Skip to comments.Food Riots: Is Bernanke Partially to Blame?
Posted on 01/30/2011 2:57:50 PM PST by HojczykEdited on 01/30/2011 3:10:01 PM PST by Admin Moderator. [history]
As we know, massive popular unrest has broken out against autocratic governments in North Africa and the Arab world. Egypt is the biggest story. But to varying degrees, the people have taken to the streets in Algeria, Jordan, Libya, Morocco, and Yemen.
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That's right. Blame everything on the mean ol' US. It's Bush's fault! It's Palin's fault! It's the Tea Party's fault! It's the GOP's fault! It's the Ugly American's fault!
Egypt used to be the bread basket of the Roman Empire. There is no reason why they should be importing food as they’re perfectly capable of feeding themselves. The reason they cannot is simple: socialism.
Zimbabwe used to be an exporter of food, as well. No more. Government is the cause of food shortages in the Third World, not an American bureaucrat named Bernanke!
Our govt has done it’s share with ethanol..and lack of petroleum production lifting world oil prices.
As the world goes more socialist food will become a real problem.
We have imported food price inflation to the world.
Wait...If George Bush is to blame for Katrina...then certainly 0bama is to blame for food riots in Egypt.
“Hungry bellies feed revolutions”...Stalin
Hate to bust your bubble, but we have sold over 1.5 million tonne’s of wheat to egypt in the last few months, wheat is higher in the good old united states because of the a/holes that want to pay farmers to grown fuel instead of food. Russia? cut them off last fall due to drought in Russia.
This is our future!!! Please call and write your congress person and tell them to redact ALL their food restrictions in this country. They’re garnering the land, putting unbelievable restrictions on farmers who find it too expensive - leave their farms which is then taken over by the government, we won’t even be able to grow our own food. Food and water is our lifeline and the ability to communicate with each other - the government is planning to take them. If this appears paranoid then so be it.
Trade deficits? I don’t think so.
It won’t take but a couple or three poor harvest years, with a resulting famine, to bring about political chaos. And when it comes I predict it will happen in Muslim dominated lands.
Why? Because Muslims are generally sub-standard farmers and most Muslims inhabit what can only be called marginally arable lands with Egypt, Pakistan, and Indonesia being the exceptions.
riots are nothing...we will have food wars in the near future...
No the rise in food costs is the unintended consequence of using ethanol added to our fuel. The farmers switched to corn rather than wheat. This caused the price of wheat to escalte.
The rise in food prices is not entirely The Benbernank’s fault, but his practice of printing $100 billion per month weakens the US dollar and axiomatically raises prices for everything.
But today there are improved plant lines and methods of agriculture. The problem isn’t with the growing of food, it is the government getting in the way of that production.
(In the case of Egypt, it isn’t just food production that has been thwarted, but all types of businesses. Socialism kills the desire of the individual to work and succeed.)
When we have riots, can we blame it on them for the high price of oil?
Isn’t it great that the Limp Duck congress extended the ethenol subsidies another 3 yrs.
Pray for America
He apparently has a nice beard and is therefore qualified.
-——The farmers switched to corn rather than wheat———
Unless the Egyptian currency is linked to the dollar, a weaker dollar wouldn't make their food more expensive.
Check out the Farmland Forecast...........it’s easy to use google.com
try it, you’ll like it.
It is more profitable to grow corn.
That’s true but it’s doing the same thing here perhaps we should all be in the streets :).
Bernanke is a liar he claimed he wouldn’t monetize our debt and he has. This all works out to be a plus for the obama administration he can continue to spend, along with soros and the International Crisis Group they have fomented enough unrest to install the man of their choice El Baradei into Egypt.
El Baradei poses as a critic of the United States, note not because of meddling in the Middle East, but because they are not doing enough. In the media El Baradei berates the US for not intervening in what he calls social disintegration, economic stagnation, and political repression in Egypt all the while working with soros/obama/brezinski.
The use of corn for ethanol will have even more consequence when oil prices increase. That will cause the cost of farm production to increase, which will drive up food prices. It will also drive up the cost of ethanol.
What is the elephant in the Egyptian room is the cost of energy. The cost of production and transport of food is rising because of rising oil prices. This is the cause of Egypt’s economic problem. And what bodes for Egypt will also be a danger for the United States.
As in the United States, interference by Big Government has caused Egypt’s economic troubles. What is of concern is what will replace Egypt’s dictatorship—another dictatorship? Whatever form of government, Egypt like nations around the world have the cost of energy to deal with. That problem will not be solved with Big Government that interferes with the creative ability of Capitalism to come up with answers.
Another unintended consequence is that the ethanol is ruining automobiles and gasoline pumps.
US debt and currency expansion feeds it. Fiat currency from other debt-laden nations adds to the problem. We get "stuff" in exchange for paper and promises. The music is going to stop.
Egypt has a very long history of government subsidies of bread....For a time in the 80’s, people were buying bread at a penny a loaf and using it to feed livestock. Probably, worldwide inflation and Bernacke are not to blame, more likely that the Mubarek government reduced the subsidy, sending prices higher.
It's pretty well established that the ethanol cash cow has pushed farmers to plant much more corn than previously, leading to less acreage for other crops.
Commodities are priced in dollars world-wide in international trade. So is oil. As the dollar continues to drop in value against non-devaluing assets (which excludes the Euro and Yen which are falling slightly slower), food and energy cost more everywhere. People are not recognizing - yet - what happens when the world’s reserve currency is abused and devalued by America. The real purposes of this action are to enable govt spending (to re-elect politicians) and to save banks. The ostensible purposes are to help the economy grow and to reduce unemployment. Keynesian lies, but clever.
Let's say the dollar is worth 5 Egyptian Pounds. Now the dollar drops 20%, suddenly it's worth 4 Egyptian Pounds.
Prices rise 25%. How is the Egyptian consumer hurt when wheat goes from $8 to $10 a bushel?
Prices right here have risen high. there is no end in sight.
The fed can not continue to just print money as they wish. The value drops and the prices on everything go up.
It is just simple economics.
Eventually we will have to dump the dollar and go with gold to get any stability.
It is gonna get ugly before we are done. It is just starting people. Buckle up .. it’s gonna be a wild ride.
.....It’s pretty well established that the ethanol cash cow has pushed farmers to plant much more corn......
I’ll accept that with no problem. Fallow land in the corn region would be planted. It is the market at work.
The issue I had was planting corn rather than wheat.
Corn and wheat are grasses. Corn grows best in the tall grass regions...the corn belt. Wheat grows best in the short grass regions.... the wheat belt. Corn doesn’t grow well in the plains.
That is in regions where the most wheat is grown, farmers could not switch and obtain the same value per acre. That is why I asked.
In the east where both are grown, perhaps it would be more profitable to plant corn rather than wheat except..... it takes different harvest machines
I guess you've never heard of carry trade.
The Egyptian Pound may or may not be formally linked to the US Dollar, but the exchange rate has been roughly 5.5 EGP per USD, plus-or-minus 5% for the last five years.
The exchange rate has been rising recently, meaning it takes more EGP to buy a USD, making it even more difficult to buy dollars to pay for things that are priced in dollars, whose price in dollars is also increasing.
I guess you can explain what that has to do with the price of wheat in Egypt.
So the blame for higher prices belongs to the Egyptian Pound, not the US Dollar.
The exchange rate is still roughly what it was five years ago; it’s only reverting to the norm.
Misdirected capital forces increases in resources and commodities which leads to food prices increases along with a cycle of speculation (demand increases due solely to anticipation of more demand). Then at some point it all unravels, the prices overshoot and then drop. At the same time the unwind kicks in and dollars quickly rise in demand which forces further price increases on particular commodities (e.g. wheat) with large U.S. sources. A slower effect of the carry trade and unwind is the unavailability of capital for ordinary uses such as increasing food production by investing in equipment or even borrowing for seasonal planting.
But that's not a carry trade.
A slower effect of the carry trade and unwind is the unavailability of capital for ordinary uses such as increasing food production by investing in equipment or even borrowing for seasonal planting.
So dollar carry trades mean no money is available to finance agricultural production?
You should probably find the real definition of carry trade and try again.
It is the result of carry trade. The money that flows overseas for higher rate returns is loaned out there for short term speculation. The carry trade itself is more narrowly defined as borrowing low, loaning high, by going overseas. But I am looking at the direct effects, not just the textbook definition.
Didn’t the govt try to pass the food safety act recently?
That should help us.
You could make the case that easy money leads to "excess speculation" or it leads to inflation fears that cause prices to rise. You'd have a harder time making the case that cheap money here flows over there to speculate in dollar denominated commodities. World wide capital is flowing into the US, not out of the US, net-net.
The carry trade itself is more narrowly defined as borrowing low, loaning high, by going overseas.
Or borrowing low, loaning high, staying here. More importantly, you're buying higher yield and wheat futures have no yield.
But I am looking at the direct effects, not just the textbook definition.
That's good, because your definition was wrong.