I finally get to use Albert Brooks'  "nest egg" theory from his hilarious film "Lost in America".  Chew on this corn ethanol apologists and your economist allies, hehey.

When the cost of a commodity that goes into a product, say grain into bread, goes up 10 cents per loaf; that 10 cents is not just passed on to the consumer, directly raising the price of the loaf by 10 cents.

That would eat into the bread makers profit margin.  That cost must be multiplied by the ratio of the price of the loaf to the cost of the grain in each loaf.

So it might very well raise the price of the loaf 40 cents.  

We ran into this on a discussion of organic milk prices and the cost of milk to the dairy company.  To raise the payment to farmers the 7 cents per pound to make their farms profitable (in the face of even more rapidly rising organic corn prices), organic milk prices to consumers would not go up 56 cents, it might have to go up a dollar or more.

It's a tough economic fact, inflation in base production costs like raw materials and energy are magnified when they are passed down the marketing chain to conmsumers.

This is why economic recovery above all requires stable energy and raw material prices, otherwise inflation runs out of control, weakening the currency and impoverishing the citizenry with less and less buying power in exchange for their labor.

Lower energy prices help to lower the price of commodities like corn.  And that keeps inflation in check, allowing easier credit.  Which results in families being able to afford to buy  homes and move up into the middle class.  Becoming investors, in their own homes, instead of merely tenants dependent completly on their own labor for survival.  

They get on the investment side of the capitalist equation.  Saving and investing, using compound interest to achieve financial security.  They have a cushion in troubled times.  That is the precursor to the basic right to pursue happiness. Without financial security, happiness is mainly a temporary state.   As Brooks explains it in "Lost In America":

"When the rain comes down, the 'nest egg' protects us, we stand under it and the rain drips off the edge."    

Argue with Brooks economists, he's way smarter than I am.  And incredibly funny, and appearing on the HBO series "Weeds" this season.