Frederick Kaufman's piece for Foreign Policy examines how the Goldman
Sachs Commodity Index (GSCI) is responsible for the increase in food
prices.
The boom in new speculative opportunities in global grain, edible
oil, and livestock markets has created a vicious cycle. The more the
price of food commodities increases, the more money pours into the
sector, and the higher prices rise. Indeed, from 2003 to 2008, the
volume of index fund speculation increased by 1,900 percent. "What we
are experiencing is a demand shock coming from a new category of
participant in the commodities futures markets," hedge fund Michael
Masters testified before Congress in the midst of the 2008 food crisis.
The result of Wall Street's venture into grain and feed and
livestock has been a shock to the global food production and delivery
system. Not only does the world's food supply have to contend with
constricted supply and increased demand for real grain, but investment
bankers have engineered an artificial upward pull on the price of grain
futures. The result: Imaginary wheat dominates the price of real wheat,
as speculators (traditionally one-fifth of the market) now outnumber
bona-fide hedgers four-to-one.
Today, bankers and traders sit at the top of the food chain -- the
carnivores of the system, devouring everyone and everything below. Near
the bottom toils the farmer. For him, the rising price of grain should
have been a windfall, but speculation has also created spikes in
everything the farmer must buy to grow his grain -- from seed to
fertilizer to diesel fuel. At the very bottom lies the consumer. The
average American, who spends roughly 8 to 12 percent of her weekly
paycheck on food, did not immediately feel the crunch of rising costs.
But for the roughly 2-billion people across the world who spend more
than 50 percent of their income on food, the effects have been
staggering: 250 million people joined the ranks of the hungry in 2008,
bringing the total of the world's "food insecure" to a peak of 1 billion
-- a number never seen before.
At least the Goldman Sachs vampires have plenty of money to buy guns to
shoot starving peasants who will be trying to steal heirloom tomatoes
from their manor gardens. Don't blame American appetites, rising oil
prices, or genetically modified crops for rising food prices. Wall
Street's at fault for the spiraling cost of food.
[permaculture] How Goldman Sachs created the food crisis - Boing Boing,
Lawrence F. London, Jr., 04/30/2011