). Exploring this in future blogs would be really interesting IMO.
As always - great work! One thing I'd like to bring to your attention. Peter Zeihan was recently on the Grant William's Podcast. He mentioned that the Chinese have not completely eradicated the Swine flu and that all of this herd rebuilding will ultimately go to waste. This obviously changes the dynamic for further food inflation in a massive way. Have you heard anything regarding to the swine flu not being completely eradicated? Or is this just rumor?
Im really looking forward to the next one along with your long term investing decisions!
Do Chickens come into play at all? Only reason im asking is, bird flu is killing a lot of chickens in our area, enough to shut down an egg laying farm in our area. It seems to be happening in other areas as well in the US.
Some quotes to add to the discussion, copied from TME that quoted from a podcast:
15% of world’s calories come from wheat. 1/3 of all wheat comes from Russia and Ukraine.
Russia has banned export of wheat; a lot of wheat supply blocked. Whole planet earth operates on a 90 day food supply. Once we stop making food the world runs out in 90 days. Most vulnerable nations lose the supply first; very quickly a massive bifurcation. Already have 1bn living on under 1200 calories.
The even bigger problem is the future planting season. Wheat spring planting season is right now; not a lot of planting going on.
This is because of the fertilizer problem. All fertilizer is made up of nitrogen, phosphorus or potassium. All farmers must use this. Without fertilizer crop does not grow. Nitrogen is made from natural gas. Nat Gas prices have doubled. The price of nitrogen based fertilizer has gone from 200 per ton to 1000 per ton. 10% of world phosphate and 25% pf potash is from Russia and that has been banned for export. Prices on phosphate and potash have sky-rocketed too. Now it is so expensive to grow crop that farmers are pulling out of production.
The worlds is “scrambling” for food right now, corn, soybeans etc skyrocketing. Strategic reserves of food being released now.
A bad weather year can be disastrous. Regardless, it will be a humanitarian disaster within 12 months and we will see hundreds of millions will go starving (think famine)
We just don’t have enough food. The way supply chains are set up will just don’t work.
thank you for the post Russell, looking forward to the next one!
Russell, I first started really thinking about this after listening to your podcast in March 2021 with grant Williams. It was a very good discussion. You said that cbs are political animals (agree) and that food price inflation disproportionately impacts poor people (agree) and hence will result in a political will to increase interest rates. We are living this now. You then said that it’s this increase in interest rates in the past which catalyses market crashes and Ponzi schemes being found out. The dynamics being asset prices being bid you by more and more debt gets reversed and the Ponzi scheme falls apart. I would be interested in what you see as canary in coal mine here as it is is different in every cycle. What do you think are the unique “Ponzi schemes” this cycle which aren’t obvious. (As fellow Aussie, Aussie housing is probably a stand out). Exploring this in future blogs would be really interesting IMO.
Russell,
As always - great work! One thing I'd like to bring to your attention. Peter Zeihan was recently on the Grant William's Podcast. He mentioned that the Chinese have not completely eradicated the Swine flu and that all of this herd rebuilding will ultimately go to waste. This obviously changes the dynamic for further food inflation in a massive way. Have you heard anything regarding to the swine flu not being completely eradicated? Or is this just rumor?
🙌🙌🙌🙌
Im really looking forward to the next one along with your long term investing decisions!
Do Chickens come into play at all? Only reason im asking is, bird flu is killing a lot of chickens in our area, enough to shut down an egg laying farm in our area. It seems to be happening in other areas as well in the US.
Some quotes to add to the discussion, copied from TME that quoted from a podcast:
15% of world’s calories come from wheat. 1/3 of all wheat comes from Russia and Ukraine.
Russia has banned export of wheat; a lot of wheat supply blocked. Whole planet earth operates on a 90 day food supply. Once we stop making food the world runs out in 90 days. Most vulnerable nations lose the supply first; very quickly a massive bifurcation. Already have 1bn living on under 1200 calories.
The even bigger problem is the future planting season. Wheat spring planting season is right now; not a lot of planting going on.
This is because of the fertilizer problem. All fertilizer is made up of nitrogen, phosphorus or potassium. All farmers must use this. Without fertilizer crop does not grow. Nitrogen is made from natural gas. Nat Gas prices have doubled. The price of nitrogen based fertilizer has gone from 200 per ton to 1000 per ton. 10% of world phosphate and 25% pf potash is from Russia and that has been banned for export. Prices on phosphate and potash have sky-rocketed too. Now it is so expensive to grow crop that farmers are pulling out of production.
The worlds is “scrambling” for food right now, corn, soybeans etc skyrocketing. Strategic reserves of food being released now.
A bad weather year can be disastrous. Regardless, it will be a humanitarian disaster within 12 months and we will see hundreds of millions will go starving (think famine)
We just don’t have enough food. The way supply chains are set up will just don’t work.
(from All-In Podcast)
https://themarketear.com/posts/ckY_2hjuA-