Many people often remark to me as to why I bother writing about the Federal Reserve and its monetary policies. After all, its policies don't really effect people in the world away from the financial markets.
But it does...in a big way.
The head of the Federal Reserve Ben Bernanke is the leading general in the global currency war. He has resorted to never-before-seen levels of printing dollars. Why?
There are two main reasons: the first is to bail out the big Wall Street banks from the disastrous and reckless decisions they made over the past decade.
The second reason is to force China to revalue their currency upward to supposedly make US industries more competitive.
But when you indiscriminately "carpetbomb" the world with bombs filled with US dollars, there is bound to be "collateral damage".
The Fed and Geopolitics
Somwhow money bombs Mr. Bernanke aimed at China ended up landing in the Middle East and North Africa, blowing up regimes there.
The Fed's printing of trillions of dollars has led to inflation all over the globe. It has been one of the key factors pushing up the price of much-needed commodities.
Basic necessities such as food and fuel have risen sharply since the Fed began its quantitative easing or money printing. Especially in some of the poorer emerging markets.
In many cases, this has led to food riots. For some reason, hungry people seem to be ill-tempered and have no stomach for the empty promises of politicians.
On January 14, 2011, Tunisian president Zine al-Abidine Ben Ali was driven out by popular revolt. He had been in power for 23 years, but rising food prices were the last straw for the people of Tunisia.
Right now, we are seeing a similar uprising in Egypt. Rising prices for the basic necessities of life are leading to an uprising against Egyptian president Mubarak, who has been in power since 1981.
The regime change in Tunisia and the possible one in Egypt is sending shudders throughout the leaders in that region.
Of course, any turmoil in that region of the world will send oil prices higher. So besides Ben Bernanke's dollar debasment raising the price of oil, now we have geopolitics, largely thanks to the Federal Reserve, also raising oil prices.
The Fed's Policies Are Bad
Even if regime changes bring about "democratic" governments, these governments will most likely not be friendly to the United States.
It does not help that the United States firmly supported autocratic regimes such as in Egypt.
But thanks to the internet, blogs and other technology, people around the world have a better understanding of what is going on around them.
US economic policies are not popular anywhere in the globe. Even allies in Europe and Japan are highly critical of the Federal Reserve.
Even more important for the long term, big important emerging market countries including China, India, Brazil, Russia, Indonesia and others are highly critical of US monetary policies.
Now we can add countries from Africa and the Middle East to the list of countries which feel that the US pushing its problems on to the rest of the globe and making other people suffer.
People around the globe now know that the Fed's mometary policies are pushing up the cost of living to all of their citizens. And to what end? So Wall Street firms can keep getting paying out million dollar bonuses?
If this keeps up, the US will be left without a friend in the globe. Thanks, Mr. Bernanke.