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To: muawiyah

Interesting site; the maps are quite impressive but still remain projections on the weather and the upcoming climate.

As such, one should be cautious in making judgments of their full value.

If you read to the bottom of the piece you will run into the meat of his argument as all that proceeds it is merely priming the pump for his delivery:

“The deflation debate should end now

The droughts plaguing the world’s biggest agricultural regions should end the debate about deflation in 2009. The demand for agricultural commodities is relatively immune to developments in the business cycles (at least compared to that of energy or base metals), and, with a 20 to 40 percent decline in world production, already rising food prices are headed significantly higher.

In fact, agricultural commodities NEED to head higher and soon, to prevent even greater food shortages and famine. The price of wheat, corn, soybeans, etc must rise to a level which encourages the planting of every available acre with the best possible fertilizers. Otherwise, if food prices stay at their current levels, production will continue to fall, sentencing millions more to starvation.

Competitive currency appreciation

Some observers are anticipating “competitive currency devaluations” in addition to deflation for 2009 (nations devalue their currencies to help their export sector). The coming global food shortage makes this highly unlikely. Depreciating their currency in the current environment will produce the unwanted consequence of boosting exports-of food. Even with export restrictions like those in China, currency depreciation would cause the outflow of significant quantities of grain via the black market.

Instead of “competitive currency devaluations”, spiking food prices will likely cause competitive currency appreciation in 2009. Foreign exchange reserves exist for just this type of emergency. Central banks around the world will lower domestic food prices by either directly selling off their reserves to appreciate their currencies or by using them to purchase grain on the world market.

Appreciating a currency is the fastest way to control food inflation. A more valuable currency allows a nation to monopolize more global resources (ie: the overvalued dollar allows the US to consume 25% of the world’s oil despite having only 4% of the world’s population). If China were to selloff its US reserves, its enormous population would start sucking up the world’s food supply like the US has been doing with oil.

On the flip side, when a nation appreciates its currency and starts consuming more of the world’s resources, it leaves less for everyone else. So when china appreciates the yuan, food shortages worldwide will increase and prices everywhere else will jump upwards. As there is nothing that breeds social unrest like soaring food prices, nations around the world, from Russia, to the EU, to Saudi Arabia, to India, will sell off their foreign reserves to appreciate their currencies and reduce the cost of food imports. In response to this, China will sell even more of its reserves and so on. That is competitive currency appreciation.

When faced with competitive currency appreciation, you do NOT want to be the world’s reserve currency. The dollar is likely to do very poorly as central banks liquidate trillions in US holdings to buy food and appreciate their currencies.

Monday, February 9, 2009

by Eric deCarbonnel

Source: Market Sceptics”

26 posted on 03/11/2009 11:08:22 AM PDT by Old Professer (The critic writes with rapier pen, dips it twice, then writes again.)
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To: Old Professer
The guy is correct to notice the extent of the worldwide drought. However, he is writing from an European perspective, not American.

A more detailed focus finds that Mexico's East Coast with normal rainfall, and the American Cornbelt with normal rainfall (except for Wisconsin).

That area is productive enough to produce enough food to provide the supplemental amounts needed for Europeans, Russians and Chinese upper classes to AVOID starvation ~ provided, of course, that they pay us $50 to $100 a bushel, which they can do if they don't wish to die.

You and I won't like prices like that unless we are farmers.

That's why I'm planting wall to wall garden around here this year.

BTW, South America's West Coast appears to be unaffected (so far). However, their climate is mediated by events in Antarctica. I'm just guessing the cool dry air is increasing the rate of evaporation all over South America and the Southern Circumpolar Vortex is sucking any wet air in over Antarctica where it will be converted to snow and ice for permanent storage.

That will eventually affect us.

The Global Warming people have been misleading everybody about these cycles and now millions of people are going to die because the Algore and his running dog lackeys thought it more important to advance their political agenda than tend to the science of studying the climate and watching out for devastating cool dry air masses.

63 posted on 03/11/2009 4:46:35 PM PDT by muawiyah
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