RUSH: This is from BigGovernment.com, Andrew Breitbart’s site. It’s a post by Chriss Street, and the title of the post: ”Fed Policy Burns Down the Middle East, Who’s Next?’ — Chairman of the Federal Reserve Ben Bernanke launched a second round of Quantitative Easing (QE2) in October, following over a year of growth in the economy at a robust rate of over 3%. Most analysts pooh-poohed QE2 as an insufficient economic stimulus to create enough inflation to reduce unemployment.’ Now, Mr. Street here writes, ‘I warned that QE2 was like pouring inflationary lighter fluid on the world and then lighting a match. With food inflation now running at 15% in poor countries, the Middle East is just the first area to burn, but fire is smoldering in much of the world and other fires will break out soon. QE2 is a program by the U.S. Federal Reserve to inject $600 billion of U.S. dollars in the financial system by repurchasing an equivalent amount of U.S. Government bonds. Once the money is paid to the former bondholder, they deposit the cash in banks. Banks take deposit dollars and leverage them by 6 to 10 times creating $3.6 to $6 trillion in credit. Given that the Gross Domestic Product of the U.S. economy is only about $14 trillion annually, it would impossible to immediately purchase 25-40% of the entire economy.
‘The theory is that the financial assets rise on the huge inflows of QE cash, investors will feel wealthier and go to the malls and the car dealerships to ‘shop till they drop.” They think they’ve got money and they don’t have it. It’s all borrowed money, but they go spending it, and they invest it in stocks. ‘The problem with theory is that QE2 money quickly drove up commodity food prices around the world.’ We know this. So did ethanol. Ethanol drove up the price of corn, which is a commodity, food. We know that oil prices are a hundred bucks a barrel, flirting in that range, and showing upward pressure. Now, the upward tick in commodity food prices is noticeable in the United States, but not as noticeable as it is around the world, and here’s why. In America we spend 10% of our personal income on food for three meals a day. That’s the best statistical research that there is on this, and 25, 30% on housing, 10% of our personal income on food for three meals a day. ‘The impact of food inflation is devastating in over half the world that spends approximately 50% of personal income on food for two meals a day.’ And that’s the sad reality for much of the world, half of their income for essentially two meals a day.
‘The 15% QE2 induced commodity food price increase has reduced the amount of food poor people can purchase by almost 1/3.’ This is written in insider lingo. The bottom line is that all of this money flooding the markets has raised commodity prices, ethanol plus QE2, and commodity prices equals food, and around the world inflation — by the way, we’ve been reporting this happening in the UK over fuel prices, food prices, it’s happening. It’s not being reported here that it’s happening around the world, and it certainly is not being reported here, the effects in this country because, of course, the regime’s primary objective here is to continue this myth that we’re in a roaring economic recovery. So they’re not gonna report the truth of inflation in this country, be it food or otherwise, energy price inflation or otherwise. And they are barely touching on the price rise in basic essentials around the world. This guy’s theory is that it is our federal spending, printing of money, QE2, that’s causing this price rise and is partially responsible for the fires and the blood in the streets in Egypt. It’s just one of the many things the people there are tired of.
Now, we’re told that what’s going on in Egypt is all political. And that’s silly. It would be the same thing as being told that riots in this country are purely about policy, when they aren’t. If you go back over the history of riots in this country has always been about economic matters, one way or another. Always about poverty, unfair distribution of resources or what have you. So you’d be wise to consider the possibility that part of what’s going on in Egypt is because the price of food is going up and nobody in Egypt can do anything about it because the source of the problem is here. And you can’t take ethanol out of the equation here, either, because that takes food off the market and turns it into gasoline, corn.
Now, the riots and revolutionary activity burning down Tunisia — you’ve heard about that, right? You haven’t? Well, yeah, it’s happening in Tunisia, too, folks. If you read foreign media on the Internet I’m sure you’ve heard about the riots in Tunisia, and in Yemen. You’ve heard about the riots in Yemen, right? You haven’t? Well, read the foreign media and you’ll read about the riots in Yemen and Tunisia, and now Egypt. Egypt is third to the party here. (interruption) Jordan, that’s exactly right, Jordan, King Abdullah, big ally of the United States, as is Egypt, by the way, that’s what’s kind of scary about this. But, anyway, there’s unrest throughout the Middle East. There has been unrest in Iran for a long time. Of course, the Drive-Bys here will not talk about it. But Egypt is not the first powder keg. It’s the third. Jordan may be the third or fourth. And I just want you to think about the possibility that the revolutionary activity going on is about gut-level economics.
The Drive-Bys here would love to tell you that the people are rioting over freedom and civil rights and so forth. Of course, you can’t take those things out of the equation. But gut-level economics, ‘Can I get enough food, can I afford to eat and feed the family? Prices are going up, I can’t do anything about it and this idiot running the country, Mubarak, doesn’t seem to care.’ That’s all it would take. ‘Do you think Americans would riot and throwing out our government if we were forced to cut back to eating 1 1/3 meals a day?’ We spend 10% of our income for three meals a day. What if it cost us 50% of our income for one and a half meals a day? Do you think Obama, hope and change, any of that would matter? ‘Once riots start people in cities hoard food.’ People are hoarding lightbulbs, folks, in this country because of the stupid idiotic lightbulb ban, but, ‘Once riots start people in cities hoard food,’ and guess what? ‘It becomes dangerous for farmers to transport food.’ Once there become shortages and once prices go up, then the people that grow the food and transport it, why, they become at risk for crime, which further ‘exacerbates food shortages and drives prices even higher.
‘Unemployment was modestly declining and inflation was flat before the Fed’s August announcement of the new stimulus, as shown above. That trend remains in place as QE2 has not significantly reduced unemployment.’ This is why everybody said QE2, QE1 didn’t work! ‘Well, that’s because we didn’t spend enough,’ the old FDR, ‘You gotta spend, you gotta really, really spend, we didn’t spend enough.’ Obama’s new budget, trillions and trillions of new spending, investment. So guess what’s happened here? Greece, Iceland, Ireland, Spain — Spain’s unemployment is at 20%. ‘QE2 leveraging of worldwide commodity food prices has sent the Middle East into flames. With the price of a barrel of oil hitting $100 dollars and food prices accelerating.’ Just something to throw into the mix here that the Drive-Bys are not telling you about.
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RUSH: And we are back. It’s El Rushbo, serving humanity, executing assigned host duties flawlessly, zero mistakes.
Is it indeed the second term of Jimmy Carter coming through? By the way, on the food shortage business, this is according to CNN: The unemployment rate in Egypt is 9.7%, just like ours was the month before last. It was 9.7%. Do you know what the individual GDP for Egypt is? Ours is $48,000 a year per capita GDP. It’s 48 grand a year. In Egypt $2,771 a year. They’ve got 9.7% unemployment. Now, apparently Mubarak and other Egyptian leaders believed an unemployment rate of over 9% could become the new norm there, just like here without there being any serious political repercussions.