http://online.wsj.com/article/SB10001424...10028.html

I also noted very little mention of speculation causing the prices to rise. Obviously not something you want to say when talking to the WSJ. Blame everyone else but Wall Street.

I'd submit the major cause of rising prices has been the increase in the money supply to pay for 2 wars and a ton of bailouts.

this isn't some big revelation. if we're going to use ethanol, it should be sugar based, but i assume our ridiculous sugar tariffs won't allow that

(05-01-2011 01:51 PM)RobertN Wrote:  I also noted very little mention of speculation causing the prices to rise. Obviously not something you want to say when talking to the WSJ. Blame everyone else but Wall Street.

Speculation is not the cause, a lot of the raise in commodity prices is due to increasing demand from China, India and Brazil. That and the dollar returning to the Bush era lows.

Not food, but fuel. Ezra Klein of the Washington Post explains way several energy economist think the run up in fuel prices is not due to speculation.

Quote:James Hamilton “Speculation is a convenient scapegoat for people who can’t be bothered to look seriously at the numbers."

Quote:On the demand side, China — and other developing nations, but mostly China — is the 800-pound gorilla in the room. “China was a net exporter of petroleum up through 1992, and its imports were still only 800,000 barrels a day in 1998,” writes Hamilton. “By 2007, however, China’s net petroleum imports were estimated to be 3.7 mbd, making it the world’s third-largest importer and a dominant factor in world markets.”

Speculation is involved, but it is not the cause, it is the result of other fundamental factors--growth of Asian economies, fall of the dollar, turmoil in middle east, and, yes, US prohibitions on drilling. Without those factors, there would be no speculation. With them, there is price instability with or without speculation.