by Paul B. Farrell
“Nobody wants to hear the truth. Not Big Oil. Not Big Ag. Not Wall Street. Not the Super Rich. Not China’s billionaires. Not Washington insiders on the take. They do not want to hear the relentless warnings of a Cassandra Chicken Little Crying Wolf about the “End of the World as We Know It.”
Forget the truth. In their minds all that matters is that they’re getting more powerful and richer and richer. Nothing else matters in their upside-down world: Wealth increases at the top. Global poverty balloons everywhere else where living on $2 a day is it for a third of the world. Easy pickings. The rich only see more opportunities to make more money when they read in Foreign Policy Journal that “in the United States, when world wheat prices rise by 75%, as they have over the last year, it means the difference between a $2 loaf of bread and a loaf costing maybe $2.10,” warns Lester Brown in “The New Geopolitics of Food … Inside a Hungry Planet.”
But if “you live in New Delhi, those skyrocketing costs really matter: A doubling in the world price of wheat actually means that the wheat you carry home from the market to hand-grind into flour for chapatis costs twice as much. And the same is true with rice. If the world price of rice doubles, so does the price of rice in your neighborhood market in Jakarta. And so does the cost of the bowl of boiled rice on an Indonesian family’s dinner table. Welcome to the new food economics of 2011.
New economics of commodity inflation and resource scarcity: Prices are climbing, but the impact is not being felt equally at all. For Americans, who spend less than one-tenth of their income in the supermarket, the soaring food prices we’ve seen so far this year are an annoyance, not a calamity. But for the planet’s poorest 2 billion people, who spend 50% to 70% of their income on food, these soaring prices may mean going from two meals a day to one. Those who are barely hanging on to the lower rungs of the global economic ladder risk losing their grip entirely. This can contribute — and it has — to revolutions and upheaval.
Yes, it will get worse, far worse. Global population is sky-rocketing, tripling from 3 billion to 9 billion between 1950 and 2050, as the Super Rich at the top will get richer, as poverty spreads, as more and more go to bed hungry in emerging and developing economies. And revolutions and upheaval mean increased global wars over depleting hard assets. In the upside-down world view the Super Rich will soon have to deal more than that extra dime for a loaf of Walmart bread. The cost of America’s denial will be trillions as the threat of WWIII grows exponentially.
Remember the Pentagon forecast: Global population growth leads to “massive droughts, turning farmland into dust bowls and forests to ashes … By 2020 there is little doubt that something drastic is happening ... an old pattern could emerge; warfare defining human life.” As this threat of WWIII increases, America is the major target for many emerging and developing economies.
Commodity Inflation Revolution ends America as a super power
Jeremy Grantham is a Cassandra, warning, crying wolf. Has been for many years. His firm manages $100 billion. He warned of the 2008 meltdown 18 months in advance. While Grantham’s latest Quarterly Letter offers faint signs of hope, the truth is, he’s predicting a no-win scenario for America in “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever.” He opens with a warning, “The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment.” But sadly, he’s already told us that our leaders are turning a blind’s eye, can’t hear, won’t listen, till too late. Here’s his short history of America’s final decades, warnings about near-term time-bombs and some predictions of the end game.
11. Commodity investors gambling in radically new global casino: Grantham warns: “From now on, price pressure and shortages of resources will be a permanent feature of our lives. This will increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor countries.” Get it? Behind all the latest warnings to “sell bonds, sell domestic stocks, buy emerging markets” is a frantic inability to see this “paradigm shift,” a permanent “New Normal” of commodity scarcity and inflation that’s inexorably linked to the world’s relentless population explosion, adding another three billion in the next brief generation.
Prediction for 2011-2020: Price inflation in commodities will not only skyrocket higher than Sock Puppets in the 1990s dot-com era … not only soar higher than Countrywide’s 2008 subprime portfolio … the world’s insatiable growth will keep driving demand for nonrenewable resources, relentlessly pushing commodity inflation into the stratosphere.
Warning: the Global Super Rich not only have known this principle of “new normal” economics for a long time, they’re already spending trillions on deals to lock up and hoard long-term commodity futures. So ask yourself, can you really get rich off what’s left of the commodity crumbs falling off the Super Rich dinner table? Or is it too late?”