Wednesday, April 16, 2008

Food prices, global econ, and our fragile little world

So imagine you eat food, and want to continue to do so. Somewhere someone grows food, sells it, and eventually you buy it, and eat it. What could go wrong there?

Well, first, the American government (for the country which produces the most food) could be moronic, buy into the Church of Global Warming, and mandate (and subsidize) ethanol production. Nevermind that we would never be able to grow enough corn to significantly dent oil usage, or that it decreases the food supply; we must increase the corn growers' profits, the public demands it! This causes there to be less consumable food, which makes prices for the remaining food supply go up.

Then, add a bit of US currency devaluation, a convenient side-effect of the government spending money without bothering to procure it from anywhere. Convenient, in the eyes of policy makers, because it helps mask decreasing value of US assets, and increases US exports, because other countries can buy more stuff with their money. Of course, we get the same amount of US money for the increased exports, and farmers are not in business to give away money, so they just charge more in US dollars for the same amount of food (to everyone).

So, let's see... so far the US government is decreasing the supply of food and increasing its price. It's probably pretty good that they exclude food from the CPI-core index, otherwise they might have some upset people about now. In the meantime, just be glad you're in a country which produces and exports food, instead of one which relies on importing it.

1 comment:

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