Cooled Inflation to Heat Back up Quickly as the Dust Bowl of Summer Smoke, Cracked Earth and Narrowing Rivers Continues Unabated
Now that fuel shortages have started to arrive throughout Europe and a food crisis is predicted for Britain, everyone will be turning to the USA for supplemental supply.
To grasp how meaningless today’s inflation numbers are, simply remember that I predicted this inflation report would be a second soft one in a row due to the rigged drop in the prices of oil and fuel that were based on Trump’s endless lies. Those 45 ceasefires to negotiate a deal that Iran was desperate to make are now PROVEN to be lies, everyone of them. As I said back then, reality will catch up to those lies.
Iran walked away from 45 of the 45 times Trump claimed Iran had called him and was desperate to deal. They stayed with their initial demands without flexing every single time, and that is where they ended, except that, more recently, they added a couple of even tougher demands and promised they will now make obtaining a nuclear bomb a national priority because, they claim, Trump has shown them they need one in order to keep from being attacked.
Since Trump could not be trusted on any of those occasions, those days of talks are decidedly gone. Iran has now said it will never talk to Trump. It will never make a deal with him, and Trump has retreated back to his desperate strategy of laying siege on Iran with his blockade now that he is getting low on weapons for attacks. At least, so it appears, though one report I read said he is getting ready for a ground war, but I don’t know the source in order to have any idea if it is reliable, so I didn’t include it in the headlines. We’ll see if more on that emerges from other sources.
The Trump administration’s parade of lies continues, but there are a lot fewer who believe them now. Even the formerly Trump-thumping site Zero Hedge now routinely calls out the relentlessly nauseating merry-go-round of the aging windbag’s vain and empty proclamations:
In his latest Wednesday Truth Social post, Trump issues a familiar refrain (one that will likely be on repeat up to the November midterms), claiming that the USA has “total control” over the Strait of Hormuz and “I think we will keep it”. It’s also yet more confirmation that he’s opting for economic siege warfare as the US military campaign is on halt. He also did his bizarre “Praise be to Allah!” sign off.…
It has become beyond obvious that there is no broader peace process and that things are in a stalemated situation amid what’s broadly seen as a Washington retreat from military confrontation, leaving Iran to press its own vision of management over the Strait of Hormuz with Oman.
That, of course, is where endless lying will leave you.
While President Trump has settled into a waiting game which once again bets on sanctions and economic warfare to eventually force Tehran to bend, Iranian military leaders are declaring that “victory is on our side”.
Tehran’s economy is hunkering down to survive for the long haul in this war of attrition.
Mohsen Rezaee, the newly appointed head of Iran’s Supreme National Security Council, has informed China’s ambassador to Tehran, Cong Peiwu: “As long as America does not change its behaviour and does not accept Iran’s conditions, the Strait of Hormuz will not be opened.”
But so far on Wednesday there’s been an uneasy quiet, so at least the bombs have fallen silent. But on Wednesday Reuters while citing mediators has painted a grim picture: “There has been absolutely no progress on this issue,” the [Pakistani government] source added...
“There is no talk of an extension because, from Iran’s perspective, there is no period that began and therefore nothing to extend.”
So, getting back to stealth inflation …
I won’t spend much time on it since it came in exactly as I and most economists expected. Almost all of the reduction in overall CPI came from actual deflation in energy prices while most other things went up. That is because the big ceasefire that caused oil to drop in price in accordance with Trump’s jawboning—ready as the bots are to take everything he says at face value—was still in play during July. So, oil and fuel prices artificially fell. (Artificially in that there is no reason on earth anyone should think the war and its blockades are ending to where we’re out of the woods on oil.) That is really all there is to say.
Next month, when we to get the August inflation report, we will likely get back to real … unless Trump tries another schmeasefire, claiming Iran wants to deal. That, however, has become problematic for him now. While the AI betting bots likely remain more than ready to take everything the former leader of the free world says at headline value, the part of the United States that is still made of people is getting sick and tired of the nauseating lies, including a great many of his own supporters (like ZH).
The president, who has lost free-world leadership because no leaders anywhere trust him anymore, APPEARS to have given up on running the merry-go-round any longer; still, with Trump, who can say? He has finally reached a point where he makes himself look more and more idiotic in the public eye the longer he repeats the big lie about Iran wanting to negotiate. Even ZH said it is now “beyond obvious” that isn’t true. He’s been losing the support of major social influencers left and right, so the lies are chipping away at him. They’re getting harder to sell even to ever-Trumpers.
Anyway, now that the actual promised fuel shortages are showing up, the power of those shortages appearing more and more in the headlines may even offset Trump’s drunken sway over the betting bots. I think AI will get a massive brain short if it tries to square that circle of Trump’s lies with the square truth of fuel shortages.
You can read the details about inflation in the Zero Hedge article I’ve linked to below if you want, but suffice it to say the drop in overall inflation, small as it was, was almost entirely due to major energy deflation, and that dream has dissipated like the smoke it was made out of.
Britain’s big bust in food
Right now, the inflation that counts is seen coming in tidbits of news while we wait for energy prices to complete their upward return to reality with “reality” meaning the higher level they will hit as the fuel shortages grow more noisy now that storage buffers all over the world are running dry.
One of those tidbits is a story in the headlines today that confirms what I just wrote about food shortages and famines earlier this week. (See the now popular article: “CALAMITY: Oil Blows out. So Does War. So Does Finance. So Will Food.”) The story in today’s news describes how it is that the Britain is facing its worst food crisis in decades:
Britain is facing its worst food security crisis in decades as repeated heatwaves risk ruining farmers’ harvests, analysts have warned.
The warning was issued as nearly three quarters of England was declared to be in drought, increasing the threat posed to food production across the country.
Soaring temperatures are damaging wheat yields, vegetable crops and milk production, Shore Capital warned, leaving the UK increasingly reliant on food grown abroad.
Being reliant on food grown abroad is not where you want to be when a shortage of fertilizers made from natural gas, the energizing petrol of the plant kingdom, is putting many bread baskets around the world at risk of decline.
“The UK has not been so close to a food security challenge for many decades,” they said.
Drought was extended across more areas of England on Monday after a record-breaking spell of temperatures, and now covers 71pc of the country.
This has left more than 27 million people living under hosepipe bans.
There is, as described in my earlier article, a gathering of storms coming together on food availability—a weather crisis, a fertilizer crisis, along with a fuel crisis driving up the cost of farming and of transporting food to market.
And a food crisis means this:
Alistair Carmichael, the chairman of the environment, food and rural affairs committee, told the BBC on Monday that shoppers must brace for “further food price inflation shocks” later this year.
Now that article is just speaking for Britain, but the same thing can be seen in France and other parts of Europe. Since it makes those nations, as the article says, more dependent on other nations for their food—especially grains, which the US grows a lot of, while it is in drought conditions, too—what do you suppose that additional and possibly desperate foreign demand for US food will do to US food prices this winter? While we may have enough for ourselves, you’ll have to compete with a good part of the rest of the world that needs it in order to get it. Get it?
He said: “The problem for farmers today will be the problems for consumers in six or 12 months’ time, because you see massively decreased yields for wheat and barley, and you see increasingly concerned voices coming from vegetable producers as well….”
Wheat yields in the UK are down by around 14pc this year, while oat production has fallen by at least 9pc.
The National Farmers Union warned last week that there could be a shortage of certain food products if the drought continues.
That means this for Britain:
The threat to domestic production could drive food inflation up to 5pc in the coming months, Shore Capital warned, up from the current rate of 1.7pc.
But as Britain and France and other nations turn demand for food toward the US, it means something similar is likely for us, too, especially if our drought gets worse.
“The assumption the UK can import when the agricultural outlook is difficult is severely flawed and based on that assumption there will be availability beyond the UK,” they said.
French and Spanish food production has been hit by droughts and wildfires, while the Iran war has limited the supply of fertiliser through the Strait of Hormuz.
Exactly. Europe’s breadbasket known as Ukraine is also badly damaged by war. So, they all come crowding toward the US.
“Household budgets remain stretched, consumer confidence is fragile, and retailers continue to grapple with rising operating costs.”
Like the spreading of cracking soils and wildfires in a drought, the food crisis is broadening. Right now, just as with fuel shortages, we see the headlines mostly covering what is happening in Europe. The degree to which that will spread in the form of increased demand for US agriculture is unclear. So is the degree to which drought will spread in the US if the current El Niño becomes the “Super El Niño” that the National Weather Service keeps predicting. I DON’T exactly trust the NWS anymore either, as they have become a government organization riddled with hype and click-bait headlines in order to relentlessly reinforce their climate-change narrative. However, El Niño’s are a regular cyclical event, and this one, by all accounts I've read, looks like it could be a big one.
Typically El Niño brings wetter conditions to the South and cooler, wetter conditions along the gulf coast and in the Southeast US, while the North and the Pacific Northwest tend to be warmer and drier. Shifts in the jet stream increase storminess in the southern U.S. but reduc Atlantic hurricane activity. So, it could alleviate drought conditions in the southern half of the nation over the winter, but could make them worse up north.
For right now, however, it just seems to be hotter and drier everywhere. A super El Niño might end the southern droughts but create a host of other problems, such as vast flooding of the Mississippi and other drainages that could delay planting next spring. Or it could be a godsend justin the knick of time. I don’t think I’ve ever lived through a “super El Niño,” so I don’t know, but in the northern grain regions it could worsen droughts.
In the meantime, the food shortages are looking more likely in Europe, and the fuel shortages are already arriving in Europe, while the US is being asked to supply both. So, you can easily do the math to see where that is headed. It might be a good time to follow the simple plan I’ve laid out a number of times to create a little practical food buffer of your own.
