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Mr. Wynand

Egypt and the Middle East

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To what extent do you think that rising food prices have contributed to the recent protests in the Middle East? Was this (forgive me for the cliche) the "straw that broke the camel's back"?

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My question is, why did food prices rise? It may be that the food price rise and the uprisings are strongly correlated without the link being causal per se, i.e., both are, IMHO, likely symptoms of the same underlying problems.

Why did food prices rise so quickly? I am curious to see what folk think about this, I have some half-formed ideas but just started considering it, so not quite ready to assert anything myself.

- ico

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Inflation is coming and really is already here, you see it in food, oil, gold and other commodities. And it is caused by the Federal Government printing so much money. The apparent rise in the cost of the aforementioned is really a devaluation of the dollar. There is nothing that has happened to the growing or manufacture of food itself, except that it takes more dollars to buy the same amount of goods, that would cause the price of food to go up.

Now part of the rise in the price of gold is due to inflation or anticipated inflation which also has caused other countries like China to seek a better investment than dollars so they have purchased huge quantities of gold, which also causes the price to rise.

Oil was on its way up due to inflation (from what, $40/bbl. to $70/bbl. approx.) and now is going up further due to uncertainty in the market.

Inflation is a hugely destructive added tax. My mother's retirement portfolio is probably worth half of what it once was due to inflation.

What this has to do with unrest in the Middle East I don't know, though I suspect little. There is some other phenomenon going on over there. Probably the people are sick and tired of tyrants and poverty. I hope they choose a better option.

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Doesn't help we are using a good portion of our corn crop for the useless, government subsidized ethanol program (ethanol actually reduces fuel milage O.o).

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If I recall correctly from what I've read, the Tunisia protests were supposedly initially inspired by an unemployed man who started a street vendor business, but had his cart and his food confiscated by police for violating licensing and price control laws. He then proceeded to self-immolate in front of the parliament, after which the calls for protest went out.

My understanding of the Egyptian situation is similar regarding mass unemployment, failing interventionist policies, and a parasitic ruling class.

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Thanks to all who answered my query.

I see the Fed as a big bad enabler of socialist policies, and agree that the rise in food prices is in large part manufactured by manipulation of the money supplies around the world.

But I think that the culprit is, in each case, the social dictatorship culture in which the protests started -- and the USA's long history of supporting such regimes is, again, an enabling.

I just can't blame individuals in the USA for the acts of irrationals in other nations, per se.

- ico

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Regarding economic policy and food/inflation there have been two recent Mises articles on this but not tying it to the Middle East, for those that are curious:

http://moneywatch.bnet.com/economic-news/blog/daily-money/food-companies-were-going-to-start-raising-prices/2138/

http://blog.mises.org/15807/inflation-its-getting-crazy/

http://mises.org/daily/5061

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But I think that the culprit is, in each case, the social dictatorship culture in which the protests started -- and the USA's long history of supporting such regimes is, again, an enabling.

- ico

What is the "social dictatorship culture" and why did that cause the protests?

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Social dictatorship culture is what I call all those flavors of thought which believe that social engineering, rather than freedom, is the correct means to a thriving society.

To me, freedom in a social context means freedom from the arbitrary dictates of others. Cultures which fail to embrace freedom are socially dictatorial to the extent that they sanction restriction of freedom.

- ico

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Inflation is definitely a big deal.

China is experiencing a lot of inflation. However, notice that their protests are rather small and are not about toppling the government since their standard of living is rising dramatically every year.

In the case of Egypt, the average man spent 50% of his income on food. Egypt is a major wheat importer and when commodity prices went up that meant either being hungry for a meal a day or being late with your rent.

When people get hungry or lose their money they start to get angry more easily. When the times are good they are more likely to put up with their dictatorships. Inflation has radicalized populations in the past. Look at Germany for example. They inflated their currency and made everyone absolutely destitute, then those people blamed their poverty on Jewish financiers and bankers and slaughtered them all.

The cause of the inflation is Bernanke dramatically increasing the money supply, and other central banks attempting to run a peg with the US dollar. They could fix all of their problems by not printing and letting their currency rise against the dollar.

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And one reason they do not want to let their currencies rise against the dollar is because then all the US debt that they have purchased will lose value ($900B for China alone). They seem to hold onto a foolish idea that the US is capable of paying back its debts to the world. The main reason, though, is to keep the US importing products from those countries.

Edited by brian0918

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