Price controls were last tried in the 1970s, and everyone swore, never again…
Less than four weeks after starting his new job, Panama’s President Juan Carlos Varela already has a serious challenge to deal with: empty grocery shelves.
This is largely a self-inflicted wound that was bound to happen.
Fresh on the heels of his victory in May, the then President-elect announced that one of his first orders would be to regulate prices for staple food products.
He followed through on his promise, establishing price controls on certain brands of roughly two dozen items like chicken, rice, eggs, and bread. And within a matter of weeks, many grocery store shelves are already empty, at least for the regulated items.
It’s not quite Venezuela or Cuba where it can be downright impossible to buy a roll of toilet paper. But it’s more proof that price controls almost always backfire.
The larger issue here is why the Panamanian government is controlling prices to begin with.
The answer is simple: inflation.
So to get a true sense of US dollar inflation… and where it’s headed in the Land of the Free… one only need look at dollarized countries like Panama.
BrotherJohnF discusses silver’s technicals, the Japanese decision to devalue the Yen, China’s massive gold imports of nearly 900 tonnes in 2012, and the implementation of price controls in Argentina in his latest Silver Update:
The lovely Lauren Lyster, formerly of Capital Account and now the new host of Yahoo’s Daily Ticker, interviewed SD’s favorite Fed-basher Jim Grant regarding the Fed’s latest FOMC statement.
Grant stated that if creating credit was able to successfully reactivate business activity the world would have been richer many generations ago, that the Fed’s actions are counter-productive, that QE funds injected into the economy is money in search of mischief, and that Bernanke’s manipulation of interest rates will fail spectacular with major fireworks as the price of interest rates find their own free market valuation.
As always, Jim Grant’s interview is a MUST WATCH!!
Unlike the government red tape and price controls which have resulted in up to 7-10 hour waits for gasoline in New Jersey as an estimated 80% of NJ gas stations remain closed (either out of gas, no electricity to pump it, or both), the free market is willing to provide necessary fuel…at the right price of course.
Which apparently is currently $25 a gallon in East Rutherford, New Jersey.