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He did mention it somewhat. Since the funds were only required to store 5% of their clients' money in the actual commodity, they could stash the rest of the mon
by thaumaturgy 15y ago
He did mention it somewhat. Since the funds were only required to store 5% of their clients' money in the actual commodity, they could stash the rest of the money somewhere else safe, and then on top of that make money on transactional costs.
From another article I'd read before (which I linked to down below, and which is gone now), the funds made quite a bit of money in the rollovers by charging a fee to every investor who wanted to roll it over. Since none of their investors actually wanted a dump truck of grain showing up in their driveway, and since the price kept going up and up and up, they paid the fee to roll it over each time.
Somebody probably did lose their shirts, but it sure wasn't the funds, and the funds won't have any trouble doing this again, because there will always be more customers eager to park money somewhere to make more money.
- justincormack 15y agoPeople lost some money after 2008, although prices are now approaching the peak levels again. However, the key point is that your pension fund may not care, they are buying because of the negative correlation with other assets, and positive correlation with inflation, as the 2005 paper mentioned demonstrated. Pension funds are where this money is coming from now, and where the trillions of dollar figures talked about would come from, as they get persuaded that this is a real investible asset.
- Cushman 15y agoFood didn't get harder to make, but the price of food went up around the world, and it still hasn't gone down to what it should be. Is there really any confusion as to who lost their shirts?
- Tloewald 15y agoThere's an old economist joke that goes like this: What happened whe the Soviet Union gained control of the Sahara desert? For five years, nothing, then a shortage of sand. It seems we can replace Soviet Union in such jokes with Investment vehicles.
- Cushman 15y agoI don't see any reason to distinguish them. A free market means a free market. When one monolithic organization with access to controlling capital makes its goal not to preserve the freedom of the market, but to extract value from the rest of the market for itself and its shareholders, that's not a market. That's a centrally planned economy. The bankers have turned Communist oligarchs in all but name.
- z0r 15y ago> When one [...] organization with [...] capital makes its goal [...] to extract value from the rest of the market for itself and its shareholders Nope, just a regular capitalist enterprise
- Cushman 15y agoAnd fascism is just a regular government, and secret police are just regular police, and martial law is just regular law... You know -- since I've got you here anyway -- I've always wanted to tell you how much I loved your novels, Mr. Orwell.
- dantheman 15y agoActually you are incorrect, a free market is one in which people voluntarily interact for mutual gain, i.e. it is not coercive. If their is government interference then it is not a free market, cornering a market does not make it any less free if done solely through voluntary trade.
- Cushman 15y agoSo if I'm born into a world where someone has cornered the market on, let's say, food, and their perfectly rational strategy is to choose not to sell food to anyone who competes with them, I'm not any less free to compete than if one person didn't get to make that decision? Get outta here with that.
- 15y ago