WE saw last week that our economic crisis is driven primarily by the greater global economic crisis, which in turn is driven by the skyrocketing prices of oil and the dwindling value of the dollar. The third crisis, which for us is at least just as great, is the global food crisis. This last one should make America happy, because it will make food-dependent countries even more dependent while America will still retain enough strength to feed the vast majority of its own people. As for us, the food crisis should be much less acute than the oil and dollar crises, because we are principally a food-growing country with the capacity to easily feed our own people, while the other two crises are totally out of our control. We are their helpless hostages. When the worldwide recession of the 1990s began, it used to be said that, “He who has cash is king.” Today, because cash is increasingly losing value (purchasing power) at an alarming rate, the common wisdom is: “He who has land is king.” Or should be if he has any sense. This is true both for individuals and states. By that measure, we are a very lucky and wealthy country. How important the capacity to grow one's own food was underlined to me by Bruno Kreisky, the late Chancellor of Austria, with whom I co-edited a book way back when one was young, bright-eyed and bushy-tailed, had a headfull of hair that wasn't replaced by a wig or a transplant when it was lost. “A country that cannot even feed its own people has no right to call itself a superpower,” he told me of the now defunct and unlamented Soviet Union. A few years later, the old man was proven right when the USSR, which owned the world's mightiest military machine, laced with 32,000 nuclear warheads, collapsed because it couldn't feed its own people. With the word “feed” interpreted in a broader sense, the connotations are even worse. Modify Chancellor Kriesky's statement today to, “A country that cannot even feed its own people has no right to call itself sovereign or independent.” We can, and therein lies not only our basic strength, but also the wherewithal of our survival, provided – and it's a very big provided – we utilize this asset sensibly and in the national interest and distribute both its products and its gains equitably. We do not. I heard on Mubashir Lucman's show last week that in the Punjab alone (forget the rest of Pakistan), seven million male calves and three million older cattle die every year due to neglect, while the annual global trade in beef is estimated at $80 billion. Our share in that is exactly zilch. Neither are we optimizing our crop yields with new know-how, nor, apparently, are we doing anything about the wheat fungus that has reached Yemen and could reduce our wheat output to zero if it reaches Pakistan. To simply accept the contention that the global food crisis is caused only by too much land being allocated to producing crops for biofuel ethanol as a petroleum substitute is to be simplistic in the extreme. High food prices are also driven by high petroleum prices. Where do you think farmers get electricity and diesel to run their water pumps in their fields? What do you think they use to run their tractors and harvesters, and the trucks on which their produce is transported from farm to market? High oil prices mean higher electricity costs or – even worse – inadequate electricity as we now have. What happens then? We end up with food that is too expensive to buy or not enough of it, and probably both, as we also now have. It all goes back to oil and its prices, not to mention distribution and greed-driven hoarding. We have to come up with a doable plan immediately to use our energy resources in the most efficient and optimized manner in order to overcome energy shortfalls, both in terms of supply and price. Europe alone is reveling in affluence. Why not put all this food into the markets for the poor? It all has to do with “Control without Responsibility,” America's latest doctrine. America knows what it is doing, not just regarding food, but also oil. They had the decline of the dollar under control, too, until China stepped in. The tragedy is that we do not know what they are doing and we do not know what we are doing. The initial fall of the dollar was deliberately targeted to reduce the trade imbalance between America and China. America had the internal strength to withstand the fallout – or so it assumed, forgetting how indebted it is and to whom, and that it has neither the levels of output nor the pricing of oil totally under its control. The US had been asking China for years to revalue the Yuan, which it thinks is artificially undervalued. When China did not, the US decided to devalue the dollar instead, but it was a managed devaluation, nothing to go hysterical about. Then, two things happened to make the US lose some control, which were enough to make a difference: China decided to sell some of the US debt that it holds, and Iran set up its Euro-denominated Iranian Oil Bourse (IOB) on May 5. This knocked the wind out of the dollar. America is the most debt-laden country in the world. On June 3, 2008 at 9:04:07 GMT, its national debt stood at $9,477,171,636,632.85. That's just under $9.5 trillion, folks! To put this into perspective, at that exact moment, each US citizen was indebted to the tune of $30,890.69. Considering that the poverty line in America is $18,500 per annum, an American owes nearly twice as much as the income of the 10 percent Americans or, over 30 million human beings, that live in abject poverty in the richest country in the world. Those are the joys of capitalism based on market forces for you. The US national debt has been growing at the rate of $1.55 billion per day since September 28, 2007. That could pay off Pakistan's entire foreign debt in about 25 days! Their annual military assistance to Pakistan is equal to one day of its growing national debt. Gandhi was right: “There's enough for everyone's need, but not enough for everyone's greed.” The US debt would still have been manageable if it had been indebted to itself. America forgot how indebted it is to China before needling it. China is the world's largest investor in US Treasury bills, bonds and securities ($400 billion in US T-Bills alone,) and holds more US debt than any other country (a staggering 40 percent) except Japan. In addition, China holds a huge reserve of US dollars because its currency, like ours, is pegged to the dollar. When a country has you by where it hurts most, you do not poke it lightly. Around mid-April, China fired a shot across America's bow when Xiu Jian, Vice Director of the Bank of China, the country's central bank, said that it is considering shifting a major portion of its national currency reserve of $1.4 trillion into “more stable” currencies. The dollar took a nosedive and fell to record lows – the lowest ever against the euro, the lowest in a generation against the pound sterling and the lowest in 57 years against the Canadian dollar. China fired another shot by divesting 50 percent of its $400 billion US T-Bills to establish a $200 billion fund to help diversify its holdings in equities and stocks around the world. “The dollar cannot remain someone else's problem,” said French President Nikolas Sarkozy. “If we are not careful, monetary disarray could morph into economic war. We would all be its victims.” (David Gutierrez in Global Research, April 17, 2008.) China wisely stopped because the US is also its largest trade partner (that is where America has clout over it and most other countries,) and killing the goose that lays golden eggs would have meant China killing itself. Europe, however, couldn't avoid the fallout as high euro and pound sterling values started eroding its exports alarmingly, while it became too expensive to breathe in. A lot of EU exports are shifting from Europe to China. Don't forget, however, that if America was not the cleverest country in the world because of its knowledge bank, the largest there is, it would not be in the position of primacy that it is in. To imagine that China can destroy the dollar simply by selling its debt and holdings is to be naïve. America is not going to take this lying down. It could demonetize. It could force the price of oil so high that China's economy goes into reverse gear. Or it could simply revert to the gold standard that it left in 1971 and which is the source of much of the world currency crisis, because it exposed the illusion of paper money backed by itself as the mirage that it really is – not worth the paper it is printed on. If all currencies are worth so many dollars, what is the dollar worth? Hot air? It became oil, but that is de facto, therefore no total control. I wonder whether the price of gold has shot up only because people find it a safer investment bet in today's uncertainty or because the US is also quietly busy buying up gold just in case it has to go back to the gold standard and leave the rest of the world in the lurch. __
