Saturday, May 7, 2011

Is The U.S. FED Responsibile For The Arab Spring Uprisings?

Graph 1. Source: IMF food price index, Bloomberg, Europe Economics

How The Fed Triggered The Arab Spring Uprisings In Two Easy Graphs -- The Telegraph

It is possible to join the dots between the Fed’s second phase of quantitative easing and the revolutions in the Middle East.

One curious aspect of recent events in the Middle East and North Africa is how unwilling most commentators have been to join the dots between the Federal Reserve’s second phase of quantitative easing and these revolutions. I’m less queasy. Of course, all revolutions have many causes, and I don’t mean to belittle the achievements of brave non-violent protesters, desperate self-immolators, or saloon-car rifle-wielders. But, as a trigger and driver of these events, the Fed seems very clearly to have achieved more in the Arab world in six months than the Pentagon achieved in decades.

Read more ....

My Comment: The last two paragraphs in this report sums up nicely why much of the Arab world is in turmoil ....

.... When food prices rises faster, revolutions become more likely. And in a number of Arab states, food prices are already higher (and more exposed to international commodity price rises) than other states ....

.... The case is clear and simple, but nonetheless powerful for that. QE2 drove up food prices, as we ought to have expected. Rapid food prices rises led to revolutions, as we ought to have expected ....


Indeed.

No comments: