Quote:
Originally Posted by mynameisjim
It's not a conspiracy, but the problem is the concentration of wealth. A few firms control a majority of the money these days. For example, it's not at all unusual for one or two firms to hold over half the oil futures. So there doesn't need to be any collusion, when one huge group of investors makes a move, the rest will follow suit and it only takes a few to follow suit. They move their own market.
Another issue is that EVERYBODY invests in oil now, not just those involved in the oil industry. Hedge funds, sovereign funds, banks, they all invest in oil now which is not the way the oil market was meant to function. So all that money drives the price up artificially. It's like if one day every single American decided to invest $10K in the stock market, the market would surge.
Same thing with food prices. The super wealthy are sitting on so much cash they don't know what to do with it. Starting a new business is a waste of time so they are investing in commodities, artificially driving up the prices, and making a fortune.
The value of the dollar plays a part in this as well.
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Commodity futures are a zero sum game and derivatives never dictate the price of the underlying. In this case, the underlying is oil. Sure, institutions who hold a ton of futures contracts can somewhat manipulate the daily fluctuations of the contracts, but they can't dictate the cost of the underlying.