This, “How Goldman Sachs Created the Food Crisis” is already Frederick Kaufman’s third article on the subject in as many years. As the article indicates, here “Goldman Sachs” just stands for the financial speculators in general. He is milking this thesis a bit dry at this point — but he has a point, sort of.

There are those who argue that financial speculators, for their own good, closely track underlying supply and demand, and therefore stabilize — not destabilize — markets. But this is not the case. Experiments have shown that, even for an instrument with a perfectly known valuation, the existence of human players itself creates speculative intent which can at least temporarily unanchor market prices. Speculation itself certainly doesn’t stabilize markets, in fact it has to be disequilibriating — required for price discovery. What keeps prices stable are well structured instruments that anchor to real economic variables by some other mechanism, things like periodic reconciliation of contracts, payment of agreed-upon dividends, or taking delivery of commodities. Anything that needs no reconciliation for an indefinite period of time is asking for trouble.
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