I was shocked this morning to see the top story on Yahoo actually recommends stockpiling food (their words, not mine). Absolutely shocked. What surprised me the most was that the top story (did I mention that already) actually quotes a Wall Street mutual fund manager who advises Americans to load up the pantry.

You can find the story here.

The main point of the article is that food prices are rising at a faster rate than you can recieve by putting your money in an interest bearing account. Therefore it makes sense to put some money into food from a financial perspective. Quoting the article,

“Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you’ll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.

Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.

And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They’re all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.”

Remember, these are government statistics which are deliberately changed in order to make the data appear not as bad as it really is.

The story goes on to say,

“These are trends that have been in place for some time.

And if you are hoping they will pass, here’s the bad news: They may actually accelerate.”

May? Try will. There is no way around it. Massive creation of new dollars to bailout the fat cat Wall Street insiders is going to dilute the value of the dollar, causing prices of everything to rise. In addition, the world’s economic system has been abused to such an extent that the free market is having difficulty meeting supply and demand. The more that government interferes with prices, the more difficult it will be for the free market to supply all of the necessary resources.

We are seeing signs of this everywhere, should we choose to look for them. There was a news story yesterday published in France about Brazil blocking exports of government-owned stocks of rice to make sure that they didn’t face a shortage.

The net result? Buyers bidding up the fewer resources that are available.

Couple a dollar that is rapidly being diluted with natural resources that are more scarce and buyers having to bid more and more for the fewer and fewer resources available, and you have the perfect recipe for a food price explosion.

Protect yourself while you still can.