Comment by Brock

Entered on: 4/18/2008 6:33:56 AM

Historically, food and energy prices have been negatively correlated. That is, for a given rise in energy prices above the overall CPI, food prices have risen proportionally lower than the CPI. This is precisely for the reasons Mish states (if money and production are stable, one rising price has to be offset by a lower price somewhere else).

With the ethanol program, however, it appears that the wise central economic planners have successfully positively linked food and energy. Now, both food and energy can rise together as a percentage of your monthly budget. Congratulations!