A gallon of milk doubled in price from around $2.50 to just over $4, at the same time all the otehr commodities doubled, after the Fed started blowing a prosperity bubble in 2002. Now all the other commodities have crashed but milk is still around $4 a gallon, and the dairy farmers sent their lobbyists to Congress (or something) because Congress is trying to get around a requirement they put on themselves not to put earmarks in the bailout money.
They want to pay farmers to get dairy cows off the production line, in an attempt to shore up dairy prices. The price of dairy goods needs to crash just like everything else has done or is doing. To quote Mish:
Here's what needs to be done. Eliminate all price supports. The weak farmers will go out of business and the rest will thrive. Dairy farmers deserve no more support than do sign manufacturers, banks, or the auto industry. Sadly, the government is playing favorites and severely distorting the economy to do so.
Why? Because it doesn't work
Taking milk cows out of production as a way to control milk prices is a controversial approach. The federal government tried that in the 1980s through the whole herd buyout program, and while the policy worked for a time, milk production eventually bounced back and farmers were once again grappling with low milk prices.
The buyout also sent beef prices crashing, as slaughtered cows entered the meat supply.
Gee, you mean Congress can make things worse by accident? Duh?
Who is supposed to drink milk? Children. It is supposed to build strong bones & whatnot. Propping up the price of milk is good for (select one)
a) dairy farmers
b) children
c) Congressmen seeking reelction
If you picked c) give yourself a pat on the back. As it stands, Ron Paul is about the only argument left against term limits on Congressmen.
Boo.
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