As we have stated on numerous occasions, the problem with forecasting is that it assumes a static environment going forward, when in fact real life very rarely turns out that way. It appears to us that this linear mentality is occurring on the inflation forecasting front where input prices as well as geo-political happenings are being consistently written off as one off events. While we do agree that droughts, crop disease and production shut ins are all part and parcel of the commodity business, the low prices that have prevailed over the past several years have left most commodity sectors unprepared for the usual “unforeseen event”. Deflationists would point to the low leverage inherent in many consumer products as evidence that even under periods of input pricing pressure, price increases at the consumer level are but a small fraction of the rise in the underlying commodity price. While we agree that this is currently the case, one has to believe that the desire on the part of producers to push through pricing becomes greater as the cover to do so increases. Add to this the geo-political pressures that have amassed all over the globe coincident with the attempt by many individuals to shield their wealth from expropriation either by overt means (tax) or more subtle forms such as currency devaluation. Combine these two factors with the global tsunami of liquidity that we currently have and we suspect that inflation is not so far in the offing. Subtle changes at the margin, from say deflation to reflation, occur obvious only in retrospect, and we are seeing these subtle changes appear. Buy Stuff Sell Paper.