Is Hoarding Food a Better Investment Than the Savings Bank?
It's true that some food prices have doubled and tripled around the world over the last few months, and it seems difficult to believe that this won't affect us here in the US.
Arends mentions the causes for this food frenzy:
(1) Increased demand from China and India, which contain billions of increasingly wealthy but not yet overfed people. That sounds like a good thing from a humane point of view.
(2) Increased demand for biofuels, which some people seem to have forgotten are made of those very things that the global poor eat to survive. (Gore and environmentally-friendly governments of this world, what were you thinking? Perhaps your own enrichment with your carbon-trading and bio investments?--which is a non-sequitur, because the use of biofuel is not even proven to be carbon-thrifty.)
[Thanks to adminstaff.vassar.edu for the image of Irish food riots of 1846.]
Arends forgets another possible cause:
(3) The loss of value of the principle global monetary reference currency, the dollar, which is being sacrificed by American politicians to "save the economy" (read "bankers and speculators").
What could arrest this food-price-spiral phenomenon is a sudden reversal of the trashing of the dollar, which trashing the monetary authorities have engineered and which is causing currency and commodity speculators to have a field day.
Indeed, some Wall Street pundits are conjecturing that the Federal Reserve will lower interest rates only a quarter point at the end of the month, and that they intend to communicate (otherwise known as "jawboning") their intention to hold rates in the near future, so as to judge whether their actions have been efficacious and to see whether general price inflation is going to need repression via rate hikes or not.
Whether this will be more than posturing is the unknown. Rate hikes seem a very remote possibility at the moment, given our popularist political climate and the people's unawareness of government's role in all of this. (See this previous post as an example of what I think about that.)
Ah, isn't economic life fascinating.