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Commodity Hyperinflation:
Speculators Running Wild

Feb. 29, 2008 (EIRNS)—EIR's economics staff is preparing a report on the food and commodity hyperinflation internationally for the coming issue, with graphs showing the spikes in wheat and other grains, and mounting shortages, which spell starvation for the human race. The financial press is unable to refute that this process comes directly from speculation gone wild (without noting that the massive money-pumping by central banks is intended to achieve exactly that). The Wall Street Journal reports on the inflation this year alone in natural gas 26%), coal (56%), platinum (41%), wheat (32%), and cocoa (38%), adding: "In recent weeks, institutions, hedge funds, and individuals have fueled much of the surge... by pouring money in to new investment vehicles that let them quickly and easily make big bets in relatively small markets." They note that the New York Mercantile Exchange (NYMEX), "the world's largest physical commodities futures and options exchange, handled a record 1.7 million contracts each day last month, fueled by a 163% year-to-year increase in electronic-trading volume." They quote AgResource that grains are being sold many times over on the financial markets, as oil has been for years. For example, commodity index funds hold contracts for about one billion bushels of soft red winter wheat—twice U.S. production!

Also, another "rogue trader" has appeared: a wheat speculator for MF Global, who lost $141 million in one day by "trading beyond his limit." However, the head of MF Global, Kevin Davis, later admitted that with the flood of money coming in, "some buying control limits had been removed because they could make trading desks less efficient when many customers were placing orders," according to the London Financial Times.