The Fed, Food, and Chaos

There's a room where the light won't find you
Holding hands while
The walls come tumbling down
When they do, I'll be right behind you
--Tears for Fears

Thoughtful piece linking Fed policies to uprisings around the world, with Egypt the current focus. We've been noting it for a long time: central bank policies gut wealth over time. Those impacted the most are those with lower incomes since they have little means to protect themselves against inflation.

In an interconnected world, the effects of the Fed's policies are not confined to US borders. Via stimulus, QE2, and other money printing programs, we are exporting inflation to the world. Inflationary effects are exacerbated because the US dollar remains the world's reserve currency. On a beggar-thy-nation planet where all countries want weak currencies in order to gain an edge in trade, as the Fed prints...so does the world.

Commodity prices worldwide have been shooting higher since last summer--none more so than agricultural commodites. One representative ETF above, DBA, is up about 50% since last summer.

Naturally, the effects of higher food prices are felt in developing countries first. Poor people begin to have trouble affording food. And when citizenry can't eat, they riot. Thus the situations in Kuwait, Tunisia, Egypt, et al.

Blend inflation w/ worldwide proclivity toward socialism, and you've mixed yourself a massive chaos cocktail. 

position in commodities