Insidious Inflation

Ronald R. Cooke has a good look at inflation at www.financialsense.com.  He details the how high natural gas prices are raising irrigation costs in Oklahoma.  This forces farmers to abandon water-intensive crops like corn.  The effects of these high prices ripple through the economy.

The price of natural gas has about doubled over the last two years. Higher natural gas prices force up the cost of irrigation. Planting corn becomes a higher risk business. That leads to less corn production. Less corn pushes up the price of corn. Higher corn prices push of the price of everything made from corn – including fuel amendments and cattle feed. Higher fuel amendment costs push up the price of gasoline. Higher cattle feed costs push up the price of that steak you plan to eat.

The other side of the argument:  Larry Kudlow says that it is premature to be worried about inflation.

Source:
Insidious Inflation
Ronald R. Cooke
8/12/05
http://www.financialsense.com/editorials/cooke/2005/0812.html

Worried About Inflation?
Larry Kudlow Money and Politic$
8/18/05
http://lkmp.blogspot.com/2005/08/worried-about-inflation.html