The Federal Reserve's picture on inflation is likely being distorted by the drive for ethanol, Jim Cramer said on TheStreet.com TV's Wall St. Confidential Web video Tuesday.
A lot of people believe that under President Bush the economy's been great, which is true, Cramer told Gregg Greenberg, the host of Wall St. Confidential. "The stock market's been great."
But recently, for reasons Cramer believes are tied to keeping the Republicans in the White House and have much less to do with energy independence, there's been a push on ethanol, Cramer said.
That has driven up "dramatically a very important raw good
corn in the panoply of things the Fed looks at," he said. "This is damning to me." (Corn is the primary feedstock used in U.S. ethanol production.)
The Fed is looking at inflation, more so than housing and consumer spending, and "inflation is the grain complex," Cramer said. "It's not going to go down because it's been mandated by the president to go up."
Greenberg pointed out that shares of chicken, egg and dairy manufacturers, such as
, are up significantly over the last six months.
"One of the things that is remarkable about the lack of antitrust in this country is that they've allowed these companies to get together," Cramer said in response. "There used to be some vicious, vicious price competition in some of these markets." But that's been "wiped away" by mergers.
Cramer directed listeners to the
Buffalo Wild Wings
conference call, where the "excellent management" talks directly about the cost of wings. If the Fed looked at this, it would realize that there is a problem, Cramer said.
He said he knows there's been a lot of corn-planting and he is still "a big believer" in the agricultural complex. "The agricultural and defense complex are both supported by the Democrats, which makes it so that I feel the inflation there is going to continue."
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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