By Andrew Lilicoat at The Telegraph
It is possible to join the dots between the Fed’s second phase of quantitative easing and the revolutions in the Middle East.
Graph 1. Source: IMF food price index, Bloomberg, Europe Economics
One curious aspect of recent events in the Middle East and North Africa is how unwilling most commentators have been to join the dots between the Federal Reserve’s second phase of quantitative easing and these revolutions. I’m less queasy. Of course, all revolutions have many causes, and I don’t mean to belittle the achievements of brave non-violent protesters, desperate self-immolators, or saloon-car rifle-wielders. But, as a trigger and driver of these events, the Fed seems very clearly to have achieved more in the Arab world in six months than the Pentagon achieved in decades.
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There is a long-established relationship between food prices and the likelihood of revolution, as we see in Exhibit 2 (courtesy of Paul Mason’s blog – click here for the chart).
When food prices rises faster, revolutions become more likely.
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