The Fed got LUCKY...

..in that they could do something incredibly inflationary.. QE and QE2 during a time of plenty.. after the commodity spike of 2008 resulted in MORE supply of Grain, Crude and Ethanol.. we are swimming in stocks of all three right now.. So the Fed is free to act to try to stimulate the economy.. "one more time." Again.. if we were facing shortages.. they probably couldn't do this.. the FED owes the American FARMER a big "Thank you."

btw... "you're welcome."

So QE2 away.. hopefully we get another bounce in growth along with better policies from the politicals in DC.. people will start to get a little more confidence in the economy and the country can go back to work.

Now what?

More history.. in the booming 1990's we in Ag were told to expect a cornicopia of good times raising food to feed a growing Asia.. in 1996 China purchases of corn drove US prices to for then record levels... then the Asian meltdown occured and the bottom fell out.. again.

Furthermore, along with energy prices falling to under $10 Crude in the late 90's Agriculture found that "we had competition" from South America...

"They have HOW MUCH LAND?"

http://www.highbeam.com/doc/1G1-82067151.html

"a lot"  but it is constrained by infrastructure and the soils need lime.. which they have plenty of.. but back to transportation.. or the lack thereof.

When energy was cheap.. South American Agricultural expansion is easy.. cheap energy inputs into the Cerrado.. cheap Ag outputs out...  build more infrastructure.. repeat.

However, as energy prices rise.. the "cheap" comes out of the South American expansion... as we have seen.  The world though is probably not going to run out of food production given that the US has ramped up.. and South America is expanding.. and will continue to expand.. probably for the next couple of decades.

The question becomes.. "then what?"

The US has something on the order of 2.3 billion acres..

The United States has a total land area of nearly 2.3 billion acres. Major uses in 2002 were forest-use land, 651 million acres (28.8 percent); grassland pasture and range land, 587 million acres (25.9 percent); cropland, 442 million acres (19.5 percent); special uses (primarily parks and wildlife areas), 297 million acres (13.1 percent); miscellaneous other uses, 228 million acres (10.1 percent); and urban land, 60 million acres (2.6 percent).

http://www.ers.usda.gov/Publications/EIB14/

Currently Corn ethanol demand uses about 1/3 of the corn crop which is grown on about 90 mln acres..  As mentioned 1/3 of the ethanol demand comes back as feed.. so the net effect is about 2/3'ds net useage of 1/3 of the corn crop.. or about 20 mln acres out of 2.3 billion or less than 1% of our land mass is currently fueling almost 10% of our liquid fuel needs.

We can increase this.

Cellulosic technology is still under developed.. but holds the promise of converting land fill waste.. as well as forestry waste as well as other abundant source stocks.  We also could capture the oil found in corn at the ethanol plant for use as bio-diesel or devote more oilseed crops to biodiesel production.. in the future.. which as more land is brought online in South America.. may happen... over time..??

In order to be self-sufficient.. to produce these things that we can at home.. as opposed to importing Crude or rare earths from foreign lands.. as the dollar's value is reduced.. these will become more expensive. 

Therefore, why not develop our own resources and put people back to work in the process?

Why not build a modern day TVA for the West?

http://www.youtube.com/watch?gl=IE&hl=en-GB&v=ORRUJyt7AIo

This system would be massive.. but could be paid for because the value of the products that could be produced.. Energy, Hydro power, Water for the West.. places like Las Vegas, Denver, and Southern California.. as well as more agricultural production.. for ethanol AND FOOD!!

With enough water.. the US can feed China.. and power the US car fleet.. we can do both.

but it will take time.. probably a couple of decades to build.. and financing.. probably cost $500 billion or so.. maybe more?

I suspect that by the time this project came online.. demand will "be there" for the increased production.. as we accomplish a "planned transition" away from non-renewables to renewable energy sources produced in the US!!!  As we build more Flex fuel vehicles.. transition to higher percentage of ethanol pumps.. e-15, e-30, e-85.. we could gradually wean ourselves COMPLETELY off imported Crude..  Generate Tremendous amounts of Hydro power.. which would COMPLEMENT the additional wind turbine expansion.. in a number of ways.. First added power lines from NAWAPA Hydro.. with added wind farms.. Secondly.. the Hydro power could be used in complement of wind.. if wind.. reduce Hydro power.. No wind.. increase Hydro power..  There will need to be electric pump lift stations along the water route.. so this plan will use Hydro/Wind power as well as generate it.. but the net effect will be a massive generation when completed.

One last thing.. we have a limited window of still cheap fossil fuels to kick off this massive public/private works project.. it's cost will only increase as the price of fossil fuels increases.. once in place.. it will allow alternatives to flourish.

This site talks about Iraq coming online over the next decade.. which can help hold Crude prices in check "for awhile" before they continue their march upward.

http://anz.theoildrum.com/node/4675

We should utilize this opportunity to build something that will enable us to remain self sufficient.

jmho..