Role of US Debt in the Current Revolution
Recently by Bill Bonner: Revolution
in Egypt and Where to Be When Black Swans Appear
Hey, how bout
that Ben Bernanke
Hes a freedom fighter! Look what hes
done to North Africa!
every time we pick up the paper another dictator is toppling over.
Where does it lead, we wonder? What would a world be like without
dictators? Without them, who will the CIA and the State Department
give our money to?
On the run
this morning (but not quite given up) is Muammar Gaddafi of Libya.
Is this guy a friend or an enemy? We cant remember. Wasnt
he a bad guy a few years ago? But recently weve heard that
he is a good guy. Hes helped with the War on Terror. And he
Friend or foe,
we dont know
but whatever he is, hes beginning
to look past tense. As of this morning, reports say hes lost
control of Libyas second largest city. His troops are firing
on protesters in the capital, where he and his loyal guards are
holed up in a few government buildings.
His son vows
to fight back. He says there will be rivers of blood
before he gives up.
of blood image was used by Enoch Powell in Britain fifty years
ago. It came from Virgils Aeneid, in which a character foresees
wars, terrible wars, and the Tiber foaming with much blood.
referring to the effects of immigration into Britain from Africa
and elsewhere. He thought he saw race wars and power struggles coming
as a result.
But the younger
Gaddafi uses the language as a threat, not a prophecy.
Still, it didnt
do Powell much good. Maybe Gaddafi will have better luck with it.
Most likely, hell high-tail it out of the country before the
blood is his own. That will bring to three the number of regime
changes in the last few weeks. Which leads us to ask: whats
comes from our old friend, Jim Davidson. He pins the revolutions
on Ben Bernanke. Behind the popular discontent is neither the desire
for liberty nor the appeal of elections. Its food. And behind
prices is Ben Bernanke.
The Arab world
is a model Malthusian disaster, says Davidson. Populations have
ballooned. Food production has not. Which makes Arab countries the
biggest importers of cereals in the world. And when the price of
food goes up, the masses rise up too.
latest newsletter, Strategic Investment:
hit an all-time high in January. According to the UNs Food
and Agricultural Organization (FAO) the FAO Food Price Index
(FFPI) rose for the seventh consecutive month, averaging 231 points
in January 2011, up 3.4 percent from December 2010 and the highest
in both real and nominal terms since records began. Note
that prices have now exceeded the previously record levels of
2008 that sparked food riots in more than 30 countries. Famine-style
prices for food and energy that prevailed early in 2008 may also
have helped precipitate the credit crisis that Federal Reserve
Chairman Ben Bernanke described in closed-door testimony as
the worst in financial history, even exceeding the Great Depression.
around, the turmoil surrounding commodity inflation has taken
center stage with more serious riots and even revolutions across
the globe. Popular discontent is not just confined to basket
case countries like Haiti and Bangladesh as in 2008. High
food prices have roiled Arab kleptocracies with young populations
and US backed dictators such as Tunisia, Egypt, Bahrain and Yemen.
Even dynamic economies have been affected. Indeed, all of the
BRIC countries, except Brazil, have witnessed food rioting.
Well, how do
you like that, Dear Reader? All those billions of dollars spent
propping up dictators $70 billion was the cost of supporting
Hosni Mubarak in Egypt alone and then the Fed comes along
and knocks them down.
The Fed lowers
the cost of money so speculators can borrow below the rate of inflation.
And then it prints up trillions more just to top up the worlds
Is it any wonder
food prices rise? Imagine youre a farmer
or a speculator.
You can sell food. Or you can hold it in storage. You know the food
is valuable. You know the world has more and more mouths to feed
everyday. You know food production is limited. And you know Ben
Bernanke can print up an unlimited number of dollars. What do you
Do you sell
immediately? Or drag your feet
holding onto your valuable grain
as the price hits new highs?
Bernanke modestly declines the credit for de-stabilizing much
of the world, close analysis confirms that he played an informing
role. His QE2
program of counterfeiting trillions out of thin air has helped
ignite a raging bull market in raw materials with food and commodities
up 28% in the past six months. The fact that the US dollar
has heretofore been the worlds reserve currency means that
almost all commodity prices are denominated in dollars. As a matter
of simple math, when the dollar goes down, the prices of commodities
tend to go up.
Yemen? Or Saudi Arabia.
In North Africa,
In North America,
Yes, the battle
rages in the Dairy State. And yes, Nobel Prize winner Paul Krugman
(Economics!) has no idea what is going on:
about the budget. Its about power.
He thinks it
is a battle between the rich and powerful, whom he calls the oligarchy,
and the decent lumpenproletariat. Wisconsins governor is trying
to bust the union, says Krugman, so that the elite can ride roughshod
over poor government workers, cut their pay, and reduce their benefits
(thereby downsizing the states budget deficit).
about money, says the New York Times columnist. Hes
wrong, as usual. The Zombie Wars are always about money. There is
less money available and more zombies who want it.
In the present
case, rather than hire honest people to work at market rates
wants the state to be forced to deal with a privileged union. Union
zombies should bargain with government zombies, he says. Together,
in cooperation, not in conflict, they should figure out how to rip
off the taxpayer.
Zombie Wars are just beginning.
with permission from The Daily
Bonner is the author, with Addison Wiggin, of Financial
Reckoning Day: Surviving the Soft Depression of The 21st
The New Empire of Debt: The Rise Of An Epic Financial Crisis
and the co-author with Lila Rajiva of Mobs,
Messiahs and Markets (Wiley, 2007). Since
1999, Bill has been a daily contributor and the driving force behind
The Daily Reckoning.
© 2011 Daily Reckoning
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