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Jack King's avatar

U.S. markets are totally oblivious to the coming storm. Keynesian economics is built on the foundation that nothing can happen which government monetary policy cannot resolve without much economic damage (at least to the major market players whose financial shenanigans are always underwritten by the U.S. taxpayer). The system has become so inured by its ability to manipulate commodity markets via derivatives that the Mercantile is entirely speculative and has lost sight of the supply/demand mechanics of the underlying commodities for which it was created. This works as long as everything is settled for cash; once the squeeze begins to shift settlement to "stand for delivery", the derivative market collapses because failure to deliver still carries significant penalties. What's unknown is just what extremes government will go to in order to postpone the coming economic collapse.

Patrick Barron's avatar

I believe that Alasdair’s message is that the people trading in paper don’t really understand the underlying mechanics of the commodities’ physical uses. But that means that there is an opportunity to stack now at bargain prices before they learn…but learn they will.

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