10 Reasons Why Lindsay Lohan Is Right About The Federal Reserve And The Price Of Food

Does Lindsay Lohan understand monetary policy better than Ben Bernanke does?  The other day, her Twitter account sent out the following message: "Have you guys seen food and gas prices lately? U.S. $ will soon be worthless if the Fed keeps printing money!"  Well, it turns out that it was a "sponsored tweet" that Lohan was paid to send out, but in a subsequent tweet Lohan explained that "i actually do care about gas and food prices, so whether it's an #ad or no, it's important for people to be aware of it."  Okay, so we probably will not see Lohan at any "End the Fed" rallies, but it turns out that in her own bizarre way she has brought a little bit of attention to some very important issues.  Food and gas prices are skyrocketing, and a lot of the blame for that can be placed on the shoulders of the Federal Reserve.

So does Lindsay Lohan really understand what is going on in the world of economics?

Of course not.

But if we can get celebrities talking about the Federal Reserve and rising prices that is a good thing.

Why?

Well, because Americans listen to celebrities.  When a top celebrity says something controversial it gets a lot of attention.  The more attention that we can draw to the problems the Federal Reserve is creating the better.

The reality is that the Federal Reserve has been at the heart of our economic problems for decades but most Americans don't understand the Fed or how it works.  The more Americans that get educated about the Federal Reserve the better.

The following are ten reasons why all Americans should be concerned about the Federal Reserve and rising food prices....

#1 What we are witnessing right now is part of a long-term inflationary trend.  Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its value.  An item that cost $20.00 in 1970 would cost you $116.48 today.  An item that cost $20.00 in 1913 would cost you $456.49 today.

#2 Over the past couple of years, the Federal Reserve has used a process called "quantitative easing" to pump hundreds of billions of new dollars into the financial system.  This has helped push the cost of food, gas and just about everything else up.  Even though "QE2" has now come to an end, the Federal Reserve has announced that they are going to continue to "reinvest" hundreds of billions of dollars into the financial system.

#3 The Federal Reserve is not the only central bank that has been doing this sort of thing.  Sadly, central banks all over the world have been recklessly printing money over the past several years.  This is creating inflation all over the planet.

#4 Prices are going up but wages are not.  One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with soaring food prices and soaring gas prices over the next 12 months.

#5 We have already seen a tremendous amount of food inflation in the United States during the last 12 months.  According to a recent CNBC article, over the past year many of the most popular foods in America have absolutely skyrocketed in price....

Coffee, for instance, is up 40 percent. Celery is 28 percent higher while butter prices rose 26.4 percent. Rounding out the top five are bacon, at 23.5 percent, and cabbage, at 23.3 percent.

#6 In many areas of the world food inflation is far worse than it is in America.  Over the past year, the global price of food has risen by 37 percent and this has pushed approximately 44 million more people around the world into poverty.

#7 When the Federal Reserve and other central banks create new money, it usually goes to big banks and major financial institutions first.  So what have the big banks and the major financial institutions been doing with this new money?  Well, they have been sinking a lot of it into hard assets such as oil, precious metals and agricultural commodities.  Over the past 12 months, almost every single agricultural commodity has risen substantially in price.  For example, the global price of wheat has approximately doubled over the past year.  But it is not just wheat that has been skyrocketing.  Check out what a recent Bloomberg article had to say about what has been happening to many key agricultural commodities over the past year....

Corn futures advanced 77 percent in the past 12 months in Chicago trading, a global benchmark, rice gained 39 percent and sugar jumped 64 percent.

#8 Many areas of the world are experiencing severe drought right now, and this is also harming food prices.  For example, the Horn of Africa is experiencing the worst drought that it has seen in 60 years.

#9 The United States is also having crop problems as well.  All of the flooding, wildfires and tornadoes that we have seen this year have certainly not helped things.  There is even a major "east coast stink bug epidemic" which is causing chaos for large numbers of farmers.  In general, U.S. agricultural production has not been blessed this year.  It just seems like there is crisis after crisis.

#10 A lot of agricultural production that would go for food is now going for other purposes.  For example, almost a third of all corn grown in the United States is now used for fuel.  This is putting a lot of stress on the price of corn.

So how concerned about food prices should we be?

Well, renowned investor Jim Rogers recently put it this way....

"We’ve got to do something or we’re going to have no food at any price at times in the next few years."

That doesn't sound good.

But it is not just the price of food that is going up.

The price of gas has also gotten crazy.

Right now, the average price of a gallon of gasoline in the United States is approximately $3.54.

One year ago, it was $2.76.

Thankfully, the price of gas has actually come down a bit recently.  Earlier this year it hit $3.99.

Sadly, back in the 90s you could go to just about any gas station and fill up for about a dollar a gallon.  Over the past couple of years we have gotten comfortable with outrageous gas prices, but the reality is that what we are seeing now is part of a very disturbing long-term trend....

Health care costs are also spinning out of control.  In a recent article about health care statistics, I noted some of the stats that show that the price of health care in the U.S. has been absolutely soaring.  The following are a couple of those statistics....

*According to the Bureau of Economic Analysis, health care costs accounted for just 9.5% of all personal consumption back in 1980.  Today they account for approximately 16.3%.

*The United States spent 2.47 trillion dollars on health care in 2009.  It is being projected that the U.S. will spend 4.5 trillion dollars on health care in 2019.

Education has also gotten insanely expensive as well. In a recent article I wrote entitled "Is College Worth It?", I noted that since 1978 the cost of college tuition in the United States has gone up by over 900 percent.

Today, Average yearly tuition at U.S. private universities is up to $27,293.  That number has soared by 29% in just the past five years.

Unfortunately, it appears that things are going to get even worse.  Thanks to dramatic budget cuts by many state governments, it is being projected that college tuition costs are going to rise even faster this year.

All of these rising prices are really squeezing the budgets of families all across America.

Things are getting really tough out there.

So if food prices keep going up this rapidly, what are we all going to eat?

Well, one scientist claims that he has been able to create an "edible steak" out of human feces.

How gross is that?

But don't laugh - if the price of food keeps going up this rapidly many Americans might have to literally eat garbage someday.

The U.S. economy is in the middle of a long-term economic decline and thousands more Americans fall out of the middle class every single day.

Until the past couple of years, the vast majority of Americans believed that things would always be wonderful in America.

Now that has completely changed.

According to a new poll by CBS News and The New York Times, 39 percent of Americans believe that the U.S. economy has now entered a "permanent decline".

As prices continue to rise, the number of American families that will not be able to put food on the table is going to continue to go up.  Already there are 44 million Americans on food stamps.  People are going to get desperate.  Society is going to continue to crumble.

So yes, there are lots of reasons why Lindsay Lohan and everyone else in America should be very concerned about the Federal Reserve and the price of food.

Once our economic prosperity is gone it is going to be incredibly difficult to get back.