Looks like Glenn Beck is right on Inflation

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If the price of gasoline and diesal go through the roof, then the price to harvest grain goes up, then there is the backing into loaves of bread (I'm oversimplifying deliberately here) then it has to be transported to the store using gasoline that its price has significantly risen, which in turn causes the price of bread to go up.

EDIT:
The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners.

Johnson looks at the percentage of income consumers are spending on gasoline and food as a way of gauging how consumers will fare when energy prices spike.

With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers.

"Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note.

Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—of not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share.)

What may make matters worse this time around, is there has been a steep increase in food prices that occurred as well. In other recent recessions food costs were benign, at between 7.5 percent and 7.8 percent of spending.

This year food prices have climbed 6.5 percent since the beginning of early January, according to Consumer Growth Partners.

"The combined increase in the necessities of food and energy creates a harsh double whammy for already stressed consumers," Johnson said. The last time this happened was in the recession that lasted from 1973 to 1975.

Johnson estimates that food and energy eat up about 15 percent of consumer spending at today's prices, compared with about 12.7 percent two years ago.

Of course, at lower income levels, these percentages are much higher. One sign of the stress some consumers are already feeling is that some AAA offices have already seen an increase in out-of-gas service calls, as motorists try to put off filling their tanks or drive around trying to seek out the gas station with the least expensive price.

Also some regions are being hit harder than others. Gas prices in Hawaii continue to set new highs, according to AAA data. The average price on Wednesday was $4.51, topping the prior record of $4.50 for a gallon of regular unleaded set in July 2008.
http://www.cnbc.com/id/42704213

but the bet was bread were is the $20 a loaf bread?
I see a big quote and evasion.
bread
bread
bread.

I'm not evading anything, and I never took any bet. I repeatedly said I don't make bets. Fact of the matter is I brought this up in the first place so that people could contact their representatives and hold their feet to the fire so they would practice more fiscal discipline. I didn't post this to conduct an experiment as to whether Glenn Beck's analysis would come true. I posted this so people could get congress to change their ridiculous spending practices and head this off.

Fact of the matter is you are so hell bent on trying to prove Beck wrong, that you are missing the signs that prove Beck's analysis is correct. Food isn't magically teleported to Grocery stores, food has to be transported to grocery stores by trucks, trucks use fuel. If the fuel prices are going through the roof the cost to get the goods to the store go up. There is only so much cost they can eat up on their own before they start having to pass the cost on to the consumer (or they change the size of the food product and keep the price the same for a unit). Imagine a loaf of bread suddenly being half the size it used to be, that is the same as a price increase.

This isn't exactly something where you need an expert to figure this out, it is rather blatently obvious if you stop and think as to how one thing affects something else. I seriously suggest you stop with your Beck-derangement syndrome mentality and start trying to think about how one thing can effect another. In this case how fuel prices and the dollar losing value will affect the price of food.

I like Beck (cuz he is a commie mormon secret agent )
but I have not seen my bread shrink yet so I have nothing to admit.
does beck win if there is any inflation? (that seems unfair)

Well actually yeah Beck is right if we see massive inflation and if fuel prices keep going up, food prices won't be far behind.

agreed what level would count as "massive inflation"?

do you think gas prices are because of the weak dollar?

It really depends on what happens over the debt ceiling fight and whether or not Republicans can hold the line against the Democrats drunken spending spree.



A weak dollar certainly doesn't help matters.

Why Gas Prices Rise as the Dollar Falls
Here's one of those complex economic truisms the financial press assumes everybody understands: A big reason oil and gas prices are hitting record highs is that the dollar is hitting record lows. Got it? The world's petroprinces evidently do. The limp dollar has prompted a bickerfest between President Bush, who's been urging the OPEC oil nations to produce more oil so prices will fall, and OPEC leaders, who say the problem isn't limited production but the weak dollar and economic woes in the United States.

Makes perfect sense—as long as you have a Ph.D. in economics. For those who don't, I asked Kristin Forbes, a professor at MIT's Sloan School of Management and former member of the White House's Council of Economic Advisers, to help explain how exchange rates affect gas prices:

Let's discuss why the dollar is so low in the first place.
Economists have been predicting for years that this was likely to happen, and now it is happening. As the U.S. economy has been weakening, interest rates have been falling, and when interest rates fall, investors want to hold less of that currency, because they can get a higher return someplace else.

Basically, that's simple supply and demand, isn't it?
The price of the dollar is falling, in terms of the amount of other currencies it takes to buy one dollar. So you're paying less in euros, for instance, to get one dollar.

So in that equation, the price of the dollar is the same as the value, and as the value falls, there's less demand for it?
Yes. But a bigger reason for the falling dollar is that the United States is running a massive current account deficit, which we're funding by borrowing from the rest of the world. We've been able to borrow at low rates, but that can't go on forever. A falling dollar is an automatic adjustment mechanism, which means there's an increase in exports from the United States and lower imports into the country, which helps rebalance the deficit.

And now that we're in an economic downturn, or maybe even a recession, what does that have to do with it?
When you have weaker economic growth, the Fed usually lowers interest rates—one of the things that lowers the value of the dollar.

So how does a falling dollar contribute to rising oil prices?
It's a little bit complicated. Oil is priced in dollars on the world market. When the dollar is weaker, foreign currencies are stronger, by definition. That means people in other countries can buy more oil for the same amount of money. So let's assume oil is $100 per barrel, and $100 is equal to 70 euros. If the euro appreciates against the dollar by 10 percent, then instead of 70 euros it will take only 63 euros to buy one barrel of oil. So that oil becomes cheaper to foreigners, and they can buy more.

And do they buy more?
Usually, yes. There are other factors obviously, like in many countries taxes are such a big portion of the cost of oil that the savings aren't that dramatic. But it would still make sense to buy more if the price in your own currency goes down.

So for those of us stuck with the dollar, why does that make the price of oil or gasoline go up?
As people in other countries buy more, demand rises, and it drives up the price in dollars, which, again, is how the price of oil is denominated on world markets. So in the United States it looks like the price is going up sharply, in dollars, while in other countries it's actually going up by much less or staying about the same.

Which other countries, and currencies, are most important in this equation?
Certainly the euro, the Canadian dollar, and some of the Asian currencies, such as the Chinese yuan and the Japanese yen, although the Asian currencies have strengthened less against the dollar.

There's another whole effect we're starting to see recently. As people become more worried about inflation, they're investing more in commodities in general, including oil. And that also drives up demand and prices.

So concern about inflation is indirectly driving up the cost of oil, which in turn is contributing to inflation?
Seems ironic, but yes. Although I doubt that this is as important as other factors driving up the price of oil—such as strong growth in parts of the world such as China and India.

Another important issue is that in a lot of countries, like India, China, Indonesia, and some Arab countries, the price of oil and gasoline is subsidized, to keep the domestic price low, usually to prevent social unrest. That matters because if oil prices were allowed to be set at market prices, demand would fall, and so would prices. So demand in those places is artificially high.

So do you think oil prices will stay where they are? Or are they artificially high and likely to fall?
I think oil prices are distorted on the high side. If they stay high, new supply will come onto the market.

Because it makes sense to increase supply if you can sell it at a high price?
Right. And if prices stay high for long, we'll start to see oil companies begin to extract some of the higher-cost oil, like from the oil sands in Canada. More supply will reduce the price.

What about the U.S. economic slowdown? Isn't that supposed to reduce demand a bit, and theoretically lower prices?
It depends on whether we see increased demand for oil in other countries. The big question is whether the slowing of U.S. growth spills over into other countries or whether those countries continue to grow rapidly and demand more oil.

The decoupling question.
Right.

What's your best guess about whether we're going to experience a recession?
I think it's a close call whether we're technically in a recession. The second quarter may be tough, but I think by the third and fourth quarter we're going to bounce back. We'll be feeling the effects of the huge fiscal stimulus and the interest rate cuts by then.

You mean new cuts the Fed may yet make? Or cuts the Fed has already made?
Cuts the Fed has already made, which usually take six to nine months before they fully impact the economy.

Study: Weak Dollar and Federal Reserve Responsible for Sky-High Gas Prices

The weakening of the dollar since 2008 has added 56.5 cents to the price of gasoline, the congressional Joint Economic Committee (JEC) has found. The average price of gasoline would be $3.40 per gallon, instead of the current average price nationally of nearly $4, if the dollar hadn’t declined.

The study of the dollar’s impact was conducted by Republican congressman Kevin Brady of Texas, vice-chair of the bipartisan committee, and Republican staff. They blamed the Federal Reserve and its efforts to spur economic growth for the price increase.

“When the Federal Reserve uses loose money to boost the economy in the short-term, consumers pay the price,” the study said. Because oil is traded in dollars, oil prices increase to compensate for the falling value of the dollar. And the price of gasoline at the pump also increases.

“Since the Fed launched its program of quantitative easing in late November 2008, the value (trade-weighted) of the U.S. dollar has declined 14 percent,” the study calculated. “The declining value of the U.S. dollar has added $17.04 per barrel to the price of oil (Brent Crude),” thus driving up the price of gasoline.

“Arguably there are other factors affecting the price of gasoline than just the price of oil,” according to the study. “[G]iven that oil is the primary input to gasoline and the close correlation [between oil and gasoline prices],” JEC Republicans said it is possible “to determine how much of the current price of gasoline is attributable to the declining value of the dollar.”

As I've pointed out before they stopped printing money like it was monopoly money.

One of the key factors is no longer in the equation.

Consumer Price Index - May 2011

The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.2 percent in May on a seasonally adjusted basis, the U.S. Bureau of
Labor Statistics reported today. Over the last 12 months, the all
items index increased 3.6 percent before seasonal adjustment.

The index for all items less food and energy increased 0.3 percent in
May, its largest increase since July 2008. The indexes for apparel,
shelter, new vehicles, and recreation all contributed to the
acceleration, rising more in May than in April. These increases more
than offset declines in the indexes for airline fare, tobacco, and
personal care.

The food index rose in May as well. The food at home index repeated
its April increase of 0.5 percent as four of the six major grocery
store food group indexes increased, with the index for meats,
poultry, fish, and eggs rising the most. In contrast, the energy
index, which had been rising sharply, declined in May. The gasoline
index decreased for the first time since last June, although the
index for household energy increased.

The upward trend among the 12 month increases of major indexes
continued in May. The 12 month change in the all items index, which
was 1.1 percent as recently as November, reached 3.6 percent in May.
The energy index has increased 21.5 percent over the last 12 months,
the food index has risen 3.5 percent and the index for all items less
food and energy has increased 1.5 percent. All of these figures have
been rising in recent months.

Maybe then the groceries will ask local shops to bake their own bread, shortening the transport cost and thus the bread cost, win-win?

bakeries NYC
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