How Goldman Sachs Created the Food Crisis
May 5th, 2011If I buy a wheat contract, I should have to take delivery of the physical wheat on the specified date. If I sell a wheat contract, I should have to deliver the physical wheat on the specified date. I should not be allowed to buy or sell those leveraged contracts without having to take delivery, or deliver, physical goods. I shouldn’t be allowed to close my position without an exchange of goods.
The same should hold true for gold, coffee, palladium or any other commodity.
It is absolute madness that commodities are bought and sold using leveraged vehicles in markets that allow participation by speculators; individuals and organizations who have no interest or connection to the underlying physical commodity.
Via: Foreign Policy:
Don’t blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street’s at fault for the spiraling cost of food.
Bankers recognized a good system when they saw it, and dozens of speculative non-physical hedgers followed Goldman’s lead and joined the commodities index game, including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers, to name but a few purveyors of commodity index funds. The scene had been set for food inflation that would eventually catch unawares some of the largest milling, processing, and retailing corporations in the United States, and send shockwaves throughout the world.
Related: World Food Prices Rise to Near-Record High as Inflation Speeds Up
Research Credit: coxsone, tired taurus
“We pay for the water we drink, And our wood comes at a price.” Lamentations 5:4
“That which has been is what will be, That which is done is what will be done, And there is nothing new under the sun.” Ecclesiastes 1:9
“The prophets prophesy falsely, And the priests rule by their own power; And My people love to have it so. But what will you do in the end?” Jeremiah 5:31