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Amy Goodman is Wrong About Food Price Inflation

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If the competition between Activists and Big Business were played out as a baseball game, we would see the Activists lineup featuring a fantastic infield and pitching staff, but no outfield, probably because the brawn needed to throw from center field to home plate is missing in left wing circles.

Big Business does not have nearly the same talent and brain power, but they do have a decent outfield so when these two teams play, Big Business hits loopy inside-the-park home runs that win ball games while Activists agonize and bicker over strategy.

Amy Goodman's recent comments regarding the current food crisis is a case in point.

http://www.alternet.org/story/84130

The recent surge in food prices, and commodity prices across the globe is not caused by the actions of speculators, as she suggests. Sure, speculators play a part, but blaming speculators for this surge in food prices is like blaming looters for the food shortages and riots in Haiti. Speculators and looters are just grabbing what they can grab while the grabbing is good; they don't cause the problem.

The deeper problem, the problem that Activists need to talk about correcting, but never do, because, in their mind, it means (erroneously) eliminating jobs -- is the problem of extremely low interest rates and too much money in circulation -- not too little. That's right. Too much money, not too little. Keep in mind that when people talk about money, they falsely think they are talking about something with limited availability whose value ebbs and flows based on supply and demand. No. None of that kind of asset backed money is used by any government in the world today. Today's global money supply is actually just trillions worth of interest bearing IOU's that people, companies and countries swap with each other in a global game of fiat currency chicken. The one holding the biggest stash of fiat currency loses. This is something German banks just discovered. They thought they were holding U.S. AAA mortgage backed paper. Ooops.

The fact that virtually all of the problems identified by Activists as threats are actually the result of there being too much of these IOU's instead of there not being enough of them goes against every bone in Activist's bodies. And yet, there it is. The current food crisis a prime example.

The Right Wing knows, but isn't saying because they do not want to kill the golden fiat currency goose, that the systemic problem underpinning the food crisis is the inability of American and various world central banks to allow for the price of money to be set by the market instead of the cheap money loving Politburo of America's Federal Open Market Committee (FOMC). To allow the markets to set interest rates would mean less fiat currency and less fees for bankers, so they naturally override the system and make money artificially cheap to pay for mergers and acquisitions and pay themselves really fat year-end bonuses.

If the price of money, or interest rates (the more familiar term), were set by the supply and demand of the market; the dot-com boom and bust, housing boom and bust, and now agricultural boom (the bust has yet to be written) would not have inflated the global commodity markets the way that it has.

Activists need to get their head around this and address this problem with a degree of financial literacy that is currently lacking. When Amy Goodman had Alan Greenspan on her show recently, neither Amy Goodman nor guest Naomi Klein touched on the issue of money supply. It was actually Jon Stewart in his interview with Alan Greenspan who scored a solid home run against the former Fed Chairman when he rightly made the connection between money supply and price inflation.

To remedy the 'hole in center field,' (to keep my baseball analogy going) the Left needs to argue for higher interest rates. Additionally, a study of how interest rates are set needs to be commissioned, followed by a discussion of whether or not America wants to be a a free market economy or continue as it is now - a command and control communist-like Corporate Union without a free market price discovery mechanism setting interest rates.

Additionally, the Left in America must not be suckered into falling into the trap of believing what the Right tells them -- that raising interest rates means economic doom and job loss. Nonsense. Sure, raising the price of capital adds cost but so what? It also adds stability, reduces volatility, increases returns on savings and pensions, cuts inflation, discourages rogue traders and reckless speculation and supports the dollar. Plus, if interest rates were set by market forces instead of government fiat the playing field would be level and encourage more entrepreneurs of whatever party affiliation to start more companies and create more jobs -- way more than would possibly be lost by an increase in interest rates. Conversely, low rates encourage monopolies that results in fewer jobs.

The Left in America needs to beef up on its macro-economics understanding of money and credit before leaping into the fray of discussing global food prices or be left to stare perplexed as another inside-the-park home run hit by the Right and Big Business who add more runs the score board virtually unopposed.