A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Focus on issues

Do not look for the most powerful man in the world, it’s a woman!



Thierry Pouch,

Permanent Assembly of the Chambers of Agriculture (APCA)



Will the United States have to bow down to China’s hegemonic power? It is highly doubtful since the North-American continent draws on powerful assets which, in spite of its economic slowdown, give it a commanding international presence, such as the Fed––the American central bank, one of the most authoritative organizations in the world. As explained by Thierry Pouch in a recent editorial we are publishing below
1, it can swing the world economy one way or the other, as well as disturb or allay financial markets, especially agricultural commodity markets.

Sworn into office this past February 3, a woman now serves as Chair of the Fed––Janet Yellen––whose every declaration will make markets shake or tremble, just like her predecessor whose monetary policy she intends to pursue. As an example, this past September 14, the Fed issued a monetary policy statement that was eagerly awaited by financial markets. A decision all the more crucial since, against all expectations, the Fed was announcing it was extending its support into the American economy, when several weeks earlier markets were panicking at the idea of a possible scaling back of its asset-purchase program. Yet since January, the Fed has started to progressively taper these infusions of cash into the economy.

This mighty power of the Fed on financial markets is one of the most telling illustrations of the psychological weight of participants, especially in financialized agricultural markets. It plays an increasing role in the formation and evolution of prices, and contributes to worsen the structural volatility of agricultural prices.


momagri Editorial Board






Some observers see the current crisis as a hegemonic transition phase. Is China going to replace the United States, as the latter did when England faltered? Several indicators are pointing in that direction, even though the process might be a lengthy one. Except that there is in the United States an organization that is still one of the more powerful in the world, and can swing the world economy one way or the other. It recently celebrated its centennial and is preparing to be led by a woman. This is the American Central Bank––the Federal Reserve, more commonly known by the three letters Fed.

Several macroeconomic indicators are showing that the American economy is on a relative declining path––lowered impact in global industrial production, declining share of imports in global trade, and decreasing percentage of dollars held by central banks for reserves. At the same time, China’s assertion on the international economic scene raises the issue of replacing the United States as hegemonic powerhouse, a topic that has gained some substance since the onset of the economic turmoil in 2007.

However, there is an organization that keeps the American power over the global economy intact. We are talking about the Fed––the powerful central bank. It is authoritative in as much as only one of its statements can stall or create euphoria in financial markets. The most recent example is the statement made this past May by retiring Chair Ben Bernanke regarding the possible Fed reduction of asset purchases, thus generating a financial upheaval and the fall of some currencies such as the Brazilian real, the Turkish pound or the Indian rupee. Contrary to the International Monetary Fund (IMF), the Fed does not have any competence outside U.S. borders. As a financial institution, it does not have any other objective than monitoring inflation and employment, which by the way differs from its European counterpart whose sole mission is to preserve price stability! Another example of the Fed’s influence on the world economy is its responsiveness. As a recognized authority on the 1929 economic collapse––his Ph.D. research work focused on the topic––Ben Bernanke quickly reacted by conducting massive cash injections in the American banking system that was grinded to a halt since the subprime mortgage crisis in August 2007. What has been called the Quantitative Easing was most useful, and allowed the banking system to continue lending money, and even allowed to restart real estate activities.

Established on December 23, 1913 as a result of the acute financial crisis of 1907, the Fed is therefore an institution––and a lender as a last resort––that is both feared and of which much is expected in the midst of a crisis. Why does it have this ability to influence the course of the global economy? Because it reflects the standing of the American economy, which, even while it is declining, still remains the hegemonic power.

Taking this further, the power of the Fed is also linked to the ranking of the dollar, which has been the vehicle currency since 1944. The dollar is the denomination for most commodity prices, is still the currency for close to 90 percent of trade transactions, and represents 62 percent of currency reserves worldwide. Last but not least, the Fed also represents the clout of the American market capitalization––nearly $15,000 billion for Wall Street against 3,850 for the London’s City and only 3,400 for Tokyo.

As he is leaving this organization, Ben Bernanke has been one of the world most powerful men, just as his predecessors were. Janet Yellen, who will assume the Fed leadership in February 2014, thus becoming the world’s most influential woman, is replacing him. We must prepare for a review of the monetary policy, since buying $85 billion in bonds every month for the past several years has generated some opposition. Besides the fact that the recovery of the American economy justifies it, the Quantitative Easing has been at the root of speculative bubbles that have more or less affected agricultural prices. With in the background, the start of the advance of the Yuan, the Chinese currency…


1 Thierry Pouch’s complete editorial is available from http://www.chambres-agriculture.fr/fileadmin/user_upload/thematiques/Economie/LetEco1401.pdf
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Paris, 19 December 2018