Prophetic Times

Financialization of Food

Feb 17, 2012

By Jeff Wehr
During 2011, a number of global events affected the US economy. There was the “Arab Spring,” and some feared it may affect the flow of oil. The Japanese earthquake and tsunami also created global fears. Then there were all those record-breaking natural disasters in America. There was the Standard and Poor’s downgrade in August. Throughout the year, stress levels went up as we discovered that many European countries had poor economic viability. With less confidence in US greenbacks, and even less confidence in the Euro, we may begin to see people store their money in physical assets like soybeans that can be stored for three to four years. As people become more and more wary of insurmountable government debt and paper currencies with no physical assets behind it, we may begin to see the financialization of food. This would raise the question, How will it affect food prices?

The dramatic rise in the value of gold can serve as an example. In March, 2011 gold hit $1,400 an ounce. Then it nearly hit $1,900. But you cannot eat gold. It doesn’t pay dividends. So why do people buy it? It is because they have lost their trust in paper currency and find gold to be a more reliable asset.

Paper currency is only as valuable as people are willing to believe it is worth. If people lose confidence, they reduce their spending, which slows down the economy, which leads to unemployment, and the downward spiral continues. The government then prints more money, which decreases its value even more. People lose even more trust in paper currency and start buying things that have apparent value like gold, soybeans, and other commodities which will always be in demand. Again the question arises, What will this do to food prices? We will have to wait and see.

But we do know what will happen to gold. “Men are heaping up treasures of gold and silver to be consumed by the fires of the last days.” Ellen G. White, Review and Herald, June 2, 1903.

“In that day a man shall cast his idols of silver, and his idols of gold, which they made each one for himself to worship, to the moles and to the bats; To go into the clefts of the ragged rocks, for fear of the LORD, and for the glory of his majesty, when he ariseth to shake terribly the earth. Cease ye from man, whose breath is in his nostrils: for wherein is he to be accounted of?” Isaiah 2:20–22.