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This takes forever to get to the point, is based on a poor understanding of forwards and why they're necessary, it's not hacker news, the title is a troll, get
by cturner 16y ago
This takes forever to get to the point, is based on a poor understanding of forwards and why they're necessary, it's not hacker news, the title is a troll, get rid of it.
In 2006, financial speculators like Goldman's pulled
out of the collapsing US real estate market, and they
were looking for somewhere else to make their stash of
cash swell.
The reason food was going through the roof was because at the beginning of 2007 everyone though the next big thing was going to be inflation, and wheat is a hedge against that. Go search back through covers of The Economist if you don't believe me.
- ig1 16y agoAlso an important point about wheat derivatives is that they're deliverable. At the end of the day you're going have someone with bales of wheat in a warehouse they have to sell at profit to the derivative price. So a high derivative price can only be supported if people are paying the higher price for the underlying product in the end.