Certainly, President Obama’s proposed budget is a long ways from passing, but as one commentator put it, “it will be historic even if only a fraction of it is passed into law.” (See it at www.whitehouse.gov/omb/)
It’s difficult to assess the impact of the size of these deficits on long-term capital creation and access, the inflationary pressures that will be created by such a massive devaluation of the dollar, or the increase in commodity prices that will result. Political perspective and objectives will determine how one views most of the proposals, but one thing that can be said with 100% certainty is that we’re looking at an unprecedented shift in the direction of the country.
This paradigm shift will inevitably lead to some major shifts in agriculture as well. Setting aside the long-term impacts, either scenario should be bullish for agriculture, especially for those with land assets that are paid for. Those who are leveraged will have to determine if this is the 1930s or the 1980s – the two time-reference points everyone is referring-to and what those impacts will be.