Politics & Philosophy by Dr. Martin D. Hash, Esq.
There's an economic principle that says the price of pork will deflate before it inflates. The logic goes: when farmers are losing money on pigs, they dump them onto the market, which lowers the price even further, forcing other pig farmers into the cycle too, collapsing the market. Soon the cheap pork runs out but there are no new pigs being raised so eventually the price of pork skyrockets. It's too late for the old pig farmers because their businesses already tumbled down, which collapsed all the ancillary industries, and it takes a while to rebuild production and distribution capacity. That's when pork inflation reigns.
To alleviate the fluctuation risk in the pig and other commodity production markets, futures derivatives were created as a form of insurance. These instruments, that are traded like stocks, allow gamblers to try and predict the scarcity versus glut of pigs, little more than casino betting, and the people betting contribute nothing to the economy except volatility. This was how the 2008 Banking Crisis occurred, which was barely saved by printing imaginary money, as will be all financial crises. Unfortunately for pig farmers, pork is not imaginary, so their business can't be cured by money magic, only by raising more pigs.
Categories | PRay TeLL, Dr. Hash
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