“You have to reroute all of our coffee immediately.” Those were the words of Michael Haft, co-founder of Washington, D.C.-based Compass Coffee. It gets its coffee beans from the Port of Baltimore.
Of course, to say that Compass gets its shipments of beans from north of D.C. simplifies what is complicated and brilliant by many, many miles. As the Washington Post reported in a piece about the granular implications of the Key Bridge collapse and subsequent closure of the Port of Baltimore, the beans that bring Compass coffee drinks to life come from Kenya, Ethiopia, Indonesia, Brazil, Guatemala and Colombia.
Which requires a pivot to the Fed. About it, there will be no defense of its existence here. The Fed’s existence embarrasses common sense. To say that it’s unnecessary is a waste of words. To say that Fed officials routinely spout nonsense is a bigger waste of words.
Still, as they say even a stopped clock is right twice a day. And the stopped clock that is the Fed was right that the high prices that revealed themselves in 2021 and beyond were “transitory.” Which in itself was a waste of words. All high prices are transitory. Put another way, the path to lower prices is through higher prices.
Yet transitory is discussed here simply because the various economic religions began ridiculing the Fed for stating the obvious back in 2021. The religions unwittingly ridiculed themselves.
You see, in blaming the Fed for higher prices Keynesians, Monetarists, Supply Siders, and Austrian School members erred twice themselves. For one, they ascribed to the Fed a role whereby it would centrally plan the cost of credit and the amount of so-called “money supply” as the fix for its alleged errors. Only economists and those who naively worship at their feet would suggest that the entity which allegedly failed in its central-planning of rates and so-called “money supply” should be charged to correct its mistakes.
From there, how strikingly odd that economists would call for the empowering of a government body to bring down prices. Did they, and do they realize the impressive fatuity of such a notion?
It can’t be said enough that the sole fix for high prices is high prices, at which point global cooperation of hands, machines and minds will gradually take care of the rest. Simple stuff.
Which brings us back to Compass. It’s not just that it imports coffee beans from around the world. Everything about Compass is a global affair. The D.C. coffee chain imports sugar for the various syrups that vivify its various drinks (stop and imagine all the global inputs that go into those syrups), not to mention that its “12-ounce coffee bean cans are made by a company that imports steel through” the Port of Baltimore. Only for it to get worse.
While Compass used to pay $1,000 per shipping container of inputs, it will now pay $3,500 per container from Newark, plus it expects to pay “an extra $10,000 on sugar in the next three months.” In Haft’s words to Post reporters Marisa Iati and Danny Nguyen, “The ripple effects are also being felt up and down the supply chain.” Well, yes. Haft aims to keep prices steady, but can’t promise to do so.
One hopes readers will seriously internalize the struggles of a relatively small business providing a relatively prosaic market good as a consequence of the shutdown of one port. Please then stop and imagine what the shutdown of global production and ports globally for weeks and months at time a time in response to the coronavirus meant for the production, shipping, and pricing of everything.
To say that many prices were higher in the aftermath of a Key Bridge-equivalent collapse on a global scale in 2020 insults statement of the obvious. Of course prices were and are higher, and of course they will be as producers around the world feverishly work to fix what panicky politicians broke. Just please don’t call this inflation.
