Is Helicopter Ben responsible for Egypt's chaos? Given that food price inflation of 20% or more triggered the first food riots, the question has to be asked

Kudlow asks some tough questions of Bernanke and QE2. 

Bernanke suffers from monetary blindness as he only knows one action: print money.  He studied the great depression in detail and his insistince on solving today's problem using his 1930's analysis means we are destined to repeat it.   

Right now Egypt, Tunisia, Algeria, Jordan, Abania, Libya, Morocco and Yemen are all suffering from poltical demonstrations.  Remember this whole process started with rising food prices.  There have even been reports of food riots in rural China and other parts of Asia.  China recently reported  vegetable and fruit increasing at a rate of 21% and 28% per annum respectively

While the mainstream media focus on the political aspects of this turmoil, they are overlooking the impact of rising inflation, driven mainly by record food prices. Via FT:
Most commentators have missed the real reason behind the protests in Egypt and elsewhere. It is not simply a sudden desire for reform. Rather, the key problem is the price of food.
When you can't afford to feed your family, there are few limits to what the people will do.

Food price inflation is running between 10% and 20% worldwide.  In the developed world, they can complain when we go to the grocery store but since food makes up a much lower percent of our expenditures, the streets are calm.  In the developing world, and especially among the poor of the developing world, food can take up to 80% of their disposable income.  Via IBD:
Egypt is the world's largest wheat importer. Yet because of skyrocketing prices, Egyptian inflation is now over 10%, while some experts estimate that Egyptian food inflation has risen to as much as 20%.

So I have to ask this tough question: Is Ben Bernanke's ultra-easy QE2 money pump-priming partially to blame?

Commodities are priced in dollars, and the Federal Reserve has been overproducing dollars for more than two years. Consequently, emerging markets throughout the world — and the food sector in particular — are suffering from rising inflation.

The CRB food index is up an incredible 36% over the past year, including 8% year-to-date. Raw materials are up 23% in the past year. Inflation breakouts have occurred in China, among various Asian Tigers, and in India, Brazil and other Latin American countries. Even Britain and Germany are registering higher inflation readings.

In dollar terms, the price of wheat has soared 114% over the past year. Corn has surged 88%. These are incredible numbers.

Comments

Popular posts from this blog

October retail sales come in strong, especially auto sales

Tea Party Buffalo Pictures

How to spot a fake Tea Partier