Speeches by agricultural economist Dave Kohl generally cover large swaths of the economic landscape. Following are some of Kohl's observations from a recent presentation in Salem, Ore., at the American Agri-Women's annual convention:
With U.S. government debt rising, the nation's creditors -- including China, Japan, Great Britain, the Caribbean and the Middle East -- will expect to earn more money on the bonds they buy, Kohl said.
That percentage increase will likely work its way through the system and result in higher interest rates for all loans, he said.
When the federal government basically prints more money to fund programs and repay debt, that eventually devalues the worth of the U.S. dollar, Kohl said.
Usually, though, it takes about 31/2 years for inflation to really kick in, he said. "That's a headwind facing our economy."
The U.S. is expected to emerge from the recession, but once the "training wheels" of government stimulus money come off the economy, growth will probably be moderate for an extended period, Kohl said.
In that environment, credit is unlikely to be as easily available as Americans have come to expect in recent decades, he said. "We were living in a false economy for about 20 to 25 years."
Whereas the economy was once based on "borrow, borrow, borrow," it will now revolve around "cash, cash, cash," Kohl said.
Cash permits flexibility, so farmers should have a reserve large enough to cover at least nine months of living expenses, he said.
-- Mateusz Perkowski