Revolution Is Coming to a Country Near You
by Ciaran Ryan
What do Syria,
Egypt, Jordan, Morocco and Algeria all have in common?
violent street protests or outright revolution, they are the world’s
most profligate printers of money.
and Austrian-leaning economic research house ETM
Analytics recently put out some research that looks at the economic
triggers behind social upheaval. Rather than looking at the more
obvious political causes of violent revolution, the research shows
that those countries with the money printing presses in overdrive
are also those experiencing – or about to experience – massive social
Take a look
at the accompanying graph and make your own deductions. It’s no
surprise that Syria tops the list, with a Continuous Commodity Index
(CCI) inflation rate of 60% since the start of 2010. Next comes
Turkey, Brazil, South Africa and Argentina with CCI inflation of
30-40% over the same period.
It’s true that
apart from Syria, none of these countries have experienced anything
like the kind of upheaval in Egypt, Tunisia and Syria. Not yet,
at any rate.
Using the same
methodology over a longer time frame, ETM concludes that monetary
looseness is a key trigger for social unrest. The second graph shows
which countries were printing money the fastest since 2009: Morocco,
Syria, Algeria, Egypt, Jordan and Tunisia. Each of these countries
subsequently experienced social upheaval or outright revolution.
It is therefore fairly safe to assume that the big money printers
over the last 12 months can expect heightened social tensions in
the coming months. It’s already happening in Argentina and in South
Africa, where dozens of striking mine workers were gunned down by
police in August 2012.
as a predictor of social unrest is particularly applicable to emerging
economies such as Brazil and South Africa where inflation has eaten
into the incomes of poor households.
CCI is used
as a more immediate measure of inflation than more conventional
measures such as the Consumer Price Index (CPI). The CCI is a basket
of some 19 commodities, including food, fuel, industrial commodities
and precious metals. It reflects inflationary trends almost
immediately on the basis that monetary expansion debases the currency,
resulting in higher costs of commodity imports such as fuel and
food. CPI, on the other hand, covers a much wider basket of goods
such as housing costs, clothing and technology, costs which form
an insignificant part of the spending of low income households.
expansion as a predictor of social tension – countries that printed
money the fastest were more likely to experience mass protests.
mass unrest broke out across the Middle East in early 2011, the
central banks of those countries had presided over substantial monetary
inflation that resulted in huge increases of raw commodity prices,
which the lower income groups of any population spend most of their
incomes on," says ETM Analytics.
also suggests that emerging countries’ central banks are attempting
to inflate their way out trouble now spilling on to the streets.
The one monetary delinquent which seems to be the exception to the
rule is the U.S., which until March 2011 was the fifth worst offender
on the list. It has since slowed down the printing presses relative
to other countries.
Based on monetary
inflation trends over the last two years, those countries most at
risk of social upheaval in the coming months are Turkey, Brazil,
South Africa, Argentina and India.
already suffering investment flight due to mine labour problems
and regulatory strangulation, is likely to face more social unrest
going forward, conclude the authors of the research. "The (South
African) Reserve Bank continues to focus on headline measures of
price inflation, i.e. the consumer price index, to dictate monetary
policy. Meanwhile, raw commodity prices that feed straight through
to higher food and fuel prices that reduce the disposable incomes
of low income earners and unemployed people by the most continues
to rage, which risks fuelling even more unrest going forward."
is obvious: watch money supply growth rather than twitter traffic
if you want to locate the next global hot spot.
back to 2009, look who was printing money before riots spilled on
to the streets:
[send him mail] is a
Johannesburg-based writer and mining entrepreneur with an Austrian
© 2012 by LewRockwell.com. Permission to reprint in whole or in
part is gladly granted, provided full credit is given.