A
financial and currency crisis could cause a collapse in world trade.
Part
2
How
Trade could Collapse
Having
examined in part 1 the effects that floods and drought can
have on national and international food markets with potential
repercussions for Britain, we need to look at the possibility of a
financial crash that would affect trade and the import of alimentary
products to the United Kingdom.
In
the event of another bailout of one or more banks in Europe or
Britain, a decision to print more currency, known as Quantitative
Easing, be it in the eurozone or in Britain, could tip the balance
and trigger an overnight depreciation of the euro or the pound. As
both are major currencies, even if one of these spiraled into
uncontrolled devaluation, the snowball effect would likely hit the
share markets and cause a worldwide reaction involving all other
major currencies, the stock exchange and the trading in bonds
and securities.
In
Britain alone, Quantitative Easing, which is carried out by the Bank
of England with the approval of the Government Treasury, has totaled
£375 billion since 2008, and served mainly to alleviate the consequences of the UK banking crash that took place that year. Other countries
too printed enormous sums of money in 2008 – and thereafter – in
order to prevent their economies going into bankruptcy as a result of
bank insolvencies.
So
another spate of money-printing to patch up a banking insolvency
could certainly tip the balance and cause a major currency to
nose-dive overnight into devaluation, bringing down the international
stock exchange and all dealings in bonds and derivatives, and causing
shares to plummet in value.
However,
basic commodities such as metals, oil, gas and food products would
not fall in value, only the currencies needed to purchase them. These
commodities would become more expensive, as a larger amount of
devalued currency would be required to pay for them, or, they would
simply become priceless, as paper money and digitally printed money
may become too worthless to buy them.
No
Gold, no Food
Basically,
producers of food products and any other essential commodities could
demand payment in a tangible counter-value, such as gold, or even
silver, or any other metal for that matter. Or they could demand
payment in rice, or in grain, or in other forms of alimentary
produce. And because fiat currencies are not gold-based, but are
calculated as mere paper value in relation to economic wealth and
production, their only value in the Western world is based on debt,
the reason being that public and private debt in most Western
countries, including Britain, is way, way beyond the value of the
annual budget, and even greater than GDP (gross domestic product).
Potentially,
Britain could be deprived of the possibility to import agricultural
produce, and even internal trading between firms within the Country
could be severely compromised, such as between farmers, food
processing firms and shops.
Once
the financial market were to collapse, the whole economy would be
affected, and food rationing would become an urgent necessity.
British
Party proposes an urgent agricultural policy to assure food is
available in Britain in times of any crisis.
Written by D. Alexander
Part 1: Emergency Response to Food Shortage, floods and drought
http://celticbritannia.blogspot.co.uk/2013/03/british-party-emergency-response-to.html
Part 3: Britain and the Food Crisis, community farm assets
http://celticbritannia.blogspot.co.uk/2013/03/british-party-britain-and-food-crisis.html
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