The Inflation Tide May Be Coming In

This is how Kroger,the grocer has been fighting gas prices. If you have a something like a membership card, the card would drop the price on thier regular gaseoline. Say it's 3.60. It would drop the price by ten cents. Now this is terrific incentive get more customers if think about this. With such an incentive can drive more customers to the business. Now when SakN'Save was in business here it was a subsidary of Winn Dixie a few years ago,they would have days where they would drop the price of gas and people would come. Of cours with the Bankruptcy Winn Dixie had to shut down SaknSave here. Now Pantry Inc which owns the Kangeroo express on the interstates don't offer any incentives. Thier problems include understaff stores. Now thier biggest mistake was keeping regular gas at 2.00 which affected thier earnings last year. To carry it further,they had close some of thier stores outside Sanford,North Carolina. Also they lost ther customer base. I can tell you honestly I was in Clinton,Ms last night and the lines at the Kroger are phonemanal to get cheap gas. It's going to be interesting tomorrow to see if the Fed can affect oil speculators and hedge funders in the commodity market of oil.

We need to drill for oil where we know there is oil, especially in the U.S.A. Only then can we expect lower prices at the pump. The environmentalists have controlled the agenda for far too long and the government has done little to help. A balance between drilling for more oil and protecting open space must be met to help in the short term. Long term, other fuel sources must be developed, but until then lets drill where we know there is oil and strike a balance with the environmentalists to agree on some safe sites to drill.

Inflation is coming. And in a big way. You are one of the few, Alexis, talking about it. Trust your instincts and keep pushing the hot button. All commodity prices except lumber are through the roof. In my business, commercial real estate developement, we are paying double for concrete and steel, triple for copper. Subcontractors are also very high in most catagories. Results; rents are going up fast for those who can pay. Otherwise, no activity. Stagflation. Higher Rents will be passed on the the consumer. Now let's look at the labor market. Wages haven't risen much. Now people are hammered with food and gas increases. Other products are going to rise next. Labor is a commodity too. We are beyond full employment. We even employ 12 million illegal aliens. A battle is looming; if unions push for higher wages, which they will, companies will want to move more jobs overseas. There's already a political backlash. It is going to worsen. What will the Democrats do? If they do anything it will be good for labor, bad for inflation. But here's the 900 pound gorilla: The world is growing. Economies are more advanced many having dumped communism for a more capitalistic orientation. Demand for everything is way up. The Fed can do what they will, but they don't control the world economy. What no is talking about is this: When the US sighed all the new various trade agreements around the world, We unknowingly bargained away the ability to control our own economy. This is very scary. Think about it. Do you think that the price of steel is going to go down when the fed raises interest rates? Does China care? We aren't swimming in our pond anymore. We're in an ocean with currents beyond our imaginations. Most folks are remembering the Demand-pull type of inflation of the Carter era, and they are saying "no way" to big inflation numbers. They are partially correct. Demand -pull is only partially to blame. Where they are wrong is that there will be big numbers posted on inflation, but most will come from Cost-push. It's already here starting to work through the system. Most of us are in total denial. Except Alexis.

I think alternative energy today is more like where the Internet was in 2001...on its way from bubble to burst.