Cattle prices and the global economy scenario one

[3legdonkey]

I am currently basing many of my investing assumptions on the premise that we are getting ready to go into a global recession with significant inflation. We have a number of global issues that I believe could draw us into a major recession.
1. Most countries have spent the last few years printing money like it is going out of style. The US, China, and Japan are all guilty as are quite a number of other countries.
2. The Euro has only been held up by significant borrowing between the EU member countries and Germany being a net exporter. Essentially with the current issues in the EU if Germany does not decide to bail out the rest of the EU the Euro will drop through the floor and most likely the EU will breakup.
3. The US has increased its printing of money (I am using very conservative estimates) to levels never before seen, in the last ten years we have gone from about 4 trillion dollars to about 8 trillion. What this means is that if you took a one dollar bill in 2001 and put it in a drawer and pulled it out today it should be worth 50 cents in 2001 value. But we have actually seen very little inflation and it is my opinion that at some time our money printing has no choice but to catch up with us.
4. The US government owes 14.5 trillion in debt and only takes in about 2.2 trillion. Unfortunately the US government also spends more than 4 trillion per year. (fun US debt clock http://www.usdebtclock.org/)

I also believe that quite a number of countries including the US will have no choice but to default on their debt.

So enough doom and gloom and on to my real question.

If bad things happen what do you think will happened to the price of cattle? If we look at what happened to Germany between WW1 and WW2 and their hyperinflation issues, people with land and the means to produce food were sitting pretty as they could barter for anything they wanted. Read the book "when money dies" if you have not done so (you can download it for free). Actually just read the first few chapters as it gets pretty repetitive after that.

So will owning livestock be the golden road to prosperity?

Or should I be locked up for being paranoid, and will everything be fine, the world economy will not tank, and the price of cattle will go up and down like usual?

 

[cowman]

I think cattle will shoot through the roof. Everybody has to eat, Look at the prices now.

 

[cross_7]

you are right on everything except the government will seize your property(taxes,epa compliance,nais & etc).
if your lucky you will allowed to stay and work for them tending their cattle and crops.
if not... well life could be tough

 

[1wlimo]

Every one does still need to eat

also some inflation can be useful as long as wages keep up as this reduces the debt, not that any of the paper money is real

 

[cowman]

Ok cross is right. There not our cows anyway, were just taking care of them for obama.

 

[1wlimo]

Ok cross is right. There not our cows anyway, were just taking care of them for obama.

That is a very pessamistic view, Obama or any other president or prime minister is only elected, is it not the civil servants, advisors, and multi nationals that have the power?

 

[cross_7]

Ok cross is right. There not our cows anyway, were just taking care of them for obama.

That is a very pessamistic view, Obama or any other president or prime minister is only elected, is it not the civil servants, advisors, and multi nationals that have the power?

not anymore

 

[1wlimo]

Ok cross is right. There not our cows anyway, were just taking care of them for obama.

That is a very pessamistic view, Obama or any other president or prime minister is only elected, is it not the civil servants, advisors, and multi nationals that have the power?

not anymore

I am not sure but if the CEO of Walmart or Cargils fore example said they were stopping their trucks, and leaving their doors closed how long before any goverment would be calling them?

 

[3legdonkey]

I think cattle will shoot through the roof. Everybody has to eat, Look at the prices now.

I agree with you for a number of reasons. But there is also a chance that we will have no market for our cattle so they will have value...

 

[3legdonkey]

you are right on everything except the government will seize your property(taxes,epa compliance,nais & etc).
if your lucky you will allowed to stay and work for them tending their cattle and crops.
if not... well life could be tough

I like to use history as my guide and if we look at China and Russia that is exactly what happened, though for different reasons. If we use Germany (WW1-2) and Argentina (1999-2000) they both experienced hyperinflation and in neither case did the government seize things like cattle or land. Instead what they did was seize gold and foreign currency and pay you for them at a government designated rate. In Argentina they also froze bank accounts for a period of time and then later put withdrawal limits on them. If you want a very poorly written but interesting read try "The Modern Survival Manual: Surviving the Economic Collapse" as the author covers what happened recently in Argentina and looks like is happening again.

So I do not think the US government will nationalize our cattle stocks or our land, but I do agree that anything could happen.

 

[3legdonkey]

Every one does still need to eat

True but if their money is worth less (prices go up significantly) they have less to spend on luxuries like steaks. So would the reduction in premium consumers hurt us as owners of livestock. Or would it improve our chances of selling directly to the end consumer and cutting out the middle man.

also some inflation can be useful as long as wages keep up as this reduces the debt, not that any of the paper money is real

I have read arguments on both sides and I am not sure which argument I buy. In the "for inflation group" they say that by increasing inflation and increasing our income it improves our ability to pay down the debt. Whereas the against inflation folks say that because increased inflation reduces the time value of money it is more expensive to borrow money (aka the interest rate goes up) so doing business becomes more expensive and government has to raise taxes to make up for lost income. I really have no clue and I am suspicious no one else does either... Grin.

 

[TexasBred]

Go read about the "Misery Index" during the Carter administration.

 

[3legdonkey]

Go read about the "Misery Index" during the Carter administration.

Is a good indicator but its issue is that they use the official numbers for the rate of inflation and unemployment. Both are actually much higher than the official numbers because they have been cooking the books.

 

[john250]

Cattle won't make you rich. They might make Brazil rich(er). Cattle make good returns on free land, such as existed in Texas, OK, Montana, etc back in the day. The cattle biz is changing fast in the US. I doubt Texas' herd will ever return to the numbers pre-drought. Folks in Indiana have sold out due to piss poor returns vs land value for corn. The USA is becoming too high priced for cattle.

 

[3legdonkey]

Cattle won't make you rich. They might make Brazil rich(er). Cattle make good returns on free land, such as existed in Texas, OK, Montana, etc back in the day. The cattle biz is changing fast in the US. I doubt Texas' herd will ever return to the numbers pre-drought. Folks in Indiana have sold out due to be nice poor returns vs land value for corn. The USA is becoming too high priced for cattle.

They are interesting opinions but how do they relate to possible changes in the global economy?

 

[1982vett]

the last ten years we have gone from about 4 trillion dollars to about 8 trillion. What this means is that if you took a one dollar bill in 2001 and put it in a drawer and pulled it out today it should be worth 50 cents in 2001 value. But we have actually seen very little inflation and it is my opinion that at some time our money printing has no choice but to catch up with us.

Pretty much the reason a 2001 killer cow was worth $350 and is worth $750 now....Certainly not able to exchange and receive similar amounts of cattle for goods today as you could then....Takes more cows today.

 

[cowman]

But can the prices really keep going like this.

 

[3legdonkey]

the last ten years we have gone from about 4 trillion dollars to about 8 trillion. What this means is that if you took a one dollar bill in 2001 and put it in a drawer and pulled it out today it should be worth 50 cents in 2001 value. But we have actually seen very little inflation and it is my opinion that at some time our money printing has no choice but to catch up with us.

Pretty much the reason a 2001 killer cow was worth $350 and is worth $750 now....Certainly not able to exchange and receive similar amounts of cattle for goods today as you could then....Takes more cows today.

And you think you have problems.
"Emmanuel Gambiri said an educated wife in his cattle-herding Mundari tribe in South Sudan costs 50 cows, 60 goats and 30,000 Sudanese pounds ($12,000) in cash. "
"In his village of Terekeka, in the state of Central Equatoria, Gambiri recalls a time when wives cost as little as 12 cows"

http://www.bloomberg.com/news/2011-07-2 ... sudan.html

I would say you are getting a pretty good price for your cattle... Big grin.

 

[cowman]

Maybe Gambiri is not getting such a good deal..

 

[3legdonkey]

Maybe Gambiri is not getting such a good deal..

I agree. He is suffering from significant cow inflation. It seems, in general, they do not eat their cattle but instead just use the milk.