cancel
Showing results for 
Search instead for 
Did you mean: 
hardnox
Advisor

Re: Will Farmers See Things Get Better First

Obviously it will be highly dependent on location, weather, and the interaction of the two.

 

But my guess would be that the "average" acre that is farmed at the market cash rent cost, appropriate fertilization and  inputs will fail to fully cover all costs over the next ten years.

 

Depreciation can give for a while, family living expenses too. But it probably comes down to how many of those acres you're farming and what other sources of income (outside, owned land, lower cost land) you have.

 

And as noted above, some luck. One form of luck is that most of the cumulative loss over that decade will probably stem from maybe 3 bad years. You hope they don't come in a row.

0 Kudos
hardnox
Advisor

Re: Will Farmers See Things Get Better First

Don, I don't know how far your tongue was in your cheek.

 

NIRP as it has so far been practiced in Japan and Europe means that the central bank charges member banks a fee for funds on deposit. The idea is to drive the short term rate lower. The banks still charge interest on loans and pay some sort of interest on customer deposits.

 

The multi-trillion $ question is, though, after driving assets generally higher for 35 years as rates fell from 18 to 0, can we ever get off 0?

 

And how much room for more appreciation is there once you're there?

0 Kudos
timetippingpt
Honored Advisor

Re: Will Farmers See Things Get Better First

This ZIRP lunacy has been tried so few times in history (making the value of saved capital negative) that it is hard to know for sure. Where it has been tried, it generally has not only created inflationary depressions and war, but has also actually destroyed the society where it was tried. If investment capital costs are too low, you create a condition where every good will be over-produced with technology and not people, thus not enough jobs, despair, and ultimately things get out of hand. Add in increasing labor availability from immigration (or forced exodus might be more appropriate) and some would argue we are already seeing that in Baltimore, St. Louis, etc.

 

I'm actually optomistic because I think the people around the globe in this partially free market will crush these currency follies before they crush the people. Any reset will not be without some dislocation of course (meaning paper assets will become more accurately valued).

 

ZIRP is really only intended to amplify the income inequality everywhere it is used. In a normal, self-correcting system, we would have already massively reduced the wealth of the rich and rewarded them for their poor investments and poor decisions. As it is, the gov put keeps them whole while it punishes the poor in terms of inflating the currency. I have said before, Obama the supposed socialist (har) has overseen the greatest wealth transfer in all of history from the poor to the rich. Nicely played on his part but the facts will remain.

0 Kudos