One of the knocks against the AustrianÂ critique of recent monetary policy is that inflation has not erupted as predicted. Paul Krugman just made this point in another fine example ofÂ the derisive rhetorical style that he has honed since becoming a regular columnistÂ at The New York Times.
But price movementsÂ across a number of commodities are pointing to inflation. To begin with, there is gold, the classic inflation hedge, which we have mentioned before in this blog.Â Currently trading at $1410 per ounce (all prices here in US$), it isÂ only slightly below its all-time highÂ reached earlier this month. Similarly with gold’s cheaper cousin, silver, which is now at $30.51 per ounce.
Outside the precious metals complex,Â copper has just breached its 2008 highs established during the last commodity price boom. Crude oil prices recently broke out of a sideways pattern to trade above $90Â per barrel. Â
Grain prices — including those for corn, soybeans, wheat, and oats — have been accelerating over the last several months towards their 2008 peaks. Cotton prices have been traversingÂ record levels for weeks now.Â Sugar prices are breaching 30 year highs, whileÂ coffee is at 13 year highs.
To corroborate the inflationary portent of these trends, we’ll need to see the yields on US Treasury bonds spike up. Over the last two months, these have surged by 100 basis points (1 %) to 3.4%. A move above 4% wouldÂ greatly strengthen our inflation story.