Quote:
Originally Posted by LostCause
It's called inflation. Commodities seem more expensive because the dollar has significantly devalued. It's the price to pay to avoid economic catastrophe following dishonest lending.
Speculation is going on, but I wouldn't claim it to be the driving factor.
- LostCause
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There's more to it than dollar devaluation, which is a major but not the only component. Increasing demand in the face of relatively fixed supply is another major factor.
Trouble is, the commodity speculators including hedge funds and Goldman Sachs are manipulating the market and hording, or otherwise generating a self-fulfilling prophesy to their own advantage. Some economists attribute this additional pressure to account for ~30% of currently high prices.
OTOH, the speculators may get their asses handed to them if prices head south as the speculative bubble bursts. Then, they'll be trampling all over each other heading for the exits, so as to avoid being stuck with inventory they cannot unload. Markets go down a lot faster than they go up, as fear motivates better than greed.
Go on NPR and listen to the Diane Rehm show on Monday or Tuesday of this week, for an expert explanation.