Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Rationing- Food for Thought

Politics / Food Crisis Apr 30, 2008 - 06:24 PM GMT

By: John_Browne

Politics

‘Food, glorious food' conjures up the image of Oliver Twist and his brother orphans wailing over a shortage of porridge in Dickensian England.

Last week, a food shortage became an American reality. Costco Warehouse, Wal-Mart and other food stores limited the purchase of certain food staples in bulk form. Purchases of rice in California and of oil and flour in Queens were restricted. Customers were angry, voicing strong concern and questioning whether the situation would worsen.


Should we be worried? While it may be premature to expect the worst, given the drift of economic events it is worth a moment to consider the possible implications.

Historically, food shortages even in developed countries, such as England, have sparked riots. In France and Russia, shortages of food led not only to riots but also to insurrection and, ultimately, to political revolution. Traditionally, food based insurrections arrive alongside other political ills, and it is a shortage of food that is often the final straw that breaks the back of social order.

If food scarcity and partial rationing comes on the crest of a rising tide of growing economic inequality and deterioration in America, social upheaval is a real possibility.

While Wall Street paid itself some $26 billion in bonuses last year, ordinary people were being squeezed financially. Some retirees even saw the value of their savings decline substantially.

For most Americans, their most important financial asset is their home. In recent years, the borrowing base it offered was an important source of income. Last year, the subprime housing debacle eroded the home values of millions of Americans, even those who had borrowed prudently. Many house values slipped below the level of their mortgage equity, threatening foreclosures and eliminated cash out opportunities. Middle-income households have been especially hard hit.

This decline in real estate values already has hit the tax base of local authorities, threatening a contraction of services which will disproportionately impact the poor. Furthermore, when the families that provide the bulk of our armed forces, see government spending in Iraq increase, while services decline at home, resentment can build.

Despite government statistics to the contrary, the American economy has been in contraction for several months. Weak earnings posted by retailers and airlines in recent weeks confirm the trend.

Although still relatively low, the rising level of unemployment promotes job insecurity and financial fear. In addition to the weakening employment picture, inflation is raging at levels far above the official figures. Weekly trips to the supermarket and the gas station are becoming horrific experiences to Americans of modest means. For these folks, high inflation is a tangible reality. This disconnect with the mild government figures is fueling distrust and resentment.

Washington's double talk is clearly evident with respect to the dollar, which continues to decline despite the “strong dollar” rhetoric. Many have concluded that the authorities are simply lying while they pursue a deliberate policy of dollar debasement. Many American realize that weakening dollar represents a stealth tax on every man woman and child, who holds U.S. dollars. Again, this is a cost that hits the poor disproportionately hard.

If food prices continue their rapid ascent, and if hording or rationing result, the social climate may deteriorate rapidly .It is hard to imagine two more potent causes of insurrection than economic hardship accompanied by a denial of access to food. In some countries food shortages already are causing riots. The situation is so grave that many major food producing countries such as Argentina, China and Russia are restricting food exports, driving prices even higher.

Raising the political temperature still more is the fact that the U.S. government is encouraging farmers to grow crops (corn, wheat and soybean) to burn as fuel, while refusing to even consider cuts in generous subsidies to wealthy farmers reaping windfall profits.

Rising corn prices have led to higher prices for wheat, beef, milk and even derivatives such as chocolate, made with milk. Furthermore healthy beef and milk producing cattle are being slaughtered to divert their wheat-based food to ethanol. Food prices have been a problem for several months due to a number of reasons including droughts. Now “food security” threatens to become political dynamite.

In an effort to avert food shortages in America, should the Federal Reserve Board lower or raise its interest rates? On the one hand, a lowering of interest rates, to avoid deepening recession, would weaken the U.S. dollar, driving the dollar price of foodstuffs still higher. On the other hand, raising interest rates would mean a deepening of recession and a generally reduced ability to buy food.

The decision is difficult and complex. At the very least, however, it should give all of us food for thought.

For investors, food rationing and scarcity pose both a moral and an ethical dilemma. Peter Schiff, discussed rising food prices on his radio show. http://www.europac.net/radioshow.asp

For a more in depth analysis of the inherent dangers facing the U.S. economy and the implications for U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.” Click here to order a copy today.

By John Browne
Euro Pacific Capital
http://www.europac.net/

More importantly make sure to protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com , download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com , and subscribe to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp

John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc.  Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with."  A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

John_Browne Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in