Food-sufficient countries frequently possess a vibrant internal market culture. This is a way of life driven by farming and associated commercial activity. Food and drink are critical for human existence and form a major part of household budgets for the mass of the population.
Rising food prices are a major contributor to inflationary pressures. People cannot choose not to eat.
At a time of rising prices that diminish the standard of living, food-sufficient countries are better able to control inflationary pressures. This is because inputs into what their food markets produce derive from within the country’s borders. These primary resources are easier to manage as they derive from home soil and local labour. When inputs are imported, people abroad decide local prices.
Countries that can feed themselves from their own resources possess good employment numbers owing to the fact that a significant percentage of the population is engaged in farming, the sale of farm produce, and related economies. The preceding is a secure, predictable, and steady source of national income.
Now, economics is about human and social behaviour. What the majority of the population perceives to be real becomes reality. Economics is self-fulfilling prophecy: “What I believe will happen will happen.”
In an inflationary environment, consumer demand frequently outpaces supply, leading to shortages. That supply shortage is also public perception. Perception drives economics. Presently, pundits believe the current inflation is demand-driven, despite the clear supply shocks from the pandemic and the war in Ukraine.
Supply shortfall corrects by increasing the price of supplies in the dance between demand and supply. This price correction reduces consumer demand, all other things being equal.
That is the theory, though there are also Keynesian believers who assert that inflation is a supply-side phenomenon created by powerful producers to maintain and even increase profit margins. The preceding are core explanations for inflation.
The unthinkable has become possible. The tyrant in the Kremlin has threatened nuclear war against the West. Although this possibility remains remote, a nuclear event would mean Russia ceases to exist — and may well end the rest of humanity as well.
Wise leaders in peacetime prepare their countries for the worst as part of good governance culture.
The tyrant’s actions have caused supply shocks to energy and food. Moreover, net importing countries and territories such as the Virgin Islands fare worse than countries and territories that are able to satisfy their consumer needs from their own internal resources when there is regional or world crisis.
In time of crisis, it is better to be a net exporter than a net importer, especially of food, energy, and essentials. Hurricanes Irma and Maria exposed the vulnerability of import-oriented economies when disaster strikes. The VI had to depend on external agencies to rescue the territory from destruction and disaster.
Resource-sufficient countries that produce much of what they consume from within their borders fare better when the wolf comes knocking at the door.
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