Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: Toddsterpatriot

Misdirected capital forces increases in resources and commodities which leads to food prices increases along with a cycle of speculation (demand increases due solely to anticipation of more demand). Then at some point it all unravels, the prices overshoot and then drop. At the same time the unwind kicks in and dollars quickly rise in demand which forces further price increases on particular commodities (e.g. wheat) with large U.S. sources. A slower effect of the carry trade and unwind is the unavailability of capital for ordinary uses such as increasing food production by investing in equipment or even borrowing for seasonal planting.


41 posted on 01/31/2011 6:34:04 AM PST by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
[ Post Reply | Private Reply | To 37 | View Replies ]


To: palmer
Misdirected capital forces increases in resources and commodities which leads to food prices increases along with a cycle of speculation

But that's not a carry trade.

A slower effect of the carry trade and unwind is the unavailability of capital for ordinary uses such as increasing food production by investing in equipment or even borrowing for seasonal planting.

So dollar carry trades mean no money is available to finance agricultural production?

You should probably find the real definition of carry trade and try again.

42 posted on 01/31/2011 6:45:56 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 41 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson