China has been experiencing quite a lot of inflation in food prices. But that is not causing the Chinese to eat less. On the contrary, Chinese are eating more and more and the high food prices drives farmers to produce even more agricultural output to chase after inflation.
As stated before, if there was deflation in food prices, it would force farmers to pull back on productivity and then Chinese would actually have less on the dinner table. By holding down grain prices, farmers will stop growing staples and start growing things that will offer a better return on investment.
Tian Lanying has given up growing wheat.
For most of her 60 years, Tian has raised wheat on a small plot of land in Henan province and sold it to the State at a fixed price. This year, she will plant corn and vegetables instead. The reason?
"Wheat does not make much money," she said.
Thankfully she is not switching to coffee beans and tea which has almost no caloric benefit. The Chinese entrepreneur thrives on inflation. You take away inflation, and then they have no incentive to produce. Inflation is the brainchild for productivity and abundance.
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