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  • michaelD

    our analysis is frequently crippled by the lack of information [because its concealed] and deliberate misinformation. that makes it very very difficult to divine what’s actually going on.

    my pet theory is that the bernank is intentionally exporting inflation upon the world in an effort to blackmail everyone else into siding with our drive to get china to unpeg. no way to prove it of course.

    my 2¢ of course [with a round of tinfoil hats for everyone]

    have a good day

  • fred

    Nice blog,

    Unintended consequences.

    US Monetary Policy is fueling global food and energy inflation. When you include high and rising male unemployment age 18-45, a non-commodity based economy reliant on foreign aide and a large divergence in wealth between the rich and the masses, you have all the ingredients for revolution.

    There is a much more agressive and violent tone to the recent rioting when compared to last year’s uprising in Iran.

    The Egyptian gov’t response was to shut down communications and ban the right to protest, similar to Iranian gov’t response last year, coincidence?

    As a protest sign said, “U.S., why do you support a dictator?”

    What happens to foreign aide should the opposition present a fundamental extremist as a viable candidate for President?

    • fred

      unintended consequences…

      The $US has become so weak that foreigners come in and buy our most treasured assets. ie. current German interest in NYSE.

  • Watching events unfold in the Middle East brings to mind author Sinclair Lewis’s novel “It Can’t Happen Here.” If one listens carefully to the words of Middle Eastern protesters we hear echoes of our own burgeoning discontent. For example, all across the Middle East millions of educated young people are unable to find jobs; governments are out of touch with the real needs of their citizens; there are significant breakdowns in the social safety nets (such as they exist here and in the Middle East); there is unresponsive leadership at virtually all levels of government; and, most chilling, there is corruption and suffering brought on by the distribution of wealth and power to a tiny group of elites. These cries of discontent are gaining a voice in our own country, expressed politically to a degree in the rise of the Tea Party. What will happen when these angry voices reach a critical mass at the center of our social, political and economic order (or disorder) in America? As Sinclair Lewis demonstrated in his novel, the answer is yes: What is happening in Egypt and another volatile parts of the world can indeed happen here.

  • EM

    Yes, Larry. It is possible that the world escalation of food prices will have a major impact on many countries. Food represents a major expense to many citizens on the globe – far more so than in the US. The impact of our economic policies can produce major disruption abroad. This would be an application of “The Law of Unintended Consequences.”

    While I do not like, respect or trust Bernanke, Greenspan, Geithner or Paulson, I do not think they have advocated these policies for the purpose of world food price disruption. Of course that does not apply to George Soros, who truly wishes to throw the world into chaos. But that appears to be what is happening. As it continues, we will see more unrest, and food and other costs will be a major factor. Hunger is a powerful sensation, and fear only amplifies it.

    Unfortunately the period of history we must study is the pre-war early years of Adolf Hitler. He exploited the economic disasters of post-War I Germany, increased the fears of the citizens, took steps against minorities and launched the entire world into World War II. The parallels are not exact, but the possibilities are there.

    If you are not scared, then you have your head in the sand.

    As we see more unrest on a worldwide basis, we must examine the extent to which it has been caused by U.S. financial policies and the leadership of current and recent Presidents.

    I wish I had a solution to recommend. But I am sure who does not have the answers – the men who guided us into these calamities!

  • whoisjohngalt

    The solution is to revoke the ethanol mandate immediately (1/3 of corn crop goes to fuel) & drill baby drill.

    • LD

      …and the question begs why doesn’t this happen? …and who is preventing these things from happening?

  • whoisjohngalt

    Of course both of these actions are directly opposed to the Green Movement. Also, the sharply higher corn prices (other food staples go up to as they all compete for farm land) have occurred in the last 6 months.

    Rush Limbaugh led with ethanol today & he brought up the fact that food makes up 10% of the budget of an USA family and 50% in Egypt. So when food prices go up here it is not as big of a deal. He also brought up that the Egyptian people are portrayed as wanting freedom in the US media, and the food price angle is ignored.

    Larry, this ethanol issue is going to be hot hot hot soon. Americans do not like ethanol subsidies–which we haven’t really discussed, farm subsidies not to grow & the fact that Iowa more than any state get to pick the President. Ethanol/food prices should be a big Tea Party issue soon.

    • LD

      So we will save the world but go broke and starve to death in the process. I am not so sure how well that works nor do I think we win that debate with a rabid crowd of starving people.

      I will need to remain more keenly focused on the price of corn.

      Thanks for the healthy serving of sense on cents.

    • Huckleberry

      Limbaugh’s trying to spin this for domestic reasons, per usual… Useless as tits on a boar-hog. No, worse: the boar-hog’s condition doesn’t contribute to misinformation and inefficieny.

      I’ve been following this for a week, and I haven’t heard a single Egyptian complain about food prices, QE2 or ethanol subsidies. I haven’t heard them complain about Israel, either, which is a wonderful sign.

      Even at 10%, a bump in food price can be a big deal to Americans who are on a fixed income, are unemployed, or who have several mouths to feed. This is hard to see from a lear jet at 30,000 ft.

      Given that food prices lag fuel spikes, its really getting hammered three times: once when you drive to the store, again in the check-out line, and again on the way home. The whole thing is another anchor dragging behind the boat… but the Dow is 12K so all must be well.

      Granted, across N Africa commodity price inflation hits harder. But the reflexive Bernank fixation of some American capitalists with relation to the crisis is yet another example of the blindered hubris that has gotten us into so much trouble in that region in the first place. Hard as it is to believe, it’s not all about us.

      Seems to me the extension of discounted wheat to the Egyptians (purchased from Red State farmers at current market prices with the some of the funds we will no longer be spending on Egypt’s war machine) could help us in the Arab Street, lock in GOP-ers to a new orientation of US policy, and perhaps do something to ease a transition across the region.

      Could we actually be in one of those rare instances where the Moral *is* the Expedient?

      PS – I miss the podcasts LD!!!

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