People around the world - when they are forced to spend close to 50 percent of their income on food - will be out soon demanding governments do either one of 2 things: A.) Raise household incomes, or B.) Lower the cost-of-living.
Unfortunately, it is not that simple... And either one of those options could at best provide extremely short term relief - and in fact, could seriously exacerbate the problem!
If a government increases liquidity through free money or higher incomes, it risks devaluing the currency, and FURTHER increasing inflation!
And if the government attempts to control or regulate commodity prices, it may simply vanish from shop shelves! Take what I call 'The cola drought' for instance... Many young people get a good proportion of their daily calories (unhealthy as it) from energy-dense soft drinks. The companies tried to increase prices, and there may have been a counter attempt by the authorities to cap the retail price. The cola giants simply passed on the difference to the retailer. The consequence? A seven-fold increase that makes it unviable for retailers to stock most soft drinks... Try finding a Mountain Dew at your neighbourhood store today!
The problem is systemic: The current banking / finance / monetary system is "creating" exponentially increasing amounts of money out of thin air (fractional reserve banking)... And simultaneously trying to squeeze exponentially increasing profits from it (profit on capital investment)!
It is not sustainable. AND IT IS THE EXACT SAME SYSTEM THE WORLD OVER!
Uncle Slappy's TGIF Slap-of-the-Week. - Dear Readers, I'm off for ten days or so. I'll write in this space, but likely less often. As always, thanks for reading. And keep what remains of your wa...
2 days ago