An Aussie economist has issued a stark warning to the nation that its food supplies could begin to run out in just months, as the ongoing war in the Middle East wreaks havoc on supply chains and trade routes across the world.
Dr Steve Keen, a critic of mainstream economics best known for predicting the 2008 market crash years in advance, appeared on The Diary of a CEO podcast this week.
The financial guru discussed the war and its impact on the global economy in a wide-ranging chat with entrepreneur host Steven Bartlett that quickly racked up millions of views online.
Dr Keen said the ongoing closure of the Strait of Hormuz was not only hampering fuel supplies, but also the amounts of fertiliser needed for global food levels.
About a third of seaborne fertiliser trade passes through the Strait, which has seen limited traffic pass through it this week despite assurances the key waterway was open for business following a fragile ceasefire between the United States and Iran.
Dr Keen warned without a quick resolution to the war and the Strait being reopened without restriction, the situation could lead to famine in multiple countries within two months, including Australia.
About 70 per cent of Australia’s urea fertiliser supplies are imported.
“It sounds ridiculous … but Australia is one of the most vulnerable countries (for food supply),” Dr Keen told news.com.au.
“The amount of food we grow is largely determined by the amount of fertiliser we apply. … If the fertiliser arrives late or you don’t have enough to cover the plan you need to feed the population, you’re not going to be able to feed them.
“Then, if you have a 50 per cent fall in (crop and grain) yields, then we’re going to be having starvation in the countries where that happens.”
Dr Keen issued a caveat that Australia could rely on its significant food exports for domestic consumption for some time, and that he was more concerned about fertiliser supplies “for India, Africa and even parts of Europe”.
He added fuel supplies, especially diesel, should be diverted and prioritised for farmers and agricultural suppliers who need to transport food around the country for commercial and household use.
“If you run out of fertiliser and you have a drop in field yields, and then you can’t even ship the food to where it’s supposed to be processed or eaten, (that creates) serious problems.”
Fuel should be rationed, diesel cars ‘turned into statues’
As service stations across Australia experience shortages of fuel and diesel prices surge well over $3 per litre, Dr Keen suggested supplies needed to be used responsibly and in a measured way.
“Fuel rationing should already be happening, and diesel in particular should be rationed so it goes to the (regional areas), not the city. We should only have diesel for strictly commercial purposes,” he said.
“Diesel cars in the city should be turned into statues until this is resolved.”
He suggested some industries may have more precedence for fuel supplies over others, which could affect areas such as retail trade.
“You have to rank industries based on how critical they are for the continuing function of the rest of the economy,” Dr Keen said.
“It’s time for second-hand shopping, not brand new clothing. So diesel for the textile industry (is a) low priority, while diesel for the food industry is a hot priority.”
Dr Keen conceded this would have a significant impact on Australians’ livelihoods, but given the volatility of the situation in the Middle East, he could not rule out any measures as being impossible.
“We don’t want to run out of petrol or diesel, but we quite possibly could, and the question is (around) which industries matter, or which are (more) critical,” he said.
Bitcoin ‘headed for zero’
Dr Keen also warned Aussies that climate change and the global energy crisis could soon see the value of cryptocurrencies such as Bitcoin plunge to zero.
He said cryptocurrencies consume some of the highest amounts of energy on the planet because of the computing hardware power needed to perform transactions and maintain operations. Bitcoin also accounts for less than 1 per cent of all global wealth, according to financial estimates.
As the climate and energy crisis intensifies, governments will target high-energy consumers and limit their activities, and Bitcoin will be one of them, according to Dr Keen.
“I can say at some point … there’ll be a panic by authorities about energy consumption and there’ll be a decision to cut back on any frivolous use of energy whatsoever, and on that basis Bitcoin is in the frivolous category,” he said.
“(Bitcoin) is a tiny minority of economic activity.”
While he thought Aussies should not be concerned for the immediate future of Bitcoin, Dr Keen advised anyone who has invested in Bitcoin and other cryptocurrencies to monitor the market and be wary of changing conditions.
“You’re hanging onto it, you’re gambling over it. It’s your speculation,” he added.
“Basically, do your own research … and (consider) looking outside the Bitcoin world.”