Brace Yourselves: Inflation Taking a Bite Out of Idaho Farms
Inflation is going to inflict even more pain on Idaho. U.S. Senator Mike Crapo explains that Producer Price Inflation is raging at just under 10 percent. Last week, the Consumer Price Index (CPI) clocked in at 7.5 percent nationally for January. Idaho was at 7.7 percent. The producer index is a sign of things to come. Those costs haven’t yet been passed on to buyers. Crapo and his Republican colleagues issued the warning at a Capitol Hill news conference. Crapo lays the blame squarely on excessive government spending.
The more dollars printed and slushed through the economy do a couple of things. There are too many dollars chasing too few goods. And the value of the dollar falls.
Your Dollar is Losing Value
Consider fuel costs. In real dollar terms, there was a higher price for gasoline in the summer of 2008. The price per barrel was high and driven by demand. There are some similarities today, but another factor in the rising price is that it takes more dollars to cover the cost. In other words, your dollar is worth considerably less. An analogy is a bartender who waters his whiskey. Eventually, it loses much of its proof, that is, its alcohol content drops.
A Pyrrhic Victory for Republicans
Expect this to be one of the many issues Republicans will ride to victory on in November.
Interest rates are expected to rise in an attempt to tame inflation. That will also increase the size of the national debt and the debt service. Borrowing by the public will also likely be curbed by rate hikes. Expectations of a robust or stable economy will falter as we could well be heading for a deep recession.
Farming Just Got Tougher
Southern Idaho’s agriculture sector can usually handle economic downturns, but farms are already shelling out more money for fuel, fertilizer, and hay. Borrowing money for new equipment will also become more difficult. Compound this with drought and there are some frightening worst-case scenarios.
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