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"Getting Down to Grilling Beans!"

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The U.S. is out of balance. Like an out-of-balance tire on your car, left unattended, the vibration becomes so annoying that it can no longer go unnoticed or unattended. Doing so could risk the wheel flying off as the associated parts that connect the wheel begin to fail.

The imbalance that we are experiencing in the United States is that between our monetary and our physical / energy systems. One of course is infinite (the ability to print money) and the other is finite. To work long term, the two system would have to balance…and you may have recently noticed a definite vibration on the left front.

Let’s look at an individual case of imbalance and at the same time a King of Simple prediction. Beef prices continue to rise at all levels. The price of a good piece of beef in the restaurant resembles your January heating bill. The meat case prices at the grocery store leave one in a state of temporary shock. In fact, it may be possible to take the kids to the grocery on Halloween and scare the pants off of them.

So what is driving beef prices? Burning up the cattle’s food supply as subsidized ethanol isn’t helping matters. The skyrocketing cost of diesel and fertilizer used to produce animal feed is also pushing up costs. And then there is the cost of transport for the cattle trucks with our current $5.00 diesel fuel price, and the list goes on.

In the mean time, real wages are falling due to a glut of labor and increasing unemployment. What we have are the two most important factors of a fluid beef market, wages and price, going in different directions.

The result will be that more and more Americans will strike beef off their shopping lists as they struggle with rising energy costs, skyrocketing inflation, and continual job losses. The prospects for wages rising in this climate when our best jobs are going to foreign interests; is bleak.

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On the other hand, there is little the beef producers can do to bring the price of raising beef down. At some point, the cost of raising the beef and the ability for the public to purchase it will collide and the wheels will fly off the beef producers’ truck from the imbalance.

This is a classic example that could be applied to thousands of products and situations. And one that has no easy answer as a permanent solution. As we continue to pressure our failing resources to support our ill conceived growth oriented society, the imbalance will continue to get worse and the wheels will surely fly off the whole shebang.

Wake up Middle America, we’re going to get down to grilling beans…and they fall through the wires!

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www.kingofsimple.com

Mike Folkerth is the author of "The Biggest Lie Ever Believed" and is not your run-of-the-mill author of finance and economics. The former real estate broker, developer, private real estate fund manager, auctioneer, Alaskan bush pilot, (more...)
 

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