November 9, 2012 Reading Time: 2 minutes


According to the Bureau of Labor Statistics, consumer prices have risen only 2% since this time last year. But according to my eyes this is nonsense. For example, over the last month I have twice experienced the effects of large price increases with regards to America’s favorite poultry, chicken. During one weekend I was desperate for some pizza and decided to order from Papa John’s. Upon arriving at the store (the cost of delivery is way too expensive), I noticed that the cashier was folding miniature pizza boxes. The boxes were so small that I jokingly asked what was going inside of them. The cashier pointed to a poster on the wall and stated that they were for Papa John’s new Chicken Poppers that are set to replace the chicken strips. Before I could even make a comparison, the cashier quickly inferred that this was a way to deal with the 30% increase in the cost of chicken that the company had experienced over the last couple of months. Instead of increasing the price of their chicken strips, Papa John’s decided to cut up smaller pieces of chicken and re-name them!

Not more than a week later, a long night brought me to McDonald’s. Usually I indulge in a good chicken club sandwich or chicken nuggets, but that night I broke a year long tradition and ordered an old favorite, Chicken Selects. I remembered Chicken Selects as big juicy strips of chicken, but unfortunately that was not what I received. I’m sure you’ve seen the movie “Honey I Shrunk the Kids,” well McDonald’s has shrunk their chicken.

Since I am a major critic of the Federal Reserve’s role of managing, i.e., destroying, the value of the Dollar, I could just be guilty of self-fulfilling prophecy. But as indicated by a recent poll conducted by Fox news, the number one concern among registered voters is not unemployment, housing, nor taxes, but inflation. There is no doubt that much of the increase in prices among agriculture goods and livestock is due to the biggest drought since 1956, but this is not the only major factor. Much of the investing that takes place on Wall Street is actually speculation. And when speculators see commodity prices rising by double digits within a couple of months, they take advantage of all the easy credit pouring from the Fed and make bets on the futures market. This results in a larger increase in the future price of commodities, which strongly influences the spot price. It may be impossible to quantify the effect of the Fed’s inflation on commodity prices, but the consequences are real.

While the drought has faded, this won’t be the last time that Americans see sharp increases in commodity prices that influence everyday purchases like chicken. The Federal Reserve does not have any plans to slow down the printing press. When global investors finally wake up and realize that the Fed’s inflation binge will never stop, commodity prices will surge as the flight to real goods begins, and the chickens come home to roost.

Devin Roundtree received his M.A. in economics from the University of Detroit Mercy.


AIER Staff

Founded in 1933, The American Institute for Economic Research (AIER) educates people on the value of personal freedom, free enterprise, property rights, limited government, and sound money. AIER’s ongoing scientific research demonstrates the importance of these principles in advancing peace, prosperity, and human progress.

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