The Age of Magic Money
Can Endless Spending Prevent Economic Calamity?
At the end of 2010 and beginning of 2011, world food prices rose sharply, hitting an all-time high in February 2011. The spike arose from an unlucky combination of increased consumer demand due to rapid economic growth in emerging markets in Asia; the diversion of food crops toward biofuel production in the United States and elsewhere; poor harvests due to bad weather in key grain exporting zones such as Australia, Russia, and South America; and increased speculation in agricultural commodity markets, as investors fled a weak dollar.
The sudden uptick in prices rightly concerned global leaders. In February, World Bank President Robert Zoellick correctly warned that “global food prices are now at dangerous levels” and that “recent rises in food prices are causing pain and suffering for poor people around the globe.” He went on to worry about “rising and volatile food prices.” Other world leaders’ remarks are similar: French President Nicolas Sarkozy