Monday, April 06, 2015

The savings glut hypothesis...

 Is gaining some momentum. Very slowly, the idea of low returns to capital for a loooong time is becoming not just less unthinkable but more inevitable.

Third, we may be headed into a world where capital is abundant and deflationary pressures are substantial. Demand could be in short supply for some time. In no big industrialised country do markets expect real interest rates to be much above zero in 2020 or inflation targets to be achieved. In the future, the priority must be promoting investment, not imposing austerity. The present system places the onus of adjustment on “borrowing” countries. The world now requires a symmetric system, with pressure also placed on “surplus” countries. [More]
I'm still working through what this means for farmers. Could Aaron spend his career believing that borrowing at 4% is to be expected? Will any project that can earn a 5% ROI be worth looking at?
For example, at a negative (or even zero) interest rate, it would pay to level the Rocky Mountains to save even the small amount of fuel expended by trains and cars that currently must climb steep grades. [More]
It is looking to me more likely that this is indeed the future. Working through what this means for investing and saving, especially for retirement is not encouraging for many. If the best you can hope for is 3-4% return, the mountain of wealth needed to retire becomes immense.

Which, of course, tends to increase the savings glut, postpone consumption and - yep, you guessed it - reduce interest rates.

Wednesday, April 01, 2015

Tough turning back...

 Just as guys are trying to plant more non-GMO seed due to resistance, cost, or whatever, producing seed pure enough for non-GMO standards is getting nearly impossible.  I've talked about the problem of growing non-GMO specialty corn.

I think the standard for seed is 0.1%; my standard for non-GMO is 1% and it can be really problematic, even with big (200+ A) fields.

This is pure hearsay - and I can't even remember who said it, but the rumor is is takes huge fields of beans to bury non-GMO seed corn production in to meet the purity test.

If you have any better info please comment or give me a tweet. [@jwphipps]