Feedback Loop
Or maybe that should be 'Foodback Loop.' David Ignatius at the Washington Post notes the raging global inflation that is driving the cost of staple foods sky-high globally. The global demand for energy, raw materials and food are creating a nightmare scenario. Food riots may be imminent in some nations.
Bradsher summarizes the evidence that food shortages and inflation are fueling political unrest: "Since January, thousands of troops have been deployed in Pakistan to guard trucks carrying wheat and flour. Protests have erupted in Indonesia over soybean shortages, and China has put price controls on cooking oil, grain, meat, milk and eggs. Food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen."
World Bank President Robert Zoellick rang the alarm bell in a speech yesterday. He noted that since 2005, the prices of staples have risen 80 percent. The real price of rice rose to a 19-year high last month, he said, while the real price of wheat hit a 28-year high…..
…..I spoke this week to Richard W. Fisher, the president of the Dallas Federal Reserve Bank and the leading inflation hawk on the Fed's Open Market Committee. He opposed the last two rate cuts, arguing that they could boost inflation without easing the financial mess. Fisher sees the booming Asian economies creating a classic "demand-pull" inflation that is propelled by 3 billion new participants in the global economy who, he says, "want to eat like you, dress like you, live like you."
"We cannot accommodate inflation," argues Fisher. "Once it takes a grip, it changes people's behavior. It's bad for investors, for workers, for savers, for people on fixed incomes."
Yet this global inflation is already beginning to feed into the U.S. economy. Including food and energy, Fisher warns, the Fed's measure of consumer prices was up a "worrisome" 3.7 percent for the 12 months ending in January. And the latest figures from the European Union show that inflation there rose to a 3.5 percent annual rate in March, the highest level since the index was created in 1997.
Not mentioned by Ignatius here is the fact that part of the pressure on global food supplies is a direct result of turning croplands over for biofuel production. There is also the greed driving that phenomenon, but put that aside. There is still a real problem here that will be causing real repercussions for Americans in both the short and the long term. Everything is costing more and that will continue as global demand outstrips supply. In that respect, Ignatius is quite correct. The Fed pumping money into this overheated global economy may be shortsighted and foolish.
Energy, Environment, World news | Gaius Thursday, 3 April , 2008
By Gary Gulrud, Thursday, 3 April , 2008 @ 11:26 am
I seem to remember a facist whose end involved an appearance on meathook. I’m fantasizing on a similar end for Minnesota officials who’ve joined the suit against the EPA, the governor and legislator for paying subsidies to our Ethanol producers when they are turning a profit, for our junior Senator on taking her staff to Greenland during high summer to wail about water rolling off of glaciers, for…..
By martian, Friday, 4 April , 2008 @ 9:34 am
You forgot to mention the oil companies who are driving oil prices to an all-time high while collecting a record $123 Billion in profits last year with one hand while they collect $18 Billion in federal subsidies with the other. More than anything else the globally high price of oil, artificially inflated, is responsible for the rest of the economic problems - a cascade effect if you will.