To manage financial risk, money flows in and out of different classes of assets. When equity indices went to record levels, for example, there was (as I reported) more interest in commodities.
It used to be that commodity futures contracts were for the purpose of stabilizing prices. President Clinton, however, working with “the best and the brightest” Goldman Sachs Ivy Leaguers, changed that. Now, making financial markets more modern and efficient, commodity futures contracts can be used to throttle macro-economic trends.
Just like before the financial crisis of 08-09, when the modern financial instruments of the best and the brightest (gangsters) came crashing down, money is flowing into commodities (convecting) to manage “the risk.”
Futures contracts are being bid up. WTI crude is now back to $70 a barrel.
Gas prices are now rising, associated with the futures. This means that the median income has less money to spend, which increases the demand for debt.
Rising gas prices are the inflation that causes rising interest rates. The effect is to raise the rents on incomes that are already declining due to globalism.
The overall, macro effect is deflationary while the economy is said to be doing well, just like it was before the Great Recession.
With the risk-management strategy intending to cause the risk to be avoided, saying that it operates to make markets more efficient in a modern, globalized world is just a big fat fraud!
This risk-management technology we call asset-class management is nihilistic. It intends to do the harm to derive the good in the name of productive efficiency; specifically, to get people working more for less, accumulating a surplus that is the good that actually does the harm. The value produced is no paradox. It is no contradiction. It is not alienated from the source that actually produces it. It is structured in the form of financial-risk technologies (wealth management) argued to be the best and brightest thing to do when, really, it is just a bunch of gangsters running a protection racket, intending to manage the random attributes of the risk so that maximum benefit can be derived from the fully assumed losses, existing, objectively, and contractually obligated, on demand, in all the futures now.
The game being played is a rotation scheme. It is a confidence game intended to make it appear that the harm done, and the necessary consolidation of assets, is an act of nature that just comes around. It is “objective reality” and without capitalists accumulating the wealth of nations, providing liquidity (confiscating property) on demand, you are completely unprotected. Without capitalists hedging the fully assumed risk of loss in a too-big-to-fail (economy-of-scale) dimension, everybody loses.