The word, transitory, has been thrown around a lot lately in the media, most notably by the Chair of the Federal Reserve, Jerome Powell.
The financial press has reported that he has used the term, transitory, to describe how long inflation might last. It appears that based on his testimony in front of a Congressional committee on Nov. 30, his thinking regarding the question of how long inflation might last has changed—from transitory to longer-lasting.
Longer-lasting inflation is not a good thing–just the opposite. Inflation is really a tax—it reduces the value of money and changes the buying opinions of consumers and investment decisions of businesses.
Investments are often reduced in value, and cash held on the sideline is worth less. Consumers find that they need to pay up for products and services. For instance, gasoline is substantially higher today than a year ago. By paying more for products, consumers have less money to spend elsewhere, which may lead to a possible recession.
How could the agency of the federal government, charged to keep inflation in check, misjudge the sudden spike in prices? Why hasn’t the Federal Reserve responded more quickly to the onslaught of rising prices?
Referred to as the punch bowl that never goes dry, the Federal Reserve, has been pumping up the economy with trillions of dollars, in an attempt to get consumers to spend and businesses to invest. It worked well for a long time, but did the Federal Reserve overplay its hand? It appears so.
Timing is everything. Witness the rise of the stock market over the past several months. It has gone up but is now receding rather quickly. Will it turn around and head back up? If Jerome Powell and his colleagues cannot answer this question with any degree of certainty, can you?
Farming is a lot like timing the market. If all the moons line up, farming is not only profitable but fun. If not, well, it is not a pleasant experience.
Why do people keep doing it? A good question. I think deep down it is because they enjoy trying to beat Mother Nature, the government, and everyone who said, I told you so.
When I inquired of a colleague why farmers do what they do, he responded by saying, “it is in their blood and perhaps in the genes of several family generations.”
Regardless the reasons, we can all agree that farming is a tough business, but it is rewarding in more than just a net income manner of speaking.
Certainly, farming is not transitory—it is for the long-term.
Thank God for men and women who battle for full employment and stable prices (the dual mission of the Federal Reserve) and even more so for courageous men and women who plant and harvest on behalf of a world that needs to be fed.
Transitory is a word that is hard to measure and seldom true.