The big problem with inflation is that people get low blood sugar when they are hungry, and soon their moods turn sour. I know this for a fact because if breakfast or brunch or lunch or coffee break or dinner or any snack is five minutes late, I involuntarily turn into a screaming monster from hell demanding to know who stole my food and vowing bloody revenge. I can only imagine the anger when hunger is caused because someone can’t afford to buy food!

This “inability to buy food” is one of the problems with inflation, and that ugliness is now here, as we read from Bloomberg.com that “The World Bank in Washington says 33 nations from Mexico to Yemen may face ’social unrest’ after food and energy costs increased for six straight years.” Hahaha! No kidding?

World Bank chief Robert Zoellick says, “Thirty-three countries around the world face potential social unrest because of the acute hike in food and energy prices”, and that since 2005, “the prices of staples have jumped 80%”.

Like what? Like corn and wheat, which are making the news by rising like crazy, and the latest food emergency is that “Rice, the staple food for half the world,” is now double the price of a year ago, and a fivefold increase from 2001. Yikes!

100% inflation in the price of rice in one year! And 500% in seven years! Yikes again! No wonder that Jody Clarke at MoneyWeek.com reports that “Since January 2005 the average price of a loaf of bread in the US has risen 32%. Overall, US retail food prices rose 4 % last year, the biggest jump in 17 years, says the US Department of Agriculture. Meanwhile restaurant owners have been even harder hit, with wholesale price increases of 7.4%. That’s the biggest jump in nearly three decades, according to the National Restaurant Association.”

And worse yet for us alcohol-besotted worthless lushes out here, heroically keeping bartenders and comely barmaids gainfully employed year around, the price of hops, an integral ingredient in beer making, has soared from $4 a pound to $40.

The Marketbasket Survey, conducted by the American Farm Bureau Federation, says a basket of things like bread, milk, eggs and pork chops will cost you $3.50, or 8.9%, more this year than last. Both a five-pound bag of flour and a dozen eggs are up over 40% since January 2007.”

And speaking of pork and yummy pork products, there is a pig crisis in Britain because the government mandated that pig farmers institute some reforms to make the rearing process more humane, and that means that “Costs rose and farmers fled the sector. The U.K.’s breeding herd has fallen to about 425,000 – half the size it was in 1990. Now, soaring feed prices have tipped the industry into crisis.”

And food prices, and the resultant anger, are rising around the world, as we glean from a reader of George Ure’s Urbansurvival.com who has been using the Google search engine for references to “food riots.” He has submitted these returns:

“278 on the 22 Mar 08
289 23 Mar
330 24 Mar
380 26 Mar
970 02 Apr
1330 05 Apr
1698 07 Apr 08″

Mr. Ure has some data of his own; “Meantime, the word ’shortage’ is hanging around 33,000 hits a day, up from the 11,500 a day” back when he first started tracking it back March 15th, 2006.

Larry Edelson at MoneyandMarkets.com says, “Over the past eight years, the price of food worldwide has increased 75%; the price of wheat has gone up a dramatic 200%.”

And regardless of what idiots at the Federal Reserve or their toadying hangers-on say, inflation in prices follows inflation in the money supply, which brings up the terrifying fact that it is all going to get worse and worse, as from Bloomberg.com we read that “Federal Reserve officials signaled the central bank will keep lowering interest rates because financial markets remain distressed even after the fastest reduction of borrowing costs in two decades”, which goes along with another Bloomberg article that reported, “New York Federal Reserve Bank President Timothy Geithner said capital markets are still ’substantially impaired’ and policy makers and financial industry leaders must ‘act forcefully’ to stem the crisis.” Translation: You ain’t seen nothin’ yet.

Too bad it will be all for naught, as Jason Hommel of the silverstockreport.com is exactly right that “the Fed is doomed. Printing more will not work. Printing less will not work. Printing nothing will not work. All the inflation of all the years from 1913 until now is beginning to crash down on our heads, and it will keep crashing until it stops.”

I am not even from this planet, and I understand that something has to keep going “until it stops”, but when will that be? The answer, says Mr. Hommel, is simplicity itself: “Until bonds start paying more each year than gold is going up each year.”

So what does one do about the collapsing economy? Nothing! You can’t do anything! Your only freaking hope is to not get into this kind of mess in the first place! Ergo, the Constitutional requirement that only silver and gold can be money, which brings up chartoftheday.com, from whom we get the Quote of the Day, which reveals how we can prevent the damned Federal Reserve and the Congress from destroying us with inflation. It is Ludwig von Mises himself who states, “The gold standard makes the money’s purchasing power independent of the changing ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence.”

And as a guy who is not excellent in anything, I can still recognize it in something that keeps us from being destroyed by inflation. And so when it comes to gold, if you ain’t buyin’, prepare for dyin’.

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter – an avocational exercise to heap disrespect on those who desperately deserve it.

But don’t expect a reprieve anytime soon, as farmers across the country are seeking profit elsewhere, and government emphasis on ethanol fuel is draining current stocks, creating a supply crunch.

The price of corn has surged 35% in the past year. And Terry Franci, a senior economist for the American Farm Bureau Federation, said last week that corn prices will continue to rise. In fact, Franci thinks that after averaging between $2 and $3 a bushel for decades, prices could climb as high as $6 a bushel – a threefold increase from 2005.

And while that may be a good thing for the American farmer, it’s not such a good thing for the American consumer. That’s because corn is an integral component in the American diet. Aside from its obvious uses as a vegetable, corn is also used to make soft drinks, bubble gum, ketchup, mayonnaise, peanut butter, bread, cereal and beer. Prices for those food items are already rising due to inflation and corn’s swelling price is causing more pain at the cash register.

In fact, food prices increased nearly 5% in 2007, the biggest annual jump since 1990. In 2007, the cost of a gallon of milk increased 26%; eggs went up 40%; and a loaf of white bread went from $1.05 to $1.28 from 2006 to 2008.

And even though the U.S. Department of Agriculture (USDA) just reported that America’s corn stocks are evaporating, don’t expect any reprieve from the National Corn Growers Association (NCGA).

Last week, the USDA put March 1 corn stocks at 6.859 billion bushels, below the average trade estimate of 7.078 billion. But despite the shortfall, the USDA also said that farmers will plant only 86 million acres of corn this year, an 8% drop from 2007.

That’s because many farmers are finding bigger profits in wheat and soybeans.

After jumping on the corn bandwagon last year, Virginia farmers and others around the country realized they were not making as much money with corn as they could by planting and harvesting wheat, and directly afterward a crop of soybeans, Jonah Bowles, the risk-management coordinator for the Virginia Farm Bureau Federation, told the Richmond Times.

Soybean acreage in the U.S. is expected to jump by 17.5% to 74.8 million acres, up from 63.6 million acres in 2007.

In Iowa, farmers are expected to plant 13.2 million acres of corn this spring, down 7% (or 1 million acres) from last year. Iowa is expected to plant 9.8 million acres of soybeans, up 14.6% from 8.6 million acres planted in 2007.

In Missouri, farmers are expected to plant 3.1 million acres of corn this year, down from 3.45 million a year ago. But they will plant 5.2 million acres of soybeans, up from 4.6 million a year ago.

There are many reasons for corn’s price spike. Growing populations, a weak dollar, and high energy costs are all forces at work. But only one cause for higher prices is actually furnished by the U.S. government: The production of ethanol fuel.

Ethanol Fuels Corn’s Price Jump

American farmers account for about 42% of the world’s corn production, and the fact that corn comes from the Midwest rather than the Mideast makes it a very popular alternative energy candidate.

So popular in fact that mandates for renewable fuels, chiefly ethanol derived from corn, have steamrolled through Washington.

The 2005 energy bill contained the first-ever requirement – known as the Renewable Fuel Standard (RFS) – that alternative fuels be mixed into the nation’s gasoline supply.

The original bill required the United States to incorporate 7 billion gallons of renewable fuels into its supply by 2012. Last year, the act was amended to require fuel producers to use at least 36 billion gallons of biofuel by 2022. In order to bring about this five-fold increase, the act also increased funding for bioenergy research and technology.

As a result of legislation such as this, the number of ethanol plants in the United States has increased 134, up from 50 in 1999, according to the Renewable Fuels Association. Ethanol is expected to soon absorb 30% of the nation’s domestic corn production.

While the mandate was intended to decrease our nation’s dependency on foreign sources and protect the environment, the ethanol movement has had some negative consequences.

A recent study from Purdue University puts the added food cost from the renewable mandate at $15 billion in 2007 – about $130 per household. And that was from ethanol usage at a fraction of what will be required in the years ahead.

Higher prices also affect meat producers and dairy farmers who rely heavily on corn to feed livestock. Pilgrim’s Pride Corp. (PPC), the nation’s largest chicken producer, announced in March that it was closing a North Carolina chicken processing plant, and six of 13 U.S. distribution centers, due to the jump in feed costs.

The American Meat Institute (AMI) has joined dairy, egg and turkey lobbyists to fight any increase in ethanol mandates that could divert yet more feed into fuel refineries. In fact, AMI spokeswoman Janet Riley said the group is “absolutely” opposed to more ethanol mandates and will continue to lobby against them.

Regardless of the stands being taken against ethanol, the alternative fuel still carries heavy support in Washington where gaining independence from foreign oil and supporting of the American agricultural industry are big talking points.

Morgan Stanley (MS), the second-biggest U.S. securities firm, has already raised its price forecasts for corn and soybeans by 20% on higher demand for food and ethanol.

“Aggressive and politically driven fuel-ethanol targets, and the need to increase acreage outside the U.S. to satisfy growing developing-world demand, will likely lend continued long-term support” to agricultural prices, said Morgan Stanley research analyst Hussein Allidina.

On average, food prices increase about 2.5% each year. This year, according to federal data, the overall cost of food is predicted to jump 3% to 4%. But as long as prices for soybeans, wheat and especially corn continue to rise, steeper increases will likely follow.

“There’s a way out of this with fewer acres, and that’s just have a bumper crop,” Ed Usset, a grain marketing specialist at the University of Minnesota told the Star Tibune. “That’s a hell of a thing to just bet on.”