Commodity Price Gains: Speculation vs. Fundamentals

Some new research from the St Louis Federal Reserve  looks at whether commodity price inflation reflects fundamentals, speculative bubbles or – quite plausibly – both.

The authors conclude profoundly, “Ultimately, the greatest lesson from recent trends in commodity prices may be the reminder that economics is founded on the assumption of a world with unlimited wants and limited resources. A world with a growing population and ever-increasing income parity implies a world with ever-increasing competition for resources.”

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