Cyberwanderer’s Blog

April 28, 2008

It’s the dollar, stupid

Filed under: economy,World News — cyberwanderer @ 11:51 pm
Tags: , , , , , , , , ,

I’ve blogged back in February about how biofuel could contribute to world hunger and the weird conflicting development of recession and inflation occurring at the same time (i.e. stagflation). Now that the food prices and perceived shortage has become a great concern and garnering headline news, all sorts of excuses are being used to explain why there is such a shortage of food which has lead to riot across the world. Price of gas rarely gets the blame. But even though price of gas do play a big part, especially with rapid rise in diesel fuel used for truck delivering the food, the main culprit is rarely mentioned in the press. The source of all this price increase in the face of recession could be traced back to the falling dollar. As dollar continued its fall, countries holding U.S. dollar in their reserves are trying to dispose of them and results to speculating on gas and food. In turn, gas and food have become the new gold. Oil prices, which is pegged against the U.S. dollar and have already risen as a result of the dollar decline, now suffers from a double whammy as speculators bump up the prices of oil further. Speculation on food commodities is also leading to astronomical rise in food prices making it unaffordable for people already living in poverty. For more on this, be sure to read the two related article below. One from Asia times and the other is from Wall Street Journal.

Related articles:

Asia Times: Rice, death and dollar ( April 22, 2008 )

The Wall Street Journal – The Fed’s Bender ( April 28, 2008 )

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