CSAs, Deflation and Japan Relief

Sundry stuff on a busy day - and a day when everyone is transfixed by world events.

First, my colleage at Dean's Corner has offered a good guide to high tech ways to donate money to Japan relief. There are 10,000 people in Japan who haven't eaten since Friday by the best estimation, and events are adding to the horror. If you want to help, these are some simple ways.

Second, the always thoughtful Kurt Cobb has a great essay everyone should read about the deflationary impact of high oil prices:

The logic is so simple it's hard to understand why smart people with advanced degrees can't see it. Commodities, particularly oil, pull money away from other sectors of the economy. When people are forced to choose between paying for heat and gasoline or paying the mortgage, they pay for heat and gasoline. Cars don't budge without gasoline (unless you can afford an electric one) and most people need their cars to get to work. The heat can be turned off rather quickly by the utility company in comparison to the glacial pace of a mortgage foreclosure that can take many months and sometimes more than a year.

This situation is particularly problematic because it pulls money out of the financial sector. And, despite all the nonsense about the financial industry being on the mend, the industry is actually becoming more and more vulnerable by the day as it increases its exposure and leverage to financial and commodity markets. The speculative animal spirits of the banks, hedge funds and other large investors, buoyed by all the virtually free money available for borrowing and huge taxpayer-financed injections into zombie banks, may now be hurtling us toward another jaw-dropping financial catastrophe. As Hyman Minsky might put it, stability and prosperity lead to instability and crisis as market participants become more and more emboldened on the upswing creating the illusion that all is well. Then, when prices and credit expansion go beyond what the economy can sustain, a decline ensues that is often dramatic as confidence suddenly shifts to revulsion and fear.

It is a critical point, and Cobb is absolutely right - most people can't see it. Do read the entire thing.

Finally, if you live in the greater Albany/Schenectady/Saratoga/Troy region or will be visiting there during the spring, our plant CSA, focusing on unusual edibles, permaculture plants, herbs, native plants and of course, the best heirloom garden vegetables is finally taking members. We'll have drop offs around the region! Check out the details here, and join by sending me an email to jewishfarmer@gmail.com! Someday I'll have a lovely online checkout system, but I'm a work in progress! You don't have to join to get great plants for us, but the CSA members get the best deals and the first choice of varieties!

Ok, back to the seed mines!


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I share your concern about Japan. I lived there four times for a total of 13 years, and I'm deeply worried about friends still there and the Japanese people at large.

However, people are not starving because there's no food. The people who are suffering right now are in areas hard hit by the earthquake and tsunami that are now inaccessible. Japan has a robust Red Cross organization of its own. I recommend this cautionary blogpost about donating to Japan right now, what will and what won't help: http://blogs.alternet.org/speakeasy/2011/03/15/what-to-do-about-japan-a…

By Jeanmarie (not verified) on 15 Mar 2011 #permalink

Hmmm...high commodity prices are not by themselves deflationary, but because other, larger, deflationary forces (credit destruction, slowed velocity of money) are already at work in the economy, and have been for the last two or three years; the Fed's money-pumping has only barely kept up. The tepid recovery and complete failure to clean out the Stygian stables of the financial system keep wages suppressed, leading to people having to make tougher choices between essentials (food, energy) and nonessentials. But that's a symptom, not a cause, of deflation. You might remember the 1970s? Rising energy prices in those days were not seen as deflationary.

Jeanmarie, I don't think anyone thinks that the Japanese are starving because there's a famine - the problem is that moving food into dangerous areas is expensive and requires money. Yes, Japan is a wealthy nation and has a vital Red Cross, but giving money to the International Red Cross is not a bad idea here - just as the US found it difficult to mobilize funds during and after Katrina, so too will Japan need help.

Moopheus, the difference, of course, was that rising energy prices in the early 1970s still went in large part to the US, which had just peaked in production. The transfer of large chunks of your wealth to other nations strikes me as a more significant factor. But the other thing is that stagflation is a misnomer - you can have *deflation* and *price increases* at the same time. Stagflation equated popular understanding of inflation (to be about prices, rather than the overall money supply) with economic and blurred them together to explain a perfectly normal phenomenon - a deflationary economy with significant price increases.


Yes, that's right. We have deflation, and we have commodity price inflation. But we do not have deflation _because of_ commodity price inflation. We have it because the banks are broke and the overall money supply is shrinking despite the Fed's efforts. There is high global demand in the commodity markets, and evidence of speculative manipulation in certain markets (esp. oil). There's other stuff going on too, of course--China's currency manipulation means that some of the inflation we should be seeing is showing up in their economy instead.