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Reasons for soaring prices

The international system of irredeemable paper money backed by nothing but debt is nearing its end. There is an over-abundance of paper money in the world, and the "soaring" prices of food, or of oil, is a reflection of it. There are no shattering shortages, but depreciating currencies triggering prices skywards.

Nizam Ahmad
II A ND all nations came to Egypt to Joseph to buy X A. grain because everywhere the famine was severe:’ Genesis 4 l:57The Old Testament.
The World Bank chief, Robert Zoellick, recently said that the demand for ethanol, droughts in Australia and Europe, financial market speculation, and increased demand for food due to rising incomes in China and India, has significantly contributed to "soaring" food prices around the world.
Certainly, government food bureaucrats in the EU or USA had taken into account all the factors that he mentions, and undertook all actions to mitigate any short- falls in food production, particularly due to ethanol production, as they are far more alert, accountable, and resourceful in planning and procuring food than Third World bureaucrats in Haiti or Bangladesh.
However, there are other reasons for the soaring prices apart from those Mr. Zoellick reveals. He has not blamed hoarding, as Bangladeshi experts persistently have, as a reason for high prices in Bangladesh. However, the "financial market speculation" that Zoellick cites has indeed crossed all boundaries due to inflationary policies of the Federal Reserve Bank of USA. Constantly falling in value is the "irredeemable" dollar, as the Fed prints more for reckless political spending and military
adventurism.
US Congressman Ron Paul recently said that "the greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration ... but the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation."
The international system of irredeemable paper money backed by nothing but debt is nearing its end. There is an overabundance of paper money in the world, and the "soaring" prices of food, or of oil, is a reflection of it. There are no shattering shortages, but depreciating currencies triggering prices skywards.
To combat high prices, alarmed
citizens of Bangladesh often ask the government to increase the purchasing power of the people by investments and spending, but there is only one thing, and little else, the government can do to boost the buying power of the people — the elimination of inflation.
For price stability and sturdy purchasing power of money, the world needs a strict monetary rule like 100 percent reserve banking, or a return to gold standard, or free banking, but certainly a monetary arrangement that is fundamentally different from the fiat regime of today, which has brought the disastrous inflationary era causing worldwide price hikes and stormy financial market speculation.
Bangladesh should identify the faulty monetary system, the failure of global monetary leadership of the Fed, the World Bank and the IMF, and not just blame the demand for ethanol, Sidr, or the profit motives of the hoarders, for
rising food prices.
It is pointless to indict hoarders and the middlemen as the chief culprits for high prices. Hoarding is a natural market reaction in the face of dire uncertainties such as famine or shortfalls. It is a warning sign of troubles ahead, and permits the producers and consumers to undertake necessary measures to endure, and to overcome, the crisis.
The hoarders play an important part by procuring and storing what is scarce, but there is a strong academic bias against their role. It is similar to an aristocrat's revulsion in the past for men in commerce.
Hoarding is an age-old method of stockpiling. If some traders hoard for abnormal profits, as many may, the resulting high prices would attract fresh supplies to the market and depress prices and profits. Government intervention contributes to more uncertainties and market distortion, which
may lead to real famines.
Government must not hinder market forces to respond spontaneously to rising prices. In times of plenty, hoarding is also vital, as farmers cannot afford to stockpile on their own, as they are without proper financial support in rural areas.
Today, no businessperson, apart from those who constantly crave for government favours and protections, would engage in agricultural trading or production, however prospective it may seem, with the kind of government intervention and policies that arc encouraged by our negative and suspicious minded bureaucrats, economists, and politicians. Only an open market with sound money that all government fails to provide, or permit, can bring back price stability in our food market and in the world economy at large.
Nizam Ahmad is a freelance contributor to The Dally Star