John Block Reports from Washington

Hello everybody out there in farm country.  This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association.  They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America.  Thank you.

 And now today’s commentary-

It’s Christmas this weekend. There will be gift exchanges but what comes to my mind is how thankful I am to be here to enjoy friends, family and the love of life. I know we all have some wonderful memories of Christmas in our younger days. My sisters and I went to our one room country school for 8 years. There were 9 or 10 kids in the school with one teacher. No running water, two outhouses, a hand pump outside to get our water. Always at Christmas our teacher worked with us to put on a Christmas program for our families, singing Christmas carols.

We sang Silent Night, Away in a Manger, Jesus loves Me and more. All of our parents were there clapping their hands for us. We would wrap the celebration up with a dinner. I have a lot of other Christmas memories. But this is one that I can’t forget.

Now let’s focus on a very important issue of the day – inflation. The Federal Reserve had been telling us that inflation is “transitory.” Well, the Federal Reserve Chairman last week backed away from that assumption. He will begin raising interest rates and tighten up on U.S. government bond buying. Inflation hit 6.8% -- a 39 year high in November. Producer price index went up 9.6%. I will never forget when inflation just exploded in 1979, 1980, 1981. We were paying 16% interest on our farm borrowed money. I was Secretary of Agriculture and our Federal Reserve kept raising interest rates. They did that to kill inflation. And it worked. Those were brutal times forcing thousands of farmers out of business. Country banks went broke. Farmers and small businesses could not pay their loans.

For most farms this year 2021 has been a good year with higher prices. Net income for U.S. farms should hit $117 billion. Next year will be a different story. I was talking to the company where we buy our fertilizer. Prices have exploded. They are 2 or 3 times higher than last year.

Larry Summers, a highly respected Democratic economist had a lead editorial in the Washington Post the day after our Federal Reserve announced plans for a series of rate increases. Mr. Summers tells us that we need to “apply sufficient restraint to cause inflation to come down to its 2% target without pushing the economy into recession.” We need higher interest rates, or we can’t bring inflation down. But we don’t need the $5 trillion Build Back Better spending bill which would accelerate inflation. Thank you, Senator Manchin for saying “No.”

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