19-Feb-12 WV-Syria fighting spikes as U.S. operates drones

[John]

19-Feb-12 World View -- Syria fighting spikes as U.S. operates intelligence drones


More people in India go hungry as global food prices rise

** 19-Feb-12 World View -- Syria fighting spikes as U.S. operates intelligence drones
** http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e120219#e120219



Contents:
Iranian ships pass thru Suez Canal to Syria's port of Tartus
Venezuela's Chavez sends diesel fuel to Syria
Unmanned U.S. drones collect intelligence over Syria
In new escalation, Syria's army uses 'live fire' in Damascus
More people in India go hungry as global food prices rise


Keys:
Generational Dynamics, Iran, Suez Canal, Syria, Tartus,
Venezuela, Hugo Chávez, Bashar al-Assad, Idlib, Damascus,
India, FAO

[vincecate]

[...]but the the overall since 2002 there has been an overall exponential growth trend of the world price of food. This trend is expected to continue until reset by world war.

You were predicting a 30% drop in the CPI. You are now expecting food prices to keep going up fast. Do you no longer expect a 30% drop in the CPI?

With fiat money, governments print lots of new money during war to pay for the war and prices go up, at least as far as I can recall. So during war I would expect the trend to continue. Hyperinflation is common for the side that loses a war. After the hyperinflation they will institute new rules that limit the creation of new money and so stop the exponential growth of money and prices, then the trend will reset.

[John]

Food is only one component of the CPI, but the one that literally
everyone demands and can't live without. Other components are more or
less discretionary, and falls in those prices can easily offset price
rises in food. In a war, if a country's financial infrastructure is
destroyed, then it may well suffer hyperinflation. In the case of the
U.S. dollar, that's less likely because the dollar has become an
international currency, and the damage required to cause
hyperinflation would have to be proportionately more widespread.

[Evan C]

It will be deflation in the petrodollar core world, i.e. the USA. But in the periphery where money can't be printed and still hold value inflation will rage. In the core, food will go up in price nominally but deflation will be the overall trend as debt financing of assets unwinds. Unfortunately, deflation will not show up in any day to day consumables in assets; it will show up in commodities, real property, the price of going concerns. This will be possible while money flees the unstable periphery to the relative safety of the core. In the periphery, the opposite will apply.

Foreign exchange will disappear in many countries (watch Egypt now). Countries in this position that import their food supplies (Egypt and soon Greece and later many others including India) will face starvation in their periphery populations. Countries such as these have their own peripheries and cores and as food becomes a scarce resource it will be their peripheries that will suffer first and most. But this will spread. In these countries as starvation or the threat of starvation makes its way to their cores the social upheaval and instability will be uncontrollable. Arab spring was a bottled up awakening but it is just a precursor to what will happen in some areas as awareness of food security becomes a primary concern. We will see affected nation states falling into flux and chaos with great loss of life on scales we are not used to. Availability of food and fuel as measured by marginal costs in relationship to the buying power of periphery populations will be the marker by which we can watch this.

Regardless of the debt levels of core countries, especially the USA, the coming instability of the periphery will start a reinforcing virtuous (vicious?) circle. Money fleeing the periphery will have nowhere to go except the core. Smart money will park money in the core waiting for the eventual bottom of the periphery. This will allow, in at least the USA's case, the continuing financing of deficits at low interest rates. Deflation will continue as long as these dynamics stay in place. Inflation will eventually have its day in the core countries but not till the dust settles.

[John]

That's a very good analysis.

John