3 ms·

If it is common knowledge, then why make an infographic about it? I don't see that "certainly" you mention. Rather, there are lots of factors that seem to threa

by Tichy 15y ago

If it is common knowledge, then why make an infographic about it? I don't see that "certainly" you mention. Rather, there are lots of factors that seem to threaten food supply in the future (isn't the latest scare the depletion of phosphor?). Also other than a failed startup, a ton of wheat still sticks around if you buy it. You can either sell it off or let it deteriorate (for a 100% loss). Sure, you can try to artificially shorten supply and drive prices up that way. It is an age old economic strategy, but as far as I know it has never really worked before (from what I remember from economics textbooks). It would only work for a very short time. Say you hoard rice this year and sell only a little rice at exorbitant prices. Peasants the world over would increase their rice production, so next year there would be a lot more rice, plus your warehouses are already stocked to the ceiling with rice from last year. The prices will now be low - either you sell your rice for cheap, or you throw it into the river. In both cases, the attempt was not really worth it.

crdoconnor 15y ago
>If it is common knowledge, then why make an infographic about it? Because I can't be bothered? >Sure, you can try to artificially shorten supply and drive prices up that way. It is an age old economic strategy, but as far as I know it has never really worked before (from what I remember from economics textbooks). It would only work for a very short time. Say you hoard rice this year and sell only a little rice at exorbitant prices. Peasants the world over would increase their rice production, so next year there would be a lot more rice, plus your warehouses are already stocked to the ceiling with rice from last year. The prices will now be low - either you sell your rice for cheap, or you throw it into the river. In both cases, the attempt was not really worth it. If I'm understanding you correctly, a similar argument was made in 2007 - it's actually really expensive to hoard millions of barrels of oil (which is what was assumed if people were speculating), it wouldn't be easy to hide and nobody had really found any evidence of it. I think Paul Krugman made this argument. Then the bubble went POP pretty spectacularly. I think Krugman eventually admitted he was wrong there. Hoarding wasn't necessary as the price increases from the futures market were transmitted to the actual market for oil (since most oil is bought on futures anyway, very little is bought at spot price) and the speculators weren't actually taking delivery of the oil they were just rolling the contracts forward. I assume a similar dynamic is in play for wheat right now.

by Tichy 15y ago

crdoconnor 15y ago

>If it is common knowledge, then why make an infographic about it? Because I can't be bothered? >Sure, you can try to artificially shorten supply and drive prices up that way. It is an age old economic strategy, but as far as I know it has never really worked before (from what I remember from economics textbooks). It would only work for a very short time. Say you hoard rice this year and sell only a little rice at exorbitant prices. Peasants the world over would increase their rice production, so next year there would be a lot more rice, plus your warehouses are already stocked to the ceiling with rice from last year. The prices will now be low - either you sell your rice for cheap, or you throw it into the river. In both cases, the attempt was not really worth it. If I'm understanding you correctly, a similar argument was made in 2007 - it's actually really expensive to hoard millions of barrels of oil (which is what was assumed if people were speculating), it wouldn't be easy to hide and nobody had really found any evidence of it. I think Paul Krugman made this argument. Then the bubble went POP pretty spectacularly. I think Krugman eventually admitted he was wrong there. Hoarding wasn't necessary as the price increases from the futures market were transmitted to the actual market for oil (since most oil is bought on futures anyway, very little is bought at spot price) and the speculators weren't actually taking delivery of the oil they were just rolling the contracts forward. I assume a similar dynamic is in play for wheat right now.