An Inflationary Cocktail in the Making

An Inflationary Cocktail in the Making
Thu, 30 Sep 2010
Richard Benson

Expect the prices at supercenter retail stores to increase as well. Wal-Mart, as one example, grew so large and great by blowing up small stores on Main Street, along with our American factories, which were moved to China to take advantage of cheap labor.

Wal-Mart and other superstores have effectively become storefronts for China, Inc. However, given labor unrest in China, major Chinese manufacturers have caved in and given their workers 20 percent wage hikes.

The days of cheap Chinese labor are fading. Worst yet, for consumer prices, it actually looks like our government has made a conscious decision to throw the dollar under the bus and go for a 20 – 40 percent dollar devaluation against the Yuan to try and boost exports, limit imports, and create American jobs.

Moreover, with higher wages and a higher currency, those 1.3 billion hungry Chinese will be better positioned to bid in the world for oil, wheat, and pork bellies. So, the likely trend for commodity demand will be up in a world where the Russian wheat crop failed, and the world’s coffee and cotton crops were duds.

Full article
http://www.sfgroup.org/An%20Inflationary%20Cocktail.htm

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