by Steve Rushton
The Federal Reserve and the Bank of England are encouraging food speculation shows clearly how both America’s and Britain’s monetary policies are engineered to work against the interests of the majority, not only at home but internationally.
These are the same criticisms people have been making, with growing clamor, since the Fed initiated its QE spending in 2010. Since the financial crash, both the Fed and Bank of England have been running these stimulus programs — a "money for nothing" technique of buying bonds from toxic banks. As Dyson mentions, the U.K. has created an extra £375 billion for big banks through the spending.
Meanwhile, Professor David McNally of York University Toronto calculates the Fed has pumped an equivalent amount, $600 billion, into Wall Street banks in the course of QE1, QE2 and QE3. He asserts this “hot money” is funding speculators to buy currencies, commodities and assets with the result that it's driving up currencies such as Brazil’s real, funding lands grabs across Africa and Asia, and making food prices soar.
A deeper look at the Fed’s impact on food prices, in fact, illuminates how the private central bank is working as an engine to fund rising inequality worldwide.
Backing up McNally’s assertions, the Guardian reports that QE has meant that commodity markets like food are being overwhelmed with investors who are focused on making the highest returns. The increased speculation has driven food prices to record levels, according to Britain's World Development Movement.
To appreciate the consequences that food speculation has had on the majority of the globe's population, I asked Miriam Ross, media officer for WDM in London, to set out its impact. “Speculation has been a major contributor to the sharp spikes in global food prices," Ross said. "When prices of staple foods rise suddenly, everyone is affected. Here in the U.K., for example, prices rose by 32% [between] 2007 to 2012.”
Ross went on, “With incomes failing to keep pace, many people have felt the pinch. But in poor countries, where many people typically spend 50 to 90% of their incomes on food compared to an average of 10 to 15% in rich countries, price spikes can spell disaster. In the last six months of 2010 alone, 44 million more people were pushed into extreme poverty by rising food prices.”
“This does not just mean peoples’ lives are devastated due to a hunger and malnutrition. It causes people to sell off possessions including cattle, take their children out of school, or cut out spending on health care,” she added, and proposed that reducing speculation should be an easy goal for the public to embrace.
“Regulation to curb speculation is on the table on both sides of the Atlantic. Whether or not regulators seize the opportunity to rein in the speculators depends on whether they prioritize the profits of investment banks or the fundamental right of people to food.”
That the Federal Reserve and the Bank of England are encouraging food speculation — and are responsible for its disastrous results — shows clearly how both America's and Britain's monetary policies are engineered to work against the interests of the majority, not only at home but internationally.
An alternative strategy, according to groups like Positive Money, is for the nation's central bank to strategically stimulate parts of the economy and help produce the things that people actually need, like low-carbon emitting forms of transportation, manufacturing, energy production, and so on. If the Fed were federalized, restructured as a public force for investing in the public good, not just Americans but the world's population would have a more hopeful future before it.
ABOUT Steve Rushton
As well as being involved with Occupy, Steve is currently writing a PhD criticising Neoliberalism from an indigenous perspective. From Southampton, Steve has also provided legal support to Dan Ashman as part of the OccupyLSX legal case—for which judgement will be delivered sometime after Jan. 11.