Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world – W.B. Yeats
Here’s a report from India’s NDTV on the “hyperinflation” in food prices in some countries, which already is and could further destabilize regimes around the world. No doubt supply shocks are contributing to higher food prices, but we believe the marginal buyer sets market prices and the marginal buyer these days are hoarders, who is in panic mode, and the speculators. With the later trying to dishoard its excess money balances and motivated by the search for a store of value.
The global imbalances appear to have reached a “tipping point” and regimes are now starting to topple. Who’s next is anyone’s guess, but our candidate would be a country with the preconditions: 1) where food is a high proportion of the consumer’s basket; 2) food prices are rising rapidly; 3) the government is trying to monetize the price hikes; and 4) political expression has historically been deeply repressed.
(click here if video is not observable)