(a set of interoffice emails)

Sanjiv to me
9:10 AM Reply
See the riots in Haiti over food prices?

Mike to me
9:03 AM Reply
Much of it caused by financial intermediaries

YES, TO THE EXTENT THERE ARE EXCESS INVENTORIES.

BIOFUELS, TO THE EXTENT THE FOOD/ACREAGE HAS BEEN USED FOR FUEL

On Wed, Apr 9, 2008 at 9:02 AM, Brian wrote:

Did you see the news in the Philippines last night? The government is going to start increasing wages to help people deal with rising food and energy costs. Interesting approach toward combating inflation.

Yes, the mainstream calls that ‘monetizing’ the price increases. Given a shortage, giving people more funds doesn’t add to supply in the short run, and, (twist on Keynes coming) when it comes to food shortages in the short run we’re all dead.

2 Responses

  1. many of the countries dealing with record rice prices are the same ones at the forefront of the managed currency regime that’s existed since 97/98. one way to combat record food prices is to let your own currency appreciate, thus abandoning said regime and exporting some of that inflation back to the u.s. via a weaker $.

  2. good point- try to improve your real terms of trade.

    problem is, sometimes your currency just won’t cooperate and appreciate when you want it to, but the near term ‘dollar glut’ caused by the big three- Bush, Paulson, Bernanke (see previous posts)- should help for a while.

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