A financial and currency crisis could cause a collapse in world trade.
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
Part 3: Britain and the Food Crisis, community farm assets