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Depression + Inflation + Famine = Chaos!

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Message Michael Fox

Oftentimes it seems so inconceivable that we could have come to this place, yet here is exactly what we are facing, right now:  Depression in the housing market; retail inflation (due entirely to the price of oil and the plummeting dollar), credit availability all but shut down, and today we discover that grain stores are at their lowest point since they began measuring in 1960: 53 days.  According to the CEO of Potash Corp., the Canadian fertilizer giant, if there is any disruption to this year’s grain harvest, the world will be facing famine in 2009.  And this is not a question of the rock-concert-for-third-world-countries famine, folks.  He is describing global shortages of wheat.  Food prices are already on the rise; with grain shortages, will surely come hoarding and hyperinflation in food.


If you think times are getting tough, add a real food shortage.   Now it’s time to grow backyard farms (Victory Gardens) – in fact it’s not at all a bad idea.  You can’t eat grass (even in a brownie), so you may re-think the practicality of planting vegetables where your hydrangeas are.


Who do we have to thank for this latest stunning fright-fest?  Well, I would start with the laser beam on the agribusiness monster that has lobbied for years to convert thousands of hectares of American farmland to corn and keep the government subsidies coming.  Surely you’ve seen commercials for ADM, “Supermarket to the World” - not that you are or even could be a direct consumer responding to their ads.  So why do they run TV commercials during the Newshour?  The answer is simple: it buys them a pass on reasoned discussion that might interfere with their agendas, for example, the decade-long touting of E-85 ethanol as the panacea to fuel shortages and import dependency (while providing 30% worse mileage!).  Buying, in essence, the national discourse (as well as through tireless and costly lobbying) allowed them to muscle through acceptance of this ridiculous product that benefits nobody other than ADM (while giving GM a claim to lower emissions).   But the result of their success is now a lot of low-power ethanol cars (a “Flex-fuel” Chevy Impala, for example will get you 18 mpg on gasoline, but only 14 on ethanol – great, no?), rather than focusing on real high-mileage vehicles.


But with all that non-food-grade corn being used to make ethanol, there are now reductions in food stocks of both corn and wheat. 

 On the other end of the food chain, 60 Minutes recently reported that high-tech fishing in the Mediterranean has succeeded in nearly depleting the Tuna population, which is estimated to have about two years left at the present rate of depletion.  Similar under-regulated over-fishing is depleting the remaining available wild salmon in the American Northwest and Canada - though the Bush Administration’s Dept. of the Interior has - as with any other statistic unfavorable to their agenda - changed the method of counting salmon stock to include farmed salmon (you know, the stuff that has to have its gray meat dyed pink)!  Voila! No shortages anymore – keep on fishing, Babe! 

So, not a single week has gone by this year (or, frankly for the second half of last year) without another jaw-dropping economic scandal.  In addition to the grim aforementioned facts, of course, the housing slump and crumbling stock markets are continuing to run down the cumulative net worth of the entire American population, the bundled securities pyramid scheme has forced our financial institutions so near insolvency that the Fed quietly slipped them $50 billion to shore up their solvency, and now even state and municipal bonds are going unsold at auction.  What more can happen, you ask?  Well, I don’t need crystal balls to go foresee some “bank holidays,” as it has already begun in Great Britain, where the government just nationalized Northern Rock Bank.  But how many banks could we absorb? How many retirement funds could sustain bond defaults?  And how will people eat when food costs soar and the bank is closed?  

Buying seeds yet?  A boy named Jack his seeds to grow a  beanstalk with Gold Coins - think about it.   

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Michael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare (more...)
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