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I would say that if we have a systems of states that allow speculation to run up the prices on food and thus cause starvation, it is an example of a bad system of states.

With help from b at MoA I found that William Pfaff argues that speculation is a great part of the current price hike:

William PFAFF-The Speculators Driving Food Price Rises - Columns - News


On the Chicago CME Group market, which deals in some 25 agricultural commodities - it is a merger of the former Chicago Mercantile Exchange and Chicago Board of Trade - the volume of contracts has increased by 20% since the start of the year and now has reached the level of a million contracts a day. This will soon exceed the rate of growth reached in all of 2007.

The hedge funds are now active in commodities and are playing the futures contracts, where upwards of 30 million tons of soybeans for future delivery are contracted for every day. They are also buying the companies that stock grains.

The argument sometimes is made that this speculation is unimportant because the futures speculators will never take delivery; but this is precisely the problem. It is why this speculation is highly destructive of the true market.

Futures purchases of agricultural commodities classically have been the means by which a limited number of traders stabilized future commodity prices and enabled farmers to finance themselves through future sales.

Speculative purchases have no other purpose than to make money for the speculators, who hold their contracts to drive up current prices with the intention not of selling the commodities on the real future market, but of unloading their holdings onto an artificially inflated market, at the expense of the ultimate consumer. Even the general public can now play the speculative game; most banks offer investment funds specializing in metals, oil, and more recently, food products.


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by A swedish kind of death on Thu Apr 17th, 2008 at 07:59:02 PM EST
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