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A small note for idiots everywhere on commodities

WE’VE been told, again and again, by the likes of the World Development Movement, Oxfam, Action Aid and all the rest, that more speculation in commodities leads to higher prices for commodities.

It’s the weight of money argument: more money being played with then obviously prices must go up.

Of course, every economist who has actually looked at the question has insisted they’re spouting garbage. More speculation can mean higher, lower or the same prices: depends which way people are betting, not how much is being bet.

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Posted: 12th, September 2012 | In: Money | Comment