In this episode of the podcast we are joined by author, attorney, blogger, and activist Ellen Brown. Ellen joined me to talk about the issue of rising food prices. Through the course of the interview, we tackle some tough questions: What does the shadow banking system have to do with rising food prices? How do rising food prices affect the world’s poor? Are rising food prices the result of unintended consequences or part of a more sinister plan? How have Goldman Sachs and other banks manipulated food prices through the futures market?
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4 responses to “Episode #120: Food Prices”
Greetings Frank
Thanks for bringing this issue to your listeners’ attention. I think Ms Brown made many excellent points. Her perspective, as she says, is that of someone trying to save the existing system. IF this is going to happen, I think her ideas are extremely valuable. In this regard, I look forward to her thoughts on State owned banking.
Unfortunately, Ms Brown discounts the possibility of systemic collapse. Many likely events such as continued crop failures, oil shortages, geopolitical upheaval and climate related catastrophe can and probably will interject themselves into the economic equation in the months and years ahead. This adds further strain to an overburdened and failing system.
Debt based money requires constant, expanding growth. This is not possible in a finite system.
We know that the corporate-conservative right-wing has a philosophy of endless growth. However, the traditional left in our part of the world also embraces the idea of an ever expanding economy. They want the perpetually bigger pie divided in a more equitable and just fashion. For decades I counted myself in this group. Both of these general views of the world ignore limits to growth that are surely upon us.
These days I practice and teach Permaculture because I see it as a path upon which I can help foster resilience, health and sanity in a time of great upheaval. My hope is that in some very small way this helps create a world for my grandchildren – or someone’s grandchildren- that is worth living in.
I think your podcasts are so valuable, Frank, because they involve techniques, methods and philosophies that are valuable whether the existing system is cobbled together for a while or whether systemic collapse overtakes us.
Thanks again to you and Ms Brown for another wonderful episode.
I would like to suggest an episode on family preparedness that might focus on readiness for such events as a food or energy shortage. It brings to mind the gas shortage you folks in NM endured recently.
Thanks, again, Frank
Marc Flora
PS Another manifestation of the big money flowing into agricultural commodities is, of course, the price of farmland. It is considered a very good investment for the super-wealthy, driving the price far past a point where young folks can buy land without assuming impossible debt.
But Ellen’s principle point is that the sovereign state of a democratic society must control the money supply. My conversation with her made me open my mind even more to the real function of money in an economy. As long as the fiction of money is maintained, then people will use it as a medium of exchange.
So in Africa cell minutes are being used as a medium of exchange…which effectively increases the velocity of money without actually increasing the money supply. And it creates a multiplier effect…the more a localized medium of exchange moves through a local economy, the more productive the economy becomes.
What Ellen is challenging us to do is to take control of our money supply. If we are stealthy about it, the imperialists might not even notice until it’s too late. Until we do so, we aren’t even in a position to discuss concepts like limiting the money supply based on natural limits to growth.
On the one hand it seems Ellen is criticizing the Fed and its handling of the American Debt by flooding the economy with more money while on the other hand stating it is necessary for the Fed to print more money to equalize the debt and thus increase… what? Value? I don’t see the consistency in her argument. From an everyday consumer’s perspective I can tell that the cost of living is rising faster than the pay I receive. I also know firsthand the history of fiat currency from MANY examples Europe has had in the past 100 years…even within my lifetime.
I don’t really see how the fact that the “Fed has the ability to print more money is going to save the US Economy” as opposed to the fact that the “Euro is forbidden from being printed is going to destroy the European economy”.
There seems to be a disconnect in her logic.
Say a banana costs 25 cents. If you print more money then everyone has access to more money and thus the value of the banana drops and costs more. Now it is 50 cents. If this pattern continues which it always seems to do with fiat currency, then in a decade or so the banana will be 2 or 3 dollars. I have seen this happen. So I don’t quite understand how simply printing more money or canceling all bonds and printing more money to compensate is going to make the banana worth 25 cents again. What ALWAYS happens in these cases is that the currency becomes void and the government simply starts afresh with a new currency.
Elia,
The real topics under discussion at Argoinnovations should probably be how banking, finance, and investment activities affect the cost, availability, and production of food and other agricultural products; that is, how and why they affect the existing and anticipated bounty of the earth that people need in order to survive and prosper, and what we need to do about it when things go awry.
And I, for one, am certainly no economic expert, or historian, or farmer. I’m just an interested bystander, the guy who asked Frank to interview Ellen Brown. I did this because I have come to believe in her cause of promoting the understanding and adoption of public banking and the many necessary things this can facilitate; and, because I want to learn more about it all and engender more discussion.
But that said, I do think a correct general understanding of the fundamental mechanics of money, and how it affects us all, will continue to be increasingly important for all the reasons stated above.
And I also happen to think few people have much in the way of a functional knowledge of banking and the mechanics of money, because we, as a citizenry, have been intentionally kept ignorant and deliberately infantalized by a relatively small group of people who have traditionally profited–and who now continue to profit, and hugely, probably more than ever before– from our state of relative ignorance.
I’m just now trying to wake up to and understand all this myself, but in my foggy, groggy and probably somewhat flawed way, I do have some thoughts and opinions on what you have written here above, and this is what I think:
First, you need to go through podcast 120 a couple more times and examine Ellen Brown’s actual statements a bit more slowly and carefully. There is not a disconnect in her logic; you have simply failed to follow it. The important ideas are of themselves relatively simple, but some of them are profoundly contrary and counter-intuitive to what most of us have learned to believe and expect. It is therefore altogether too easy to inadvertently confuse and conflate the issues.
Second, Brown does *not* criticize the Fed for flooding the economy with more money. What she actually says is that the Fed should probably inject more money because the money supply–which is actually the same thing as the supply of credit, or debt, in our system–this supply has been substantially reduced and continues to be destroyed.
The situation is as if the blood in your body has by one means or another become diseased and dysfunctional, has stopped circulation, or has leaked out of its normal confines. Therefore, the first priority is to get enough blood moving in your system to sustain the functioning and prevent the failure of essential organs. There needs to be enough money circulating through the economy so that our most essential economic activity doesn’t die. Little things like the production of energy and food, for instance.
With “quantitative easing” the Fed has been filling a bucket with a hole in it. The bucket started getting empty partly because the money/credit tap got turned off, and this was because of the other reason the bucket started getting empty– that is, certain alarming developments caused the hands on the knob to realize that there was a big hole of noncollectable bad debts in the bottom. First everybody realized there was something massively wrong, probably a big hole, then they freaked out, and turned off the money/credit/debt spigot. So next, the government and the Fed freaked out and turned on other taps (TARP, loans from the Fed), because they and almost everyone else who counts realized the game is over if the bucket becomes empty.
Quantitative easing works sufficiently well enough to keep the economy alive because the Fed manufactures money out of nothing–that is, out of nothing more than the whims of a few Ben Bernanke types and a few keystrokes on a computer. And also, because the Fed (which is owned not by we the people, but rather by the private banks–and mostly by just a few private banks) charges we the taxpayers relatively small fees for the purpose of using our own money. This is a result of the fact that the Fed has set the interest rate so very low, and also, because it pays most of the fees/interest (but certainly not all of it), back to the government.
Third, what Brown *does* say is that the Fed has caused problems by flooding the financial markets with lots of *cheap* money. The result is that low interest rates, the low yields on federal bonds, are causing distortions and dislocations in the markets. Because of the low rates of return on debt, and also because of the fact that most of the world’s economy is relatively stagnant, the only way investors can make any money on simply having money, these days, is to participate, knowingly or otherwise, in manipulating the price of essential commodities (food). This usually by causing prices to move upward (which, of course, causes lots of poor people to starve to death.)
Fourth, the Fed does not “print money” to “equalize debt.” Rather, Brown says all money *is* debt and that the Fed “prints money” to *monetize* the debt in an amount equal to the debt. That is, the Fed buys debt (bonds) from the government (of which it, the Fed, is not really a part, but rather a separate, sanctioned independent institution within government) in order to convert debt into its other more liquid form, dollars. Dollars are a more useful anamorph of debt. Dollars are debt you can spend, rather than obligations (so called “loans”) that are now increasingly and continually unlikely to be met according to original terms.
The availability of dollars/debt/credit/money must be kept reasonably commensurate with the availability of goods and services. On the one hand, you have to have enough liquid money to facilitate the exchange or movement of goods and services. On the other hand, you have to have enough goods and services to maintain the value of the money. In order for the system to function adequately, the relationship between the amounts of liquid money and available goods and services must be relatively stable and predictable.
Leaving aside the question of legality, when a government/institution/individual “prints money” to pay for things already created, or services already rendered, say a delivered bunch of ripe bananas, the money supply is diluted and you have inflation. Inflation functions like a broadly levied tax. Everyone pays their little distributed portion for the things the government/institution/individual who printed the money obtained. When a government/institution/individual “prints money” to pay for things or services that do not yet exist, that is, for anticipated needs, say a banana plantation–the supply of both money and the supply of needed things and services, are permitted to increase; but, the money supply is not diluted; and, the value of the money and needed things and services thus created is available to circulate and satisfy the needs of everyone. Thereby generally increasing the total sum of available wealth to the people. More bananas become available to purchase and eat.
Fifth, the value of a banana is not 25 or 50 cents. That is the price of a banana. The value of a banana is determined only by how hungry you are. That is, there is no relationship between price and value. A banana is worth exactly, and only, what someone is willing to pay for it.
Sixth, here’s the deal about your personal experience of inflation (and mine). Forgive me if I state the obvious. The banks, Wall Street financial houses, hedge funds, the government, etc.–these guys are manipulators. You are a manipulatee. Those guys created nothing but they took your time on earth, your access to what you have created and labored for. They have stolen your wealth. The money, the cost of things, is just a way to keep score. Either the price of the things you need keeps going up; or, you are less and less able to obtain or have money with which to purchase the things you need. These are two sides of the same coin: heads they win, tails you lose. The issue not about whether or not your money is backed by precious metal or by the promises of government; that is a myth; gold or silver is a stupid way to try to mediate price and store value, somebody else can always hoard it all or control access to it better than you or your government can. Either way, with commodity backed money or with fiat, you simply don’t have enough; either you don’t have enough money or you don’t have enough stuff. Whether it happens because the price of things goes up, or because your wages go down doesn’t matter. They get to have more, you get to have less.
Seventh, (And here I stray into shakier areas I have a much weaker grasp of) those countries in Europe that experienced hyperinflation were under the thumb of other countries. There was predatory behavior then, as there is now. When their economies faltered and their currencies collapsed, they could no longer compete, and this permitted other economies (ours, for example) to prosper by filling in the gap.
Unlike the countries of Europe, we are not under any other countries’ thumb. Or at least not very much so. China maybe. But if the Chinese mess with us, they cut their own throat. We are their market. Their huge profits and investments here are in dollars. The things they need to buy must be purchased in dollars. If the value of the dollar goes down, they are SOL; they have nothing with which to swoop in and pick up our assets at fire-sale prices, and there is no other market that can absorb their excess productive capacity.
So, short of losing World War IV, or succumbing to the Bank of International Settlements becoming our central bank (and neither circumstance is necessarily improbable), we will not start over and have a new currency. If we do, it will most likely be BIS Special Drawing Rights, whereupon all the world will likely be permanently enslaved and immiserated.