[lbo-talk] Once again, food prices

[brad]

SA wrote:
I don't know much about the commodities markets, but in the run-up to
the crisis, there was a major boom in prices. Many people blamed it on
speculation. That might be true, but note that prices then collapsed
when the crisis hit - even though the "amounts of money" available to
invest had massively *increased*! (Because of monetary easing,) So the
boom and the collapse were both about changes in perceptions and
expectations, not about changing amounts of money.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
This is actually not what happened.  The run up in prices was followed
by a huge reduction in speculative investement and the popping of the
commodity bubble in 2008.  The money moved from commodities into
treasuries and caused the US dollar to rise, which added further
deflation of commodities (because they are priced in US$).  The Senate
report outlines this pretty clearly.
http://levin.senate.gov/newsroom/supporting/2009/PSI.WheatSpeculation.062409.pdf
Ghosh is pretty good on this too:
http://triplecrisis.com/frenzy-in-food-markets/

Brad