by Dave Kranzler, Investment Research Dynamics:
Too much debt, poor capital allocation decisions (McMansions, expensive leased cars, spending to “keep up with the Jones’) and declining disposable income. It’s hitting the general middle class in America similarly to the way in which it is hitting the American family farmer.
The Wall Street Journal posted an article titled, “The Next American Farm Bust Is Upon Us” earlier this past week. The bubble in farm land, just like the general real estate bubble, was precipitated by the Fed’s money printing and general easy money policies. The cover story was that the policy was directed at stimulating economic activity. But the actual result varies, with banks, corporations and ultra-wealth elitists benefiting to the detriment of the rest of the country.
A friend and colleague of mine who happens to be a wheat farmer shared with me his real life experience with trying to compete against the Monsanto-driven corporate farms in this country. He’s working to move the production of his farm from wheat to industrial hemp but will need legislative help in his State to accomplish this:
Where some farmers get in trouble is spending too much for new equipment, and/or not fertilizing enough (or at all)… and/or not being good farmers in general.
For farmers carrying a high debt load, it’s challenging right now. Prices for wheat and corn will rebound eventually, but I’m not sure these grains are the best crops for farmers to grow going forward.
Russia is the world’s largest exporter of wheat, with Canada and the US tied for #2. Russia is also increasing their corn production (non-GMO) to be competitive with American farmers. Although demand for wheat and corn will never go away, these reasons are why I’m bearish on grain farming… and bullish on industrial hemp.
That’s why I’m cautiously optimistic about the industrial hemp bill becoming law in my State this year (fingers crossed).
Make no mistake, the plight of the farmer parallels that of the general middle class. While some portion of the middle class is doing the proverbial celebratory end zone dance right now over the few thousands in paper profits they are making in the greatest stock bubble in U.S. history. Most if not all of them will hang around too long and watch paper profits turn into paper losses when this historic equity bubble pops.
Meanwhile the Establishment elitists are coming out of the woodwork and warning the proletariat to take their profits out of the market and run, like these comments from James Tisch, CEO of Loews Corp, Tisch family scion, member of the Council on Foreign Relations and former director of the NY Fed. In reference to the average retail investor.