Was it an encounter whilst in Italy with our dear friend, former Italian finance minister, resolute Glass Steagall supporter and now prospective PM, Giulio Tremonti, or the provocative comments of another dear friend, Bonbon, whose tireless promotion of American System Economics on David McWilliams’ blog only the most blocked mind can ignore? Maybe it was a combination of influences from both of these LaRouche co-thinkers. Or maybe it was simply the thought of horse meat in his burgers that brought up a case of monetarist nausea.
Whatever the reason, David McWilliams has surprised us all here with an excellent article which gets right to the heart of our present malaise – monetarism. Surely the next rational step is to now present the solution. Giulio and Bonbon will provide all the expertise and advice he needs for that exercise.
Here’s an excerpt from the article. The rest can be found on his blog here
“Like the scandals we have experienced in the past few years in the banks, the momentum of this story is following a similar pattern. First, we have an isolated incident in one country, which at first appeared to be a unique issue of local malpractice. But then it becomes clear that the local incident is only part of a greater systemic issue.
The similarities between the banking scandals and the food scandals are eerie. The main reason is that both industries are based on trust and both have become globalised in the past decades.
Now the supply chain has spread all over the world to the extent that no one knows where their food comes from – in the same way as no one really knows where the money for their mortgage came from.
Most people didn’t ask questions either, because most of us trust the system. But few took any notice of what was happening to that system. In the past few years, food – like finance – has become a commodity traded all over the world by people who never get their hands dirty.
Did you know that, in the past five years, financial speculation in food commodities has doubled from $65 billion in 2006 to $126 billion in 2011? Or did you consider the implications of the involvement of pure financial traders in the food business?
In 1996, the futures market in food commodities was largely driven by food traders trying to ‘insure’ themselves against movements in food prices, which are driven by weather and harvest concerns. More than 80 per cent of all traders in food futures were themselves food traders. Today, food traders are a minority, and pure financial speculators account for over 65 per cent of the market. These guys help to drive the price of food upwards, which has been the case in the past few years.
Most of us didn’t really think about the implications of all this for the Irish food chain. We thought our dinners were a localised affair from Irish farm to factory to table. Now a convoluted trail has been revealed which spreads across countries between agents, middlemen and dealers of all sorts.
Once an industry becomes globalised, the premium on trust and regulation increases. This is where the food scandals and the recent banking scandals become rather similar. The quest for cheap food in a globalised industry becomes akin to the quest for cheap money in a similarly globalised industry.
Details of links between Polish abattoirs via Irish burger factories to Irish dinners have been revealed in the same way as it became apparent that German money was financing Irish ‘ghost estates’ via original German lending to Irish banks.
And then, in an episode scarily reminiscent of the financial rating agencies rating assets ‘AAA’ when they were junk, we have stories of food sources stamping food ‘beef’ when it is horsemeat.
When an industry becomes globalised, people come to rely on stamping and quality control in a way that wasn’t so absolute before. What is the point in reading the labels on food for ingredients if we now know that beef is actually horse? What or who can you trust?”
The rest of the article can be found at David McWilliams’ blog, click here