[lbo-talk] Once again, food prices

brad babscritique at gmail.com
Wed Feb 9 06:00:47 PST 2011


I agree with you that Krugman is once again missing, or choosing not to highlight, the most important factors in the rising food prices: dollar denominated food prices rise due to declining value of the US$ and commodity speculation. While it is true that a devalued US$ raises food prices around the world, I don't agree that we should jump on the rightwing attack of QE and talk of a looming inflationary crisis.

Sure the fed has its hands on the control of the monetary base and is decreasing the value of the US$ slightly through QE, but I don't think it has been the fundamental cause of that decline (compare the decline between 2006-2008 with the declines since QE). Also this argument rests on the assumption that there is some natural, unmanipulated pre-QE means to which the US$ achieved its value. There simple was never a time that the monetary base wasn't manipulated and the historical fact is that the US$ is way over valued due to the legacy of US currency manipulation (which is the cause of many of the domestic economic problems). The overvalued US$ has long caused food prices to be below the actual cost of production in most places and has caused the long history of 20th century cheap food that fueled capitalism's rapid expansion.

Maybe someone can illuminate how workers would be hurt more by a declining US$ than say bankers, capitalists and generally anyone with lots of US$? I simply do not understand leftists who want to claim that maintaining a overvalued US$ is in the best interest of workers. There is a reason that Paul Ryan wants to increase the value of the US$ and scare everyone with the inflation boogieman, because it would help capitalists.

Brad



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