[lbo-talk] Fed driving commodities bubble?

Shane Mage shmage at pipeline.com
Mon Apr 11 11:59:27 PDT 2011

> On Apr 11, 2011, at 1:12 PM, Doug Henwood wrote:
>> On Apr 11, 2011, at 1:06 PM, Shane Mage wrote:
>>> Price counts for many things--but whatever the price the identity
>>> of long and short intersts remains.
>> So what?
> My point was that the graph allegedly showing QE driving up prices
> would be the same graph if it used short rather than long interest.
> And the question then is, why does anybody claim that it shows what
> it *obviously* does not?
>> If buyer and seller agree to a price today that's 3% higher than
>> yesterday, the identity remains, but the price is up. And when
>> thousands of new buyers come in, prices tend to rise.
> That's the nature of a speculative bubble--because prices are seen
> to be rising "thousands" of relatively less-informed speculators buy
> future goods because they expect prices to go on rising long enough
> to make a killing while some fewer but richer other speculators, at
> a certain stage better-informed or better positioned, sell them
> those future goods (applying the Rothschild maxim, leave the last
> ten percent to the marks). And once that ten percent of the price-
> rise has occurred the price collapses back to or below its starting
> point, leaving the "Rothschilds" even richer while the marks have
> lost their shirts. Stiglitz got a Nobel Award essentially for
> pointing out the obvious fact (not undeservedly, since scientific
> discovery is basically recognition of obvious realities that self-
> interest or ideology have kept everybody from paying attention to)
> that differential access to and control of information are
> determinant in that sort of market behavior.
>> But of course, it violates a certain Vol. 1 fundamentalism that
>> finance can influence the real world.
> Ever since the days of John Law (three centuries ago) the mechanics
> of speculative markets have been well known (at least to perceptive
> economists as well as to the "Rothschilds"). What has that to do
> with Kapital, v.1? Is the sneer meant to dispute Marx's contention,
> as explicit in v.3 and Theorien as in v.1, that finance produces no
> surplus-value or, as we put it now, is a "zero-sum (excepting the
> vigorish) game?"
> Shane Mage
> "All things are an equal exchange for fire and fire for all things,
> as goods are for gold and gold for goods."
> Herakleitos of Ephesos, fr, 90
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