Tales from Inflation. A cultural shift

This is my second wrangle with inflation.  And just when you think you've got it all figured out, you get thrown a curve ball.

Back in 1991(ish) I started working for an engineering firm in Greenville, SC.  I picked the absolute wrong time to move...but where I was just seemd like the wrong time to stay.

The Land of Corn and DIRT

We flew into....well, to be honest, I'm not sure what airport we flew into.  The final destination was Mattoon, Illinois.  If you've never heard of the place, don't be disappointed (see the red thingy in the map below).  I think we may have flown into the Indianapolis Airport.

From my recollection, the drive to Mattoon was notable for one thing: CORN.  And lots of it.  Square miles of corn.  More than you could shake a stick at.  I was already familiar with the deep dark rich topsoil in Illinois and especially Iowa, having driven through those regions as a young college kid.  

I had asked why all the fields were burnt. 

"Everything in the field was black", I inquired.  

Being from South Carolina (the "Sandlapper State" I should note, called this for a reason) how could I have conceived the possibility of that blackened field actually being the soil?

As we drove closer to the plant, true to the song...the corn really was as high as an elephant's eye.  And it most certainly climbed way up to the sky. As we got closer to the plant, the path cleared and you could finally see it over the tops of the vast swaths of green stalks of corn.

Destination: Dog Food

This was the regional manufacturing facility for Kibbles 'n Bits (parent company being Mars). We were tasked to help them upgrade the plant to handle the complex food processing of pet food.

By this time, we had already met with the Plant Manager Charlie Brokaw.  We already knew what they wanted to attain. We even pitched an idea (that they pounced on as the best idea) using some newly introduced equipment into the Americas. What I didn't know at the time but found out years later, it was to become the supplier's largest usage of their equipment in the USA.  For some number of years, it was the go-to place to see their equipment in operation in a food processing plant.

After we signed in we waited for Charlie to catch up with us from his meeting.  We were told the plant was shut down and we could go in and look the place over while we waited.  I don't recall a lot about the plant.  But, most grain based food processing plants are very similar.  This pet food facility was very similar to a Kellogg or General Mills Food Processing plant that make human breakfast cereals.

What the...? What is that?

However....there was one thing that struck me.  On the opposite end of the facility (food processing plants are enclosed, BTW) was an adjacent area that looked like a board room or conference room.  It was brightly lighted and in stark contrast to the processing plant that had very few lights on due to being shut down.  

There was something very odd about it... We were too far to make out any details.  There was a long conference table with maybe a dozen chairs.  And....something else I couldn't make out. I signaled the other engineers to go with me to check it out.

We went into the conference room and just couldn't figure out the scene.  What did it mean?  In front of each chair was an empty bowl and a box of Kibbles 'n Bits.

I looked at the others. "What are they doing?  What is this?"  They didn't know either. There was that dissonance your brain was having to go through to make sense of it all.

We made our way back to the Administration Building and headed to the cafeteria to continue to wait for Charlie. Luckily, we didn't have to wait long. 

As we chatted, I asked Charlie about the setup we saw in the conference room. 

"Charlie, what's that all about?  Were you going to bring in dogs to taste the kibbles?

"Well, not really.  Dogs don't go by taste, they mainly go by smell."

That didn't really answer my question.

"So what's the setup about?" I was trying to have him TELL us rather me saying something that seemed preposterous.

"We eat 'em." he said - smiling.

I was just blown away.  "You EAT them?  That's crazy.  Is it....uh...safe??"

His smile got bigger. "Oh yes.  It's very safe."

"How so?", I asked

"We build the plants to human consumption standards".

That stunned me. And then...he told the story within the story.

The Big Reveal

"Back in the 70s as inflation kept raging higher and higher, there were rumors that the elderly on fixed incomes could no longer afford meat.  The only thing they could afford was dog food.  This really concerned us.  So we took it upon ourselves to upgrade our pet food processing plants to meet human consumption standards."

Well, the gears in my head started spinning. First, in order to understand the undertaking, there has to be a basis from which to start. Normally. But in this case I can only infer what had to be done knowing what a modern food processing facility CGMP (Current Good Manufacturing Practice) plant must abide by. 

What would it take?

Generally, a food processing facility must accomplish at least two things: 

1) the food must maintain presentability 

2) the food must be safe to eat and maintain flavor/taste. 

Now, I'm no expert.  It's been a long time since I was involved in food processing, per se. But there are some general guidelines we can surmise.

In order for the food to be presentable, there can be no observable rust or other foreign material . This means:

1) no carbon steel parts in contact with the food.  Otherwise, there could be particles of rust. So, generally, equipment that come in contact with the food ingredients must be made of non-rusting components such as stainless steels.

2) The processed food must be free of any metals.  This nessitates the use of metal detection equipment. Magnets won't work with stainless steels.

3) No glass is allowed inside the plant.  I don't know if this is industry wide, but the clients I dealt with allowed zero glass in the process or within the processing environment/plant.

4) Workers in the processing plant, must wear appropriate clothing to prevent hair from getting into the food. Refrain from wearing any loose items or jewelry while in the processing area of the plant.

In order for the food to maintain flavor and be safe, there are one of two environments that need to be maintained:

1) the food must be maintained at a high enough temperature to kill bacteria or,

2) the food must be maintained at a low enough temperature to prevent the growth of bacteria.

3) I could add a 3rd possibility as pH. But I can't state that as a fact. Probably depends on what is processed.

Now, from this point on, it can get very complicated with special valves that are engineered to minimize the hold-up of liquids or allow the automatic flushing to remove fluids that could become contaminated.  Also, there is the use of CIP (clean-in-place) procedures and equipment, internal equipment design, etc. The list goes on and on. 

So, with all of this information that I have - and I don't know even the half of it - what kind of price tag would you put on upgrading an 1970's pet food facility to a people food facility?

What would be the cost?

We can break the costs down into three segments:

1) The direct costs to upgrade the plant

2) The direct costs to the employees of the plant

3) The costs to the consumers

1) The direct costs to upgrade the plant

If I had to guess, I would guess anywhere from 40 to 60 per cent of the original plant cost. This is just a complete wild guess. 

2) The direct costs to the employees of the plant

But...there was one other characteristic I left out of the re-designed plant. By the late1970s and early 1980s, computer process control became the norm. All those 1960s and early 1970s plants that were upgraded? Once the conversion would be completed, probably upwards of 50% of the operations staff could be laid off. We can only hope they were reassigned to other plants built or yet to be built.

Now if you are a bonafide expert, don't bother writing me explaining where I am wrong. This was never meant to be an "expert's opinion". This was meant to be a general discussion that explains what all could go into the design of a food plant. In fact, I didn't even mention nutrition.  This was a complication I didn't want to deal with.

3) The costs to the consumers

But there is one other Unintended Consequence of upgrading the plant to people food standards. The plant upgrade costs still have to be paid for.  The only way to do this would be....to RAISE THE COST OF THE PET FOOD, thus impacting the people who they were trying to protect.

So, there you have it.  Who wins in inflationary times?  

No one.

Effects of Inflation - the '77 Natural Gas shortage. What would this mean to us now?

 

This is the first post I am putting up to explain and show what the impact was when the strong, unrelenting inflation hit the USA when we went off the gold standard. Now, this was not the first time we had high inflation post WWII.  But this was for sure the start of a New World for Americans. 

We have to ask ourselves "what about now? What are we not expecting to happen to us?"

The title is a little misleading..but people at the time knew they were talking about natural gas.

Reading this article in Newsweek you would think...well, stuff just happens.  However, this is the story of government regulations with no thought of the Unintended Consequences. A story of price regulation gone wrong in the New World of Choking Inflation.  And no one was looking. 

The adage "fixed prices create scarcity" was at play.

The crisis has been building for years, the result of government complacency and a clash between an industry that wanted to deregulate gas prices and a Congress that refused to do so.... Natural-gas companies have long contended that an unduly severe winter weather could create perilous shortages. Since 1967, America's natural-gas reserves have decreased more than 25 per cent, and the gas companies have maintained that stringent price controls have denied them the profits necessary to finance new exploration and drilling. Opponents of deregulation, fearful of raising energy prices in the midst of a recession, charged that the industry was crying wolf. 

That debate continued last week, with some still charging that the gas companies were holding back supplies to prod Congress into ending controls.

If you want to understand the complete history of government regulations, you can visit this site.  Below, I extracted the info dealing with the problem at that time from that website. I bolded the important parts and added some info for clarity.

The Effects of Wellhead Price Controls 1954-1978

All three of these systems of price control discussed above [you can read that history at the  link - JG] had disastrous effects on the natural gas market in the United States. The artificially low price ceilings that had been set since 1954 had a number of outcomes in the market, coming to bear in the late 60s and 70s. Because the set rates for natural gas were below the market value of that gas, demand surged. The low prices of natural gas, as set by the FPC, meant that consumers were receiving good value for their money. This combined with the oil price surges experienced during the OPEC crisis in the 70s made natural gas an even more attractive fuel.

However, at the same time, there was little incentive for natural gas producers to devote the money required to explore for and produce new natural gas reserves. The selling price for natural gas was so low, it simply wasn’t worth it for the producers. Producers also saw little incentive to search for new reserves. While the price at which they could sell interstate gas was fixed, the finding and development costs for establishing new reserves was as variable and unpredictable as ever. Producers saw little reason to engage in the exploration of new reserves that would cost more to find than they could be sold for under FPC wellhead price control. [the Federal Power Commission - the FPC, which had been created in 1920 with the passage of the Federal Water Power Act - JG]

However, the FPC only regulated producer wellhead prices for natural gas destined for the interstate market, leaving natural gas sales within the intrastate market relatively free of regulation. So while demand was surging nationwide, economic incentives did not exist for producers to ship their gas across state lines. They could sell it at a much higher price to intrastate bidders. In 1965, a third of the nations proved reserves were earmarked for intrastate consumers; by 1975, almost half of the proved reserves were committed to intrastate consumers.

This resulted in natural gas reaching consumers in the producing states, while the consuming states were experiencing natural gas supply shortages. In fact, in 1976 and 1977, many schools and factories in the Midwest were forced to close, due to a shortage of natural gas to run their facilities. Meanwhile, in the producing states, virtually no shortage was felt, due to the thriving intrastate market satisfying natural gas demand in these states. This led to certain ‘curtailment’ policies, advocated by the FPC and state utility regulators. These policies essentially set a schedule of priority, directing distributors and transporters to curtail supplies to certain customers who were deemed ‘low priority’. However, these policies resulted in numerous litigation suits and FPC proceedings that turned out to be extremely complicated and time consuming. Realizing that something must be done at the federal level to reduce the strain of these supply shortages and demand surges, Congress enacted the Natural Gas Policy Act in 1978.

As the fight among the net producers went back and forth, the people in states like Texas sported bumper sticks showing their general animosity: 

"Let the bastards freeze in the dark” (or “Let the Yankee bastards freeze in the dark” or “Let them freeze in the dark") and “Drive 80 mph and freeze a Yankee” (or “Drive 90 mph and freeze a Yankee” or “Drive fast and freeze a Yankee") were bumper stickers that were popular in Texas during the 1973-74 energy crisis.

The bumper sticker “Let them freeze in the dark” appears to have started by a Wyoming company in February 1973. Energy prices were rising, but toughened environmental laws prevented finding more energy sources. The “them” were the environmentalists.

Texans had other reasons (besides environmental restrictions on energy) for “freezing Yankees” in 1973-74. Federal regulations had required supplying Northeast customers with oil and natural gas at regulated prices. Also, Northeast politicians had suggested that Texans should have conserved energy during this out-of-state energy giveaway. The “Drive 80 mph and freeze a Yankee” bumper stickers were popular in Houston at this time.

The dates for this show these bumper stickers were popular in the early 1970s, but I suspect they were either still affixed to those bumpers, or they bought more. 

South Carolina, which was a predominantly Democrat state at the time, attempted to do its part.  The University of South Carolina, where I was attending, decided to switch their power generating plants from natural gas to fuel oil (dual fuel boilers are very common).

I still remember a friend of mine, while I was walking to my next class, came running up to me yelling "Hey, guess what!! The University is shutting down!  We ran out of fuel oil!!"

Yes.  The university shut down early for the Christmas holidays and opened back up in late January (if my memory is correct). 

 

 

Dr.SHIVA: The Elites Are FULLY Prepared For Revolution! ARE YOU?

 Dr. Shiva is probably one of the smartest people to have ever walked this Earth. The inventor of email is molding and shaping a cadre of like-minded people to....think differently. For sure, the idea of cycles once grapsed, is a game changer.  That happened to me when I discovered the Real Estate Cycle.

The youtube video is worth the time to watch.  The upshot:

The extreme Left ideas we are seeing are being pushed to the forefront to not just cause chaos but to actully push us to civil war or possibly even world war.

Why?  Because they think this will keep the inevitable from happening.  This is why I had an earllier post entitled: Who is the enemy?  Who REALLY is the enemy?

This isn't a long video and is well worth the watch.

You can run.....but you can't hide

 Lately, I've heard on youtube many side comments on the problems with plastics.  I've done some research into this, but need to do more research.  For instance, PET plastic and phthalates (Not to be confused with plasticizer phthalates use in some polymers such as vinyl).  My semi-conclusion right now is it is a NOTHING BURGER. But, I'll continue to look into this. Since my BS degree is in Chemical Engineering and I've been involved in NUMEROUS industries, I think I can do a pretty good analysis on this.  But I am not a CHEMIST. There is a big difference.

But one thing is for sure: You can run....but you cannot hide.  You may think you're in good shape not using plastics, but...your choice of an alternative material may not do what you think it will do. 

That's why I thought I would highlight this: ceramic cups and bowls.

About 35 years ago I went to a family reunion. Way-back-when, my grandfather had settled in Georgia and raised his family there. So, that's pretty much been the anchor for where most of my clan lives. 

The more notable member of the clan was my Uncle Bill Gordy.  William A. Gordy was considered the most well-regarded potter in all of Georgia.  Many of his creations are on display in the Smithsonian Museum. We had a chance to spend some alone time with him. He took us to his studio.  It doubled as a store.  And all the shelves were bare.

"I can't make this stuff fast enough.  I'm a year behind on my backlog," he said, waving his hand at the bare shelves.

He put on a demonstration for us.  It was fascinating. He started from scratch and explained every step - 99% of it I barely remember.  But there was one thing he said that popped my eyes open:

"The worst part of all of this is having to deal with the Federal Inspectors."

I asked, "What? What the heck do they have to do with this?"

"Oh, they check for lead in the cup." 

What the.... I had never heard anything about this.  Lead in the clay? 

Apparently, in the glaze, but also can be found in the clay.

However, there are lead free glazes available.  I don't know anything about them,  other than they do exist. 

I do recall that excessive lead was found in numerous ceramic cups made in China. I can't find any articles to link to.

Doing some surfing on the internet, this is still a really big problem. From her post in 2019 From Lead Safe Mama:

Since testing those first mugs, I have probably tested more than 1,000 mugs (they are one of the most popular things that people ask me to test and people often have collections of 20 or more mugs in their homes) and nearly all of the mugs I have tested have had at least some amount of Lead — some at ridiculously high levels (in the tens of thousands of parts per million!) Lead is added to many of the pattern transfers, as well as to brightly-colored glazes as an ingredient that helps to stabilize the color (as I understand it), but it is not necessary for this purpose — as some companies have demonstrated that it is quite feasible to make mugs that are completely Lead-free...

She had bought an XRF unit to test the cups.  This mama-jewel can be found on Ebay for about $9,000.

Unfortunately, she does not break down how many ceramic items had this or that amount of lead. Other than "nearly all of the mugs" had some level of lead. 

So,, what do you do?  Refrain from ceramics all together? Right now, my go-to mug at work is stainless steel.  But at home I have a vast array of mugs gathered from all over the world, filling several cabinets. 

Things I've read ( as Lead Safe Mama mentions) say that sources of the lead are sometimes bright colored paint or bright colors in the glaze.  If that's the case, then Uncle Gordy's pottery would never ever leach anything at all. His mostly-used glaze is sort of a muddy color:

Smart man.

Let's give this another try

The main focus of this blog has been to follow California as it swirled around the drain. But...it got to the point that it was just too depressing. Especially the homeless situation. There were hundreds of vidoes posted on Youtube that I could have added here. But..I really felt I was exploiting these people - for whatever reason they had for being homeless. I just couldn't do it anymore. 

Of course, I posted articles on other subjects. So I will continue to do that. The coronavirus scare provided subject material. But it got to the point exceptional articles were posted everywhere and I didn't think I had anything to contribute - except at the beginning when everyone was wearing a mask. I thought the most creative thing I could - and did - was to take the section of  the book in Atlas Shrugged where Dagny is conversing with Jim regarding the crooked Metallurist Association who wanted to ....railroad....Reardon. To me, at the time, it all fit like a glove.