So, I am trying to save some money here, in these tough times, and am making my own bread. I have a nice Sunbeam bread machine that turns out a great loaf with not a lot of effort, but upon examining my costs…
A 5 lb bag of flour will make me 6 loaves, and costs me $1.99 and tax. A three pack of yeast is $2.00! So my cost for a loaf for the flour is .33 and the cost for yeast is .66! 
Can I propagate my own yeast? There must be a cheaper way!
This site says you can buy 1lb bags of it at CostCo or Sams - for $2.50 in 2007.
In the UK, you can also buy lumps of live yeast from bakeries, even the in-house supermarket ones (I’ve done it myself).
Fleischmann’s Instant Yeast @ Google Shopping.
Saf yeast is even cheaper.
Wowsers! I don’t need that much. Ralphs has the little jar that looks like a rubber cement jar for eight bucks, I wonder how much that one makes…
Now all I need is a cheaper source of flour. 
Two bucks for five pounds seems pretty good though…
I think I can get it down to less than fifty cents a loaf, including electricity for the breadmaker.
Yes you can propogate your own yeast, but it can be a bit of work and you really do need to bake constantly.
this site has a compendium of links to more information.
Essentially sourdough as a baking process is keeping a liquid culture alive, with specific use and feeding instructions. It can die off, or get infected with wild yeast or other microbes that are not good for baking.
I buy my regular yeast from King Arthur Flour and have bought specialty sourdough yeast cultures from several different sites. I do this at teh beginning of winter as I do not like to spend as much time farting around baking in the heat of the summer.
Buy the stuff in the jars. Make sure it has a far away expiration date. Store it in the refrigerator and use it for a year or more. you can purchase a jar for $4 if you get it in a store that doesn’t gouge you.
The individually-sealed packets of yeast in the grocery store are kind of a rip-off if you look at the price per bag, as you’ve done in your OP. You can buy the yeast in larger jars, or even large bags, at a much lower price/oz.
This is what I use. If you have a GFS Marketplace nearby you can find it there. I think it’s about $3 for 16 oz. bag there, though I’ve seen it as high as $6 at specialty groceries like The Fresh Market.
Either way it’s a steal compared to the little envelopes. I keep it in a Tupperware container in the fridge and it lasts for months. You can make dozens of loaves from that $3 bag. The envelopes are for people who make yeast breads from scratch once or twice a year.
The two options that have been mentioned are both good…buy your yeast in “bulk” instead of the little packets.
Switch to sourdough, you’ll need yeast once and then you’ll need to feed the starter.
I also buy my yeast from King Arthur. I keep a pint jar in the freezer, and every so often take about a quarter cup and put it in a little Tupperware container in the refrigerator. The reason being the freezer jar lid is hell to get off. I think that jar in the freezer has been in there for a couple of years. My bread is fabulous.
I have to admit, I can make a very servicable loaf of bread from all purpose flour, but the european artisan bread flour makes an amazing loaf.
I bought some on a recent trip up to their store - I would love to be able to afford to make all my bread out of it. I just made a batch of potato bread with it and some leftover mashed potatoes that was amazing.
And rob just finished installing my new wood cook stove, so I will be teaching myself how to bake in it. Maybe next summer he will build me a stone baking oven outside 
Google levain.
wikipedia entry
Levain is a bread leavening agent used traditionally in France and today by artisan bakeries and hobbyists around the world. It produces breads with rich aroma, pleasant structure and excellent keeping properties. Levain is a type of pre-ferment which is made in two fermentation steps from an active sourdough starter culture, flour and water. It yields a rather dry and porous dough which can be kept refrigerated for up to a week.
The levain is added to the bread dough, normally replacing the baker’s yeast. In order to make 4 lb (2 kg) levain bread dough some 1 lb (500 g) levain is needed.
I guess the biggest problem with sourdough is knowing how to handle it in a bread machine - they seem to be so unforgiving with screwing around with quantities.
Yes, I’ve used that – it is awesome! I wish they sold that in the stores. I actually am surprised they sell the 100% white whole wheat, which I buy regularly. I’ve been making a lot of semolina bread lately. I envy you your trip! I would have bought SO much stuff!
I too buy Saf instant yeast from King Arthur Flour, and I’ve been keeping my 16 oz sealed in a freezer bag in the freezer for a couple years. It still works perfectly.
Also, last week I got two three-packs of yeast at the grocery store and I paid only sales tax on them, by shopping a sale with double coupons.
That is the yeast I use. I have used it far out of date, with excellent results. You can put a pinch in some warm water with sugar and see if it “works” (makes C02).
That said, although I make 2 or more loaves a week, I do it for the quality and not price. Many of the loaves I make cost more to make than buy. If I add in the value of my time, my bread is very expensive.
I bought 24 lbs of the flour, about 10 different scone and bread mixes, and some hardware - that maple leaf muffin placque and cookie cutters. The mixes are stashed in the big chest freezer we have to keep the weevils away until I can use it up.