Surprise, surprise. This is the legacy of a corrupt financial system under the United States Federal Reserve. Last century the American people, through their elected representatives, gave Wall St the keys to the vault. Greenspan then untied all the regulatory knots and opened the spigots pouring trillions of dollars into the worlds economies and letting the hedge funds loose.

The real wealth of the world has been debased by the U.S Fed (enthusiastically assisted by Reserve banks around the world) and then leveraged into the stratosphere.

All that money has to go somewhere.

It has been into tech stocks, into stocks in general, into housing, into metals.

Now, it is flowing into food, which to a hedge fund is just another commodity.

There is too much money and leverage in the world economy and it has to be taken out. The solution of the Fed Reserve is to pour more money on the fire. The politicians run around in circles crying, ‘do something’, but don’t inflict any pain on anyone.

The world probably has more people than it can feed easily. Hence it has come down to who can pay for what food there is.

That has implications for political and economic stability, implications for the environment, and now we see, implications that go to the very heart of humanity, having enough to eat.

The bright young thing at the hedge fund computer screen making and losing millions in a flicker has no connection with the starving child in Haiti.

Greenspan unbolted the shackles from Wall St. This is the result of letting an immoral monster loose with unlimited money through the Fed’s printing press and hedge fund leverage.

A humanitarian crisis

http://www.theage.com.au/news/national/world-in-crisis-soaring-food-prices/2008/04/14/1208025091644.html

Just wondering DB ... Apart from your focus on monetary policy;

Can you see any connection (or disconnection) for this international 'food crisis' in terms of sustainable development, 'climate change' and differing politico-socio ideologies?

More to the point but harder to answer ... what do you propose should be done?

DB

I have started a discussion thread regarding living sustainably and growing own produce, buying locally, organic.

Rather than focussing on the worst case scenario, I propose taking positive action and focussing on what we can do rather than what we have little or no control over.

http://forum.onlineopinion.com.au/thread.asp?discussion=1669

I would be interested in your POV.

Thank you.

Tensions rise as world faces short rations

http://www.ozpolitic.com/forum/YaBB.pl?num=1207026487/0#0

The problem with biofuels:

http://www.ozpolitic.com/forum/YaBB.pl?num=1169519086

Q&A: i) Can you see any connection (or disconnection) for this international 'food crisis' in terms of sustainable development, 'climate change' and differing politico-socio ideologies?

ii) More to the point but harder to answer ... what do you propose should be done?

i) The short answer is yes. The 350 word allocation for the Forum, by necessity, means a narrow focus. The long answer would require an Article as it takes in major environmental issues, economics and definitely politico-socio ideologies. To be rich is indeed glorious, but, what did Deng Shao Ping mean by 'rich'. What do you mean by 'rich'?

ii) I am not an economist and I fear that a little knowledge is indeed dangerous. I think that John Ralston Saul is a good starting point.

Fractelle: growing own produce, buying locally, organic.

I couldn't agree more. It would save on fuel, be fresher and more healthy and, mostly, gardeners are not aggressive - well, unless their prize tomatoes are threatened. Can that be translated into feeding the world? Is there enough productive agricultural land to sustain the world population using low intensive farming methods? I simply do not know. My bit is to have a vege garden

DB

You asked: "Is there enough productive agricultural land to sustain the world population using low intensive farming methods?"

Dunno either.

But it most definitely won't hurt and as you say is much healthier and less wasteful.

The painful truth is that we are going to have to consider a major shift in ideology. For the third world countries, education and equal status of women would make a significant difference, both in terms of population stabilisation and a more peaceful society. It is a demonstrable fact that countries where women have greater participation in all aspects of human endeavour are more peaceful and productive, for example, Australia and any other western democracy you care to name. But what will it take to achieve a shift towards cooperation instead of coercion? Of education instead of occupation? - thinking of Middle East here. And what do you do about the likes of Mugabe - the little Hitlers of this world for whom power is everything?

Whatever; the next 20 years are gonna be very interesting.

Yair, a lot more closely connected to peak oil than to US monetary policy, I’d reckon.

The effects of peak oil are here now, with rapidly rising fuel prices having huge effects on the prices of just about everything else. Massive conversions from food crops to fuel crops will add greatly to rising food prices.

This will change our world greatly before there are any actual shortages of fuel.

Ludwig, the main drivers of the current rise in foods are: increased demand by India and China, drought in the southern hemisphere and the US and European obsession with biofuels. The latter has really only added to a spike that was already happening.

The US obsession with biofuels has little to do with peak oil, yet, but more to do with US administration fears about instability in the Middle East. If you go to the US, all the talk is of energy independence. The EU obsession has the same driver, but also some different drivers including “Green” political pressure.

'Ludwig, the main drivers of the current rise in foods are: increased demand by India and China'

DB = Yes, China and India are interesting. I did not address them due to word constraint.

Something to ponder in relation to my monetary argument.

China has a stable population. I am unsure of India, but I do not think it is rising rapidly.

So the increased demand has come from an increasingly wealthy population.

If you accept my original argument, then the sum total of money and derivatives in the world is far greater than the real wealth of the world.

A lot of that wealth is heading for China and India. They, along with the 'West' will be able to pay for food - probably - but the poorer nations will be left in the cold. Though I have read that there has been food shortages in China.

The poorer nations are like pensioners on fixed incomes trying to survice in a world where the increased liquidity is driving up prices faster than their pensions.

Add to that the other issues of climate, drought, bio-fuels ... and I wonder if we have reached, or will reach, a point where there simply is not enough food to go around.

If a nation needs the food and can pay for it, will they forego that food on humanitarian grounds? Would you support food shortages in Australia on international humanitarian grounds?

We could be in for some interesting choices.

I see that Haiti has had food riots, with the rising price of food.
Given that they are mostly Catholics and that the Vatican did what
it could to restrict family planning and encourage more babies,
perhaps the Vatican with all its wealth, can now feed them too!

The present food price hike is more complex then just biofuels.
For years, both the EU and US have been dumping subsidised grains
onto world markets, which put alot of third world growers out of
business. They can start producing food again, if its worth their
while. Nobody works for nothing.

Rice prices have skyrocketed and rice AFAIK is not known used for
biofuel production.

With wheat, prices 2 years ago were at the cost of production,
so no incentive for anyone to grow too much. Add a few droughts and
disasters and the world was caught short. Now that the price has
risen, farmers around the world are planting plenty, but all these
crops have a lag time of a year or so, from decision to plant, until
harvest. Watch this space but I expect wheat prices to drop by
25-30% this year, if there are no major disasters in growing areas.

At the end of the day of course, food costs are linked to oil costs.
Western methods of production rely on cheap oil for fertiliser,
machinery, herbicides etc. They have all double in cost, so
food will be far more expensive to grow.

The best thing that the third world can do is produce their own through methods
like permaculture, which don't need all that energy,
then finally get real about family planning, Catholic Church or not.
Feeding 6 kids is more difficult then feeding 2.

DB,

You have raised a very important thread and I agree that 350 word and post/time limits can be a pain in the butt. However, I understand and accept the constraints OLO have placed on these opinion pages.

Someone indeed should write an unbiased article outlining the issues that are inherent in what you have alluded to, and continued with other posters – maybe SusanP can track one down.

Embedded in your thread is the fundamental issue of sustainable development. I can only recommend you visit the UNCSD website:

http://www.un.org/esa/sustdev/csd/policy.htm

Fractelle,

You may be particularly interested in Agenda 21:

http://www.un.org/esa/sustdev/documents/agenda21/english/agenda21toc.htm

Agenda 21 addresses the concerns you have raised, including; education, gender, population, etc.
Incidentally, Australia is a signatory to this process but you hear little about it here.

Freediver,

Interesting site, must take some work to keep it up. I think you realise just how important all these sustainability issues are juxtaposed?

British think-tank – “Society will have to decide the value to be placed on food and how ...” Well duh!

“… market forces can be reconciled with domestic policy objectives." Bureaucratic clap-trap!

You’re right though; biofuels can be a problem (I’m waiting to see how the next generation of biofuels pan-out). They’re not all that ‘clean’, are not all that energy efficient, still contribute to GHGe and require huge land area to grow crops like corn (that could/should be used for food or animal feedstock to take the pressure off grain prices).

Geeze, the Bush administration is subsidising some South American countries to slash and burn the Amazonian rainforests to plant corn for the USA’s transport fleet.

Ludwig, Agronomist,

Yeah, we can talk about peak oil, biofuel, whatever. The problem remains, the way humanity utilises its energy resources and the impact on the environment.

Yabby,

Do you know of Agenda 21? What do you think?
Any economists out there?

I think you are all correct in that there is a clutch of reasons why
a food shortage is appearing,
Donating money to the UN FAO will only give a short respite.
Ultimately no one can help the hungry except themselves.
I also have seen them sitting around waiting for the next UN food
truck to arrive. We can have pity on them and the difficult position
in which they find themselves, but ultimately there is nothing
we can do except palitive care.

I read just the other day that ethanol plant construction in the
US is largely going on hold because of financial problems.
It was the rise in maize prices that caused the food riots in
Mexico as it mostly comes from the US and was being diverted to
ethanol. A contact I have in the US who is a farmer tells me that
a different variety is used for ethanol production so it cannot
be a direct diversion, but a next harvest diversion.

Q&A

Thanks for the link - I had a quick look and bookmarked for deeper study later.

I truly believe that money is better spent on education than just about anything else. Problem is at present that third world countries as viewed more as cheap labour than future investment.