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Inflation Hits Where it Hurts


$100 for a barrel of oil? $800 for an ounce of gold? $4 for a gallon of gasoline? Sure, that's all pretty scary, but we've got a real crisis brewing (pardon the pun) that dwarfs all of those:

Small brewers from Australia to Oregon face the daunting prospect of tweaking their recipes or experimenting less with new brews thanks to a worldwide shortage of one key beer ingredient and rising prices for others.

This is an example of how people can be affected by inflation without even realizing it. If the quality of the microbrews we drink is lowered by a notch because the brewers are being forced to cut back costs how many people will even notice? Maybe some of us experienced beer drinkers will, but most people won't realize that they are "paying" for inflation by getting a lower quality product in exchange for their money.

Not only will the quality fall, but the price is going up.

Oh, and one other thing: Beer prices are likely to climb. How high is anybody's guess. Craft brewers don't have the means to hedge against rising prices, like their industrial rivals.

"I'm guessing, at a minimum, at least a 10 percent jump in beer prices for the average consumer before the end of the year," said Terry Butler, brewmaster at central Washington's Snipes Mountain.

You can believe the government's CPI (consumer price index) if you want to, but those of us who live in the real world know better. Rather than relying on a dubious metric cooked up by some government bureaucrats with a lot of confusing formulas, just look at the prices of raw commodities and you have all the information you need about where inflation is headed.

Now the bright spot in the brewing industry is facing mounting costs on nearly every front. Fuel, aluminum and glass prices have been going up quickly over a period of several years. Barley and wheat prices have skyrocketed as more farmers plant corn to meet increasing demand for ethanol, while others plant feed crops to replace acres lost to corn.


Snipes Mountain saw its barley malt prices grow between 10-15 percent this year, and paid $12.35 per pound for Cascade hops, far beyond the $5.60 per pound allotted last year.

I've always believed that market prices for raw commodities are a far better indicator of where prices are headed than the government's CPI. There's no interpretation or calculation needed when it comes to examining the price of a barrel of oil or an ounce of gold. The price is the price is the price. The markets don't lie. Government bureaucrats do, and quite often, on the other hand.

With the price of nearly all commodities heading higher and the value of the American dollar continuing to fall, there's simply no doubt anymore that the policies followed by our government and the Federal Reserve are having an adverse impact on the financial well-being of the lower- and middle-classes. We have pumped massive amounts of stimulus into the economy for the last 6 years in the form of deficit spending, tax cuts, and an overly accommodative monetary policy and now we are starting to pay the price with higher commodity prices and a plunging dollar. Republicans like to present themselves as better caretakers of the economy, but, in reality, they have just figured out better ways for us to live beyond our means. You and I will be paying the price for their ways for years to come.

Note: Wizbang Blue is now closed and our authors have moved on. Paul Hooson can now be found at Wizbang Pop!. Please come see him there!

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Publisher: Kevin Aylward

Editors: Lee Ward, Larkin, Paul S Hooson, and Steve Crickmore

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