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Central banking and social unrest.

Rising food prices in the Arab world are much to blame for social unrest.  And who’s actions cause prices to rise?  Why, that would be the central bank of the world’s fiat reserve currency – the Federal Reserve, of course.  And you thought they just tried to control interest rates.

Charts: Food Prices, Commodity Prices

Gary North

Feb. 24, 2011

The United States Department of Agriculture has published this chart of commodity prices, including oil. Food prices have risen, especially after 2006, but not anywhere near as rapidly as general commodity prices and the price of oil.

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http://www1.eere.energy.gov/biomass/pdfs/global_agricultural_supply_and_demand.pdf

The move in oil began in 1999, during the boom phase of the economy. The recession of 2001 did not reverse the rise of prices.

Oil's price tumbled sharply in the second half of 2008: from $147 per barrel in July to $33 in December. Since then, it has risen. Food prices also fell sharply. Food prices have risen steadily since late 2008.

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http://www.fao.org/worldfoodsituation/foodpricesindex/en

The Role of US Debt in the Current Revolution

by Bill Bonner
Daily Reckoning

Recently by Bill Bonner: Revolution in Egypt and Where to Be When Black Swans Appear

 

 

 

Cereal Wars…and Zombie Wars…

Hey, how ’bout that Ben Bernanke… He’s a freedom fighter! Look what he’s done to North Africa!

Seems like every time we pick up the paper another dictator is toppling over. Where does it lead, we wonder? What would a world be like without dictators? Without them, who will the CIA and the State Department give our money to?

On the run this morning (but not quite given up) is Muammar Gaddafi of Libya.

Wait… Is this guy a friend or an enemy? We can’t remember. Wasn’t he a bad guy a few years ago? But recently we’ve heard that he is a good guy. He’s helped with the War on Terror. And he sells oil.

Friend or foe, we don’t know…but whatever he is, he’s beginning to look past tense. As of this morning, reports say he’s lost control of Libya’s second largest city. His troops are firing on protesters in the capital, where he and his loyal guards are holed up in a few government buildings.

His son vows to fight back. He says there will be “rivers of blood” before he gives up.

That “rivers of blood” image was used by Enoch Powell in Britain fifty years ago. It came from Virgil’s Aeneid, in which a character foresees “wars, terrible wars, and the Tiber foaming with much blood.”

Powell was referring to the effects of immigration into Britain from Africa and elsewhere. He thought he saw race wars and power struggles coming as a result.

But the younger Gaddafi uses the language as a threat, not a prophecy.

Still, it didn’t do Powell much good. Maybe Gaddafi will have better luck with it. Most likely, he’ll high-tail it out of the country before the blood is his own. That will bring to three the number of regime changes in the last few weeks. Which leads us to ask: what’s up?

The answer comes from our old friend, Jim Davidson. He pins the revolutions on Ben Bernanke. Behind the popular discontent is neither the desire for liberty nor the appeal of elections. It’s food. And behind soaring food prices is Ben Bernanke.

The Arab world is a model Malthusian disaster, says Davidson. Populations have ballooned. Food production has not. Which makes Arab countries the biggest importers of cereals in the world. And when the price of food goes up, the masses rise up too.

From Jim’s latest newsletter, Strategic Investment:

Food prices hit an all-time high in January. According to the UN’s Food and Agricultural Organization (FAO) “the FAO Food Price Index (FFPI) rose for the seventh consecutive month, averaging 231 points in January 2011, up 3.4 percent from December 2010 and the highest in both real and nominal terms” since records began. Note that prices have now exceeded the previously record levels of 2008 that sparked food riots in more than 30 countries. “Famine-style” prices for food and energy that prevailed early in 2008 may also have helped precipitate the credit crisis that Federal Reserve Chairman Ben Bernanke described in closed-door testimony “as the worst in financial history, even exceeding the Great Depression.”

This time around, the turmoil surrounding commodity inflation has taken center stage with more serious riots and even revolutions across the globe. Popular discontent is not just confined to “basket case” countries like Haiti and Bangladesh as in 2008. High food prices have roiled Arab kleptocracies with young populations and US backed dictators such as Tunisia, Egypt, Bahrain and Yemen. Even dynamic economies have been affected. Indeed, all of the BRIC countries, except Brazil, have witnessed food rioting.

Well, how do you like that, Dear Reader? All those billions of dollars spent propping up dictators – $70 billion was the cost of supporting Hosni Mubarak in Egypt alone – and then the Fed comes along and knocks them down.

The Fed lowers the cost of money so speculators can borrow below the rate of inflation. And then it prints up trillions more – just to top up the worlds’ money supply.

Is it any wonder food prices rise? Imagine you’re a farmer…or a speculator. You can sell food. Or you can hold it in storage. You know the food is valuable. You know the world has more and more mouths to feed every day. You know food production is limited. And you know Ben Bernanke can print up an unlimited number of dollars. What do you do?

Do you sell immediately? Or drag your feet…holding onto your valuable grain as the price hits new highs?

Davidson continues:

While Mr. Bernanke modestly declines the credit for de-stabilizing much of the world, close analysis confirms that he played an informing role. His QE2 program of counterfeiting trillions out of thin air has helped ignite a raging bull market in raw materials with food and commodities – up 28% in the past six months. The fact that the US dollar has heretofore been the world’s reserve currency means that almost all commodity prices are denominated in dollars. As a matter of simple math, when the dollar goes down, the prices of commodities tend to go up.

Today, Libya. Tomorrow…Yemen? Or Saudi Arabia.

In North Africa, Cereal Revolutions…

In North America, Zombie Wars…

Yes, the battle rages in the Dairy State. And yes, Nobel Prize winner Paul Krugman (Economics!) has no idea what is going on:

It’s “not about the budget. It’s about power.”

He thinks it is a battle between the rich and powerful, whom he calls the “oligarchy,” and the decent lumpenproletariat. Wisconsin’s governor is trying to bust the union, says Krugman, so that the elite can ride roughshod over poor government workers, cut their pay, and reduce their benefits (thereby downsizing the state’s budget deficit).

It’s not about money, says the New York Times columnist. He’s wrong, as usual. The Zombie Wars are always about money. There is less money available and more zombies who want it.

In the present case, rather than hire honest people to work at market rates…Krugman wants the state to be forced to deal with a privileged union. Union zombies should bargain with government zombies, he says. Together, in cooperation, not in conflict, they should figure out how to rip off the taxpayer.

Stay tuned…the Zombie Wars are just beginning.

Reprinted with permission from The Daily Reckoning.

February 24, 2011

Bill Bonner is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and The New Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007). Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning.

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Marc Faber: Bernanke Is a Liar.

Marc Faber and several others (e.g. Jim Rogers, Peter Schiff, Ron Paul) who understand Austrian economics predicted the housing crisis and the financial crisis.  Knucklehead Keynesian economists like Ben Bernanke and all the talking heads on CNBC failed to see the coming crisis.  They are ignorant liars.  Enjoy the short video below.
Marc Faber: Bernanke Is a Liar

Bull Source

Investor Marc Faber talks with CNBC about the false economic recovery, Egypt, emerging economies, and inflation.

Faber believes the global economy may be okay for the next six months. “We have to realize that it’s an artificial recovery driven by ultra-expansionary monetary policies and also ultra-expansionary fiscal policies,” he comments. Faber predicts that deficits will lead to renewed problems down the road.

“The annual cost of living increases are more than 5% today and the Bureau of Labor Statistics is continuously lying about the inflation rate, including Mr. Bernanke. He’s a liar. Inflation is much higher than what they publish.”

Faber says the true cost of living increase for most US households is 5-8%, and just below that in Western Europe.

Reprinted with permission from Bull Source. You can subscribe to Bull Source posts for free here.

February 5, 2011

© 2011 Bull Source

Dr. Marc Faber [send him mail] lives in Chiangmai, Thailand and is the author of Tomorrow's Gold.
 
 
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Volcker Leaves the Obama Team

Bill Bonner reports that former Federal Reserve chairman Paul Volcker has left the Obama economic advisory team (www.dailyreckoning.com). This means that there is no dissenting opinion to Ben Bernanke's money printing and historic low interest rate madness. Don't get me wrong. Massive double digit price increases are on there way in the next couple of years regardless of Volker's presence. Volker could have dampened the eagerness to print more fiat dollars once price inflation reaches double digits. Imagine the public outcry when gasoline reaches $6.00 per gallon. Perhaps we haven't seen the last of Mr. Volker.

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Prepare for massive price inflation that makes the late 1970's look like a great time. Ignore warnings of deflation until the Federal Reserve abandons quantitative easing and they refuse to buy Treasuries. High dividend stocks can help you stay ahead of the price increases. Subscribe to www.myhighdividendstocks.com/feed to discover high dividend stocks with earning power and strong balance sheets.

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The "Ben Bernank" Cartoon Video

The "Ben Bernank" Cartoon Video
Gary North

Nov. 15, 2010

This video was produced on the Xtranormal site. The site provides free
software to produce talking head(s) videos. It doesn't get any better
than this for the money. Bernanke gets skewered.

Enjoy.

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