# Inflation on the Way



## usmcstinger

The use of Keynesian Economics causes inflation. The Brits found this out and abandoned this flawed economy theory. It has never worked.

When the Fed stops putting money ( it does not have ) into the economy, inflation will start and interest rates
will rise. Looks like we are going back to the Carter years.

Who is most effected by inflation, the Middle Class and Working Poor.


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## Pennywise

The stats remove food and energy from the equation because (allegedly) they are too volatile as commodities to accurately gauge economic health, but anyone who shops for food knows that inflation has been a reality for years. Food costs are not fluctuating, they are going up, up, up, with no end in sight. Likewise, energy costs.

It's all a fucking scam.


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## pinqy

Pennywise said:


> The stats remove food and energy from the equation


No, they don't. There is a special index, the so-called "core inflation" that removes food energy, but there are dozens of other special indexes as well that remove shelter, health care, just food, just energy, etc.

The headline All Items CPI-U includes food and energy. So does the All Items CPI-W which is used for Social Security COLA. And so does the All Items PCE, used in GDP calculations.


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## SteadyMercury

Pennywise said:


> The stats remove food and energy from the equation


Probably the most common misconception related to CPI.


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## SteadyMercury

usmcstinger said:


> The use of Keynesian Economics causes inflation.


Inflation isn't by itself a bad thing for an economy, it depends on what level of inflation you're talking about.


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## jwoodie

So what is the best investment strategy now for a ten year outlook?


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## pinqy

SteadyMercury said:


> Pennywise said:
> 
> 
> 
> The stats remove food and energy from the equation
> 
> 
> 
> Probably the most common misconception related to CPI.
Click to expand...

That and "they substitute hamburger for steak."


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## SteadyMercury

jwoodie said:


> So what is the best investment strategy now for a ten year outlook?


Ask me in ten years and I'll tell you. 

Seriously though who knows, it all depends on what you're investing for, how much it matters if you lose money, etc.

I'm a simpleton with investing, mostly just cheapo index funds. My wife and I have reached our number so we're (in theory) financially independent, and plan on retiring at end of this year. Our investment goal is maintain our standard of living with annual inflation adjusted withdrawals, and since we're in early to mid 40s we need growth going forward since hopefully have at least a 40 year retirement to fund.

We've settled on the simple three way portfolio of 33% each in total stock market index, total intl stock market index, and total bond index. So I guess that is 67% stocks, 33% bonds. Only caveat is most of that bond mix is in a Stable Value fund that pays about 2% right now, in current interest rate environment I think the bond fund has more downside than up so I'll take the guaranteed 2% until things shake out with Yellen and company.

Good luck!


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## william the wie

Actually the Far East and Europe are far more worried about deflation than inflation


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## fbj

usmcstinger said:


> The use of Keynesian Economics causes inflation. The Brits found this out and abandoned this flawed economy theory. It has never worked.
> 
> When the Fed stops putting money ( it does not have ) into the economy, inflation will start and interest rates
> will rise. Looks like we are going back to the Carter years.
> 
> Who is most effected by inflation, the Middle Class and Working Poor.





Well the only way I can fight inflation is to eat less and date less   lol


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## KissMy

*Bush was the most inflationary president in our lifetime. Obama killed inflation, flatlining it during his administration.*


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## Bill Angel

How's this for a scenario?
Current lower prices for gasoline results in consumers having more money to spend on American products and services. 
A greater demand for these products and services results in fuller employment and upward pressure on wages, resulting in an increase in inflation (via higher prices).
These inflationary pressures cause the Federal Reserve to start raising interest rates.
What happens when the Federal Reserve starts raising interest rates? THE STOCK MARKET SELLS OFF! 
So now could be a good time to start selling off one's stock holdings, perhaps even short selling stock in some of the high flying glamour companies.


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## SteadyMercury

Rising interest rates have an impact on stock prices but it is one of many variables, I sure wouldn't just blindly short selling stocks right now based on speculation that interest rates alone will cause a sell off.

History has show that rising interest rates don't always equate to negative returns in the long run. Take the 1960s for example:


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## Bill Angel

On the subject of inflationary pressures that could induce the Federal Reserve to raise interest rates, check out the article: 
http:/www.nytimes.com/2014/12/06/business/economy/after-jobs-report-obama-takes-a-little-credit.html
If job growth is robust, why would the Federal Reserve hold interest rates as low as they currently are? 
To quote from the NYTimes article:


> In addition to a better-than-expected growth in the number of jobs [in November], those workers’ average hourly wages rose 0.4 percent, twice what economists expected. While only a monthly number, it could suggest that wages are finally rebounding, too, which would put more cash in the pockets of working people.


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## Treeshepherd

Bill Angel said:


> If job growth is robust, why would the Federal Reserve hold interest rates as low as they currently are?
> ]



Because what Wall Street fears most is deflation. Fed policy is focused on stimulating inflation, and they are having a very tough time achieving that goal.


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## Delldude

Bill Angel said:


> On the subject of inflationary pressures that could induce the Federal Reserve to raise interest rates, check out the article:
> http:/www.nytimes.com/2014/12/06/business/economy/after-jobs-report-obama-takes-a-little-credit.html
> *If job growth is robust, why would the Federal Reserve hold interest rates as low as they currently are? *
> To quote from the NYTimes article:
> 
> 
> 
> In addition to a better-than-expected growth in the number of jobs [in November], those workers’ average hourly wages rose 0.4 percent, twice what economists expected. While only a monthly number, it could suggest that wages are finally rebounding, too, which would put more cash in the pockets of working people.
Click to expand...


Too many dollars floating out there? And when they come home what's going to happen?


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## kiwiman127

Well, so far this OP has been wrong.
Energy and food prices are dropping not increasing.  This is good for the US's consumer driven economy.
About the only thing that is hurting some is Wall Street.  But considering that when Wall Street was on a roll, that roll didn't trickle down to the working class, which just happens to make up the largest segment of the consumer class.  So the deflation we are going through is helping more Americans than were being helped by the Wall Street surges.
In a sense, the working class is finally getting a raise.
*Falling Food and Gas Prices Stoke Consumer Confidence*
http://www.nytimes.com/2014/12/13/b...as-prices-stoke-consumer-confidence.html?_r=0


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## Mac1958

.

I wouldn't be freaking out about inflation just yet.  The bond market doesn't believe it, and no doubt Yellen is watching that.

,


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## Treeshepherd

*Financialization* may be defined as: "_the increasing dominance of the finance industry in the sum total of economic activity, of financial controllers in the management of corporations, of financial assets among total assets, of marketised securities and particularly equities among financial assets, of the stock market as a market for corporate control in determining corporate strategies, and of fluctuations in the stock market as a determinant of business cycles_" (Dore 2002)

The financial sector of the US economy has become an ever-increasing slice of the pie in recent decades. Finance just doesn't create the number of jobs as the other sectors, like manufacturing or agriculture. While it remains more profitable to start a hedge fund than to start a widget factory, trickle down economics is not going to be very effective. 

Also, the financial sector is fueled more than other sectors by debt and inflation, and the game of inflating our nation out of debt. If the value of the dollar plummets, it makes our $17 trillion national debt look less terrible. Of course, while these gimmicks are all well and good for Wall Street, they are less aligned with the interests of Main Street. To the average consumer, a shrinkage in GDP could merely be a reflection of lower prices for the goods and services he requires. Growth in GDP is often a simple factor of inflation. 

So, Main Street is getting shafted. The Political Class protects the interests of Wall Street, but who protects the Political Class? In order to buy allegiances, we see the rise of the Praetorian Class. Steadily, the Praetorian Class overtakes the Middle Class, until such time that the entire scheme starves itself out. 

"_The emergence and rise of the Praetorian Class is a common observation in societies that have transitioned from market-based meritocracies to societies governed by coercive syndicates formed by the Political Class. The Praetorian Class is formed and grown to defend the Political Class and in time becomes the dragon that rules its master. It represents a highly disturbing trend because it foretells the decline, not the advance, of a society. In some instances, the decline is peaceful, clearing the path for an improved future. Unfortunately, in many instances that is not the case. The Political Class leverages the full force of the Praetorian Class representing significant loss in wealth, personal freedom and, in many cases, human life_."
The Rise of the Praetorian Class Casey Research


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## Delldude

kiwiman127 said:


> Well, so far this OP has been wrong.
> Energy and food prices are dropping not increasing.  This is good for the US's consumer driven economy.
> About the only thing that is hurting some is Wall Street.  But considering that when Wall Street was on a roll, that roll didn't trickle down to the working class, which just happens to make up the largest segment of the consumer class.  So the deflation we are going through is helping more Americans than were being helped by the Wall Street surges.
> In a sense, the working class is finally getting a raise.
> *Falling Food and Gas Prices Stoke Consumer Confidence*
> http://www.nytimes.com/2014/12/13/b...as-prices-stoke-consumer-confidence.html?_r=0



Energy prices aren't dropping due to any type welfare program for the working class. OPEC's time to go away as a major player in the futures markets killing global economies along the way. Overdue. Of course with energy prices dropping, food delivery costs are coming down.

However, similar events happened this way in 2007.....look at Ivan, China. Global meltdown on the way ?


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## Treeshepherd

Delldude said:


> kiwiman127 said:
> 
> 
> 
> Well, so far this OP has been wrong.
> Energy and food prices are dropping not increasing.  This is good for the US's consumer driven economy.
> About the only thing that is hurting some is Wall Street.  But considering that when Wall Street was on a roll, that roll didn't trickle down to the working class, which just happens to make up the largest segment of the consumer class.  So the deflation we are going through is helping more Americans than were being helped by the Wall Street surges.
> In a sense, the working class is finally getting a raise.
> *Falling Food and Gas Prices Stoke Consumer Confidence*
> http://www.nytimes.com/2014/12/13/b...as-prices-stoke-consumer-confidence.html?_r=0
> 
> 
> 
> 
> Energy prices aren't dropping due to any type welfare program for the working class. OPEC's time to go away as a major player in the futures markets killing global economies along the way. Overdue. Of course with energy prices dropping, food delivery costs are coming down.
> 
> However, similar events happened this way in 2007.....look at Ivan, China. Global meltdown on the way ?
Click to expand...


Energy prices are falling due to a glut in the marketplace. Everybody is pumping, and oil-burning machines are becoming more efficient. 

Yes, a global meltdown is already underway. But I think the USA is actually sitting pretty. We've got a relatively low population, and relatively few environmental problems. We've got an opiated television/video game consuming population that will only go to a protest in order to take a selfie, so we have relatively little civil unrest. We've got the best farmland in the world. Our military and covert forces are hell-bent on thrashing our competition. Low energy prices and stagnated wages are actually spurring a manufacturing revival. 

From a purely Machiavellian point of view, the USA is fairly well off, or at least stable. In a globalized economy, everything is relative.


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## kiwiman127

Delldude said:


> kiwiman127 said:
> 
> 
> 
> Well, so far this OP has been wrong.
> Energy and food prices are dropping not increasing.  This is good for the US's consumer driven economy.
> About the only thing that is hurting some is Wall Street.  But considering that when Wall Street was on a roll, that roll didn't trickle down to the working class, which just happens to make up the largest segment of the consumer class.  So the deflation we are going through is helping more Americans than were being helped by the Wall Street surges.
> In a sense, the working class is finally getting a raise.
> *Falling Food and Gas Prices Stoke Consumer Confidence*
> http://www.nytimes.com/2014/12/13/b...as-prices-stoke-consumer-confidence.html?_r=0
> 
> 
> 
> 
> Energy prices aren't dropping due to any type welfare program for the working class. OPEC's time to go away as a major player in the futures markets killing global economies along the way. Overdue. Of course with energy prices dropping, food delivery costs are coming down.
> 
> However, similar events happened this way in 2007.....look at Ivan, China. Global meltdown on the way ?
Click to expand...



"Energy prices aren't dropping due to any type welfare program for the working class"  I never said that was the reason energy prices were dropping, however I did say the because the prices of energy and the ripple effect on food prices dropping is a gift for the working class, after decades of flat wage growth.  
The working class/middle class has been getting soooo fucked over, they deserve a break and they deserve more breaks.


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## kiwiman127

Treeshepherd said:


> *Financialization* may be defined as: "_the increasing dominance of the finance industry in the sum total of economic activity, of financial controllers in the management of corporations, of financial assets among total assets, of marketised securities and particularly equities among financial assets, of the stock market as a market for corporate control in determining corporate strategies, and of fluctuations in the stock market as a determinant of business cycles_" (Dore 2002)
> 
> The financial sector of the US economy has become an ever-increasing slice of the pie in recent decades. Finance just doesn't create the number of jobs as the other sectors, like manufacturing or agriculture. While it remains more profitable to start a hedge fund than to start a widget factory, trickle down economics is not going to be very effective.
> 
> Also, the financial sector is fueled more than other sectors by debt and inflation, and the game of inflating our nation out of debt. If the value of the dollar plummets, it makes our $17 trillion national debt look less terrible. Of course, while these gimmicks are all well and good for Wall Street, they are less aligned with the interests of Main Street. To the average consumer, a shrinkage in GDP could merely be a reflection of lower prices for the goods and services he requires. Growth in GDP is often a simple factor of inflation.
> 
> So, Main Street is getting shafted. The Political Class protects the interests of Wall Street, but who protects the Political Class? In order to buy allegiances, we see the rise of the Praetorian Class. Steadily, the Praetorian Class overtakes the Middle Class, until such time that the entire scheme starves itself out.
> 
> "_The emergence and rise of the Praetorian Class is a common observation in societies that have transitioned from market-based meritocracies to societies governed by coercive syndicates formed by the Political Class. The Praetorian Class is formed and grown to defend the Political Class and in time becomes the dragon that rules its master. It represents a highly disturbing trend because it foretells the decline, not the advance, of a society. In some instances, the decline is peaceful, clearing the path for an improved future. Unfortunately, in many instances that is not the case. The Political Class leverages the full force of the Praetorian Class representing significant loss in wealth, personal freedom and, in many cases, human life_."
> The Rise of the Praetorian Class Casey Research



Hey, thanks for the link.  I actually read that article a couple years ago.  Interesting stuff and also scary.


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## Delldude

kiwiman127 said:


> Delldude said:
> 
> 
> 
> 
> 
> kiwiman127 said:
> 
> 
> 
> Well, so far this OP has been wrong.
> Energy and food prices are dropping not increasing.  This is good for the US's consumer driven economy.
> About the only thing that is hurting some is Wall Street.  But considering that when Wall Street was on a roll, that roll didn't trickle down to the working class, which just happens to make up the largest segment of the consumer class.  So the deflation we are going through is helping more Americans than were being helped by the Wall Street surges.
> In a sense, the working class is finally getting a raise.
> *Falling Food and Gas Prices Stoke Consumer Confidence*
> http://www.nytimes.com/2014/12/13/b...as-prices-stoke-consumer-confidence.html?_r=0
> 
> 
> 
> 
> Energy prices aren't dropping due to any type welfare program for the working class. OPEC's time to go away as a major player in the futures markets killing global economies along the way. Overdue. Of course with energy prices dropping, food delivery costs are coming down.
> 
> However, similar events happened this way in 2007.....look at Ivan, China. Global meltdown on the way ?
> 
> Click to expand...
> 
> 
> 
> "Energy prices aren't dropping due to any type welfare program for the working class"  I never said that was the reason energy prices were dropping, however I did say the because the prices of energy and the ripple effect on food prices dropping is a gift for the working class, after decades of flat wage growth.
> The working class/middle class has been getting soooo fucked over, they deserve a break and they deserve more breaks.
Click to expand...


And I bet someone has OPEC in their cross hairs....


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## jwoodie

KissMy said:


> *Bush was the most inflationary president in our lifetime. Obama killed inflation, flatlining it during his administration.*



Other than retarding the U.S. (and European) economic recovery, which of Obama's policies have "killed inflation?"  Take your time...


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## Treeshepherd

'Obama killed inflation'. That has to be the most gay economic assessment that I have ever heard. I guess Obama must have pushed the easy button that slows inflation. It couldn't be due to market saturation. 

Obama-Yellen are attempting to stimulate inflation. Nothing would please them more than inflation. Rather, nothing would be more pleasing to their puppet masters. 

By the way, there are only 3 more shopping days before Xmas. Max out your credit. Do whatever it takes to satisfy the greedy addictions of your beneficiaries. The economy depends on ever increasing levels of insanity to remain sustainable.


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## Delldude

Treeshepherd said:


> 'Obama killed inflation'. That has to be the most gay economic assessment that I have ever heard. I guess Obama must have pushed the easy button that slows inflation. It couldn't be due to market saturation.
> 
> Obama-Yellen are attempting to stimulate inflation. Nothing would please them more than inflation. Rather, nothing would be more pleasing to their puppet masters.
> 
> By the way, there are only 3 more shopping days before Xmas. Max out your credit. Do whatever it takes to satisfy the greedy addictions of your beneficiaries. The economy depends on ever increasing levels of insanity to remain sustainable.



Don't you think with all the money floated out globally, inflation could get terribly Carter when the dollars start to come back?


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## Toro

Inflation fell this month.


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## Judicial review

SteadyMercury said:


> usmcstinger said:
> 
> 
> 
> The use of Keynesian Economics causes inflation.
> 
> 
> 
> Inflation isn't by itself a bad thing for an economy, it depends on what level of inflation you're talking about.
Click to expand...



Really?  How does a 15% national interest rate sound to you?


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## Delldude

Toro said:


> Inflation fell this month.



What of all those printed dollars out there?


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## Treeshepherd

Delldude said:


> Toro said:
> 
> 
> 
> Inflation fell this month.
> 
> 
> 
> 
> What of all those printed dollars out there?
Click to expand...


I've looked at that possibility. What I think is this; the rest if the world is thrashed. If you're a millionaire in Dubai, or Russia, or Carlos Slim in Mexico, where are you going to put your money to work? You're going to put it into America, because the rest of the world is thrashed.


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## SteadyMercury

Judicial review said:


> Really?  How does a 15% national interest rate sound to you?


Sounds bad, not that it has anything to do with my statement that inflation isn't necessarily bad.


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## Judicial review

SteadyMercury said:


> Judicial review said:
> 
> 
> 
> Really?  How does a 15% national interest rate sound to you?
> 
> 
> 
> Sounds bad, not that it has anything to do with my statement that inflation isn't necessarily bad.
Click to expand...


They are connected.  When inflation hits you will see those kind of interest rates.  Inflation is a bad thing.


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## william the wie

Inflation is unlikely until energy prices stabilize


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## SteadyMercury

Judicial review said:


> They are connected.  When inflation hits you will see those kind of interest rates.  Inflation is a bad thing.


Correction = high inflation is a bad thing


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## Toro

Delldude said:


> Toro said:
> 
> 
> 
> Inflation fell this month.
> 
> 
> 
> 
> What of all those printed dollars out there?
Click to expand...


They're going into asset markets. 

There's no consumer price inflation.


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## william the wie

Toro said:


> Delldude said:
> 
> 
> 
> 
> 
> Toro said:
> 
> 
> 
> Inflation fell this month.
> 
> 
> 
> 
> What of all those printed dollars out there?
> 
> Click to expand...
> 
> 
> They're going into asset markets.
> 
> There's no consumer price inflation.
Click to expand...

But commodity deflation seems likely to continue.


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## SteadyMercury

william the wie said:


> But commodity deflation seems likely to continue.


Commodity is a pretty broad term, everything from oil to coffee to iron to beef.

I know oil is down, and beef is up.


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## KissMy

SteadyMercury said:


> william the wie said:
> 
> 
> 
> But commodity deflation seems likely to continue.
> 
> 
> 
> Commodity is a pretty broad term, everything from oil to coffee to iron to beef.
> 
> I know oil is down, and beef is up.
Click to expand...

Beef is only up because it lags droughts & corn price by over 4 years due to life-cycle of cows. Chicken prices cycle much faster.


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## william the wie

KissMy said:


> SteadyMercury said:
> 
> 
> 
> 
> 
> william the wie said:
> 
> 
> 
> But commodity deflation seems likely to continue.
> 
> 
> 
> Commodity is a pretty broad term, everything from oil to coffee to iron to beef.
> 
> I know oil is down, and beef is up.
> 
> Click to expand...
> 
> Beef is only up because it lags droughts & corn price by over 4 years due to life-cycle of cows. Chicken prices cycle much faster.
Click to expand...

Other commodities are still very near their lows despite today's uptick also when Russia gets out of embargo their grain and beef lands are bigger and better than ours. Since that is about all Russia can export expect a big uptick in production for both.


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## SteadyMercury

I've never heard of that.

From this list from 2013: World Beef Exports Ranking Of Countries in 2013 before Russian sanctions:

*Rank* *Country* *2013* *% Of World*
1 *Brazil* 1,849,000 20.17%
2 *India* 1,765,000 19.26%
3 *Australia* 1,593,000 17.38%
4 *United States* 1,172,000 12.79% 
5 *New Zealand* 529,000 5.77%
6 *Uruguay* 338,000 3.69%
7 *Canada* 333,000 3.63%
8 *Paraguay* 326,000 3.56%
9 *EU* 244,000 2.66%
10 *Belarus* 220,000 2.40%
11 *Argentina* 186,000 2.03%
12 *Mexico* 166,000 1.81%
13 *Nicaragua* 125,000 1.36%
14 *Pakistan* 50,000 0.55%
15 *Colombia* 46,000 0.50%
16 *Jordan* 35,000 0.38%
17 *Saudi Arabia* 35,000 0.38%
18 *Ukraine* 34,000 0.37%
19 *China* 30,000 0.33%
20 *Costa Rica* 18,000 0.20%
21 *Honduras* 13,000 0.14%
22 *South Africa* 13,000 0.14%
23 *Russia* 12,000 0.13% 
24 *Malaysia* 6,000 0.07%
25 *Chile* 5,000 0.05%

Russia exported about 1% of what the United States did, and they weren't significant in any way on the global beef market at 0.13%. Why would you expect them to suddenly make a difference?


Wheat is here: Wheat Exports by Country - World s Top Exports


United States: $10,542,808,000 (21.7% of total wheat exports)
Canada: $6,538,890,000 (13.4%)
France: $6,171,779,000 (12.7%)
Australia: $5,875,566,000 (12.1%)
Russia: $3,482,667,000 (7.2%)


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## william the wie

Russia has the resources but it still has a nearly Soviet agricultural policy as does the Ukraine. For example Russia has 1,247,000 sq.km of arable land vs. 479,000 for Canada and 423,000 for Australia . More importantly is the higher quality land bottom lands that permitted pre-WWI Czarist Russia to blow us off the world grain markets and even some years under Lenin's New Economic Policy 1921-9.. So, I stand by my earlier statement Russia and even  more so the Ukraine have better quality farmland and combined they have more than we do for both grains and pasture what they lack are competent land laws.


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## KissMy

Russia has imported US ranchers to teach them how to raise cattle


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## SteadyMercury

What I called into question wasn't about who's got quality farmland, it is about predicting a big uptick in production for beef because of Russia, when they were an insignificant supplier on beef on the global market as recently as 2013. What could happen where they suddenly wake up and start impacting the world beef market?

Russia is a huge importer of beef, they can't come close to meeting the demands internally much less impact beef prices with exports anytime soon.


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## william the wie

SteadyMercury said:


> What I called into question wasn't about who's got quality farmland, it is about predicting a big uptick in production for beef because of Russia, when they were an insignificant supplier on beef on the global market as recently as 2013. What could happen where they suddenly wake up and start impacting the world beef market?
> 
> Russia is a huge importer of beef, they can't come close to meeting the demands internally much less impact beef prices with exports anytime soon.


True but that is due to farmland laws not the lack of breeding stock such as Yaks who can carry beef cattle fetuses or lack of high quality pasture land or feed.


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## SteadyMercury

Further adding to the intrigue is Russia's cattle has been trending down, -467,000 in 2013.


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## Treeshepherd

I like a ribeye, personally.


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