Give Us Prosperity Or Give Us Inflation
Farm values are up 20% over last year, is this a surprise to anyone?
AP by way of Business Week:
The Federal Reserve Bank of Kansas City says the farm boom is continuing this year as high crop prices and improved livestock prices combine to drive farm income higher.
The Fed said Friday that robust farm income in region helped drive cropland values up roughly 20 percent over last year.
The 10th Federal Reserve District, based in Kansas City, Mo., covers Kansas, Nebraska, Oklahoma, Wyoming, Colorado, northern New Mexico and western Missouri.
The Federal Reserve says farmers are using their improved income to invest in land and equipment. Bankers throughout the district reported an increase in the number of farmers using cash as a down payment on land purchases.
"My favorite dark-horse bubble candidate for the next decade or so is farmland," wrote Yale economist Robert Shiller, author of Irrational Exuberance. Bubble-spotting has become something of a national pastime but in these uncertain and unreasonable times, it's hard to know one when you see one. We could say there's a bubble in Treasurys but we know that's only because the primary dealers are trying to get in everything they can before the only buyer (the Fed) walks away from the table. If they walk away, that is.
Meanwhile, (actual) inflation hit a 2 1/2 year high, up 3.2 percent if you don't magically factor out food and energy:
Stripping out volatile food and energy costs, core CPI rose a mild 0.2 percent from March. The 12-month increase at 1.3 percent was at its highest level since February 2010. The Fed, however, would like to see that closer to 2 percent over time.I guess it's a good thing we can't eat iPads.
"The report raises no red flags for the Fed of an unruly inflationary dynamic taking hold," said Julia Coronado, North America chief economist at BNP Paribas in New York.
"Surging headline inflation has taken some steam out of economic momentum of late which would leave the Fed more inclined to be cautious in removing accommodation."
Year-on-year core CPI has risen 0.7 percentage point from a record low of 0.6 percent in October, an increase Fed officials will keep an eye on as they decide when to tighten policy.