Monday, June 23, 2008

World Food Crisis

What world food crisis?

There has been an increase in food prices, but there is no shortage of food supply.

If the increase in food prices is due to cost factors such as oil and raw materials, then the price of food will not come down through an increase in production - unless the food producers are happy to make losses through oversupply.

World food prices rise in US dollar terms because the US dollar has depreciated. It's a US dollar problem. The solution is for the US to raise its interest rate to strengthen the dollar or risk the beginning of the end of the US dollar as an international reserve currency.

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