With events still in motion, analysts are scrambling to identify and understand the causes behind the wave of protests and revolutionary movements sweeping through the Arab world. U.S. dollar inflation may be among them, and if that’s the case, it could only be a matter of time before the root causes of Arab unrest take effect right here in America.
Other potential causes for the protests in Tunisia, Egypt, and several other Arab countries, include a lack of civil liberties, indefinite “states of emergency” with accompanying police-state measures, high unemployment rates (in some cases double and triple the world average), a lack of free elections, and rampant government corruption. Some analysts also mention the role that Julian Assange’s WikiLeaks organization may have played in exposing government corruption and malfeasance. But throughout history, the one thing that will make people desperate enough to riot and revolt is hunger.
Economist Larry Kudlow argues that rapidly rising food prices in Egypt are the primary cause of the protests and calls for revolution:
“…in addition to the apparent revolt against repressive governments, all the experts say the other main cause of unrest is record food prices. For example, former Bush advisor Dan Senor notes that Egypt is the world’s largest wheat importer. Because of skyrocketing prices, Egyptian inflation is now over 10 percent.”
Kudlow notes that the Federal Reserve’s dollar inflation may be to blame for record food prices in the Middle East, and subsequent region-wide calls for revolution, because commodities are priced in dollars. In other words, the U.S. dollar is presently the world’s reserve currency, so when an Egyptian wants to import a global commodity like wheat, he or she would first buy dollars with local currency, and then use the dollars to buy the commodity. This is how the policies of the Federal Reserve bank significantly affect the entire world.
For over two years now, the Federal Reserve has been pumping record amounts of dollars into the global economy, printing them up (or these days simply adding zeroes to electronic bank accounts) to purchase IOUs from banks and governments around the world. Over the last decade, the growth in the supply of dollars has been astronomical in scope, pushing up the price of gasoline, raw building materials, and food commodities like milk, wheat, and eggs. The reasoning behind this policy of radical dollar inflation (and subsequent dollar devaluation) is done in secret by unelected bureaucrats at the Federal Reserve Bank.
Americans have so far been shielded from the worst effects of their central bank’s inflationary policies, though food, fuel, and raw material prices are on the rise. If we want to avoid riots in the streets like we’ve seen in Egypt and Tunisia, I posit that it is absolutely critical that we rein in the Federal Reserve before the severe consequences of our inflation finally catch up to us. And that’s exactly what one father-son team on Capitol Hill are trying to do.
Ron Paul, a Congressman from Texas and his son, Senator Rand Paul of Kentucky, have introduced twin bills that would create- for the first time- a full public audit of the Federal Reserve bank’s presently secret policies and financial records. Senator Paul said in a press release that, “It is more crucial than ever that we have real transparency at our own central bank.” As the Middle East erupts in chaos and revolution over skyrocketing food prices, the urgency for banking reform in America may have never been more clear.