The commodity market bubble: Money Manager

Abstract

In his article on the commodity market bubble, Wray breaks from the hypothesis of supply and demand determination of raw materials in the futures markets. The article is of particular interest given that when it was written, the commodity prices that had increased more than 500% from 2003 to 2008 began a sharp decline. The author’s principle hypothesis is that the process of financialization has been a major factor behind the increase in prices of the 25 raw materials commonly included in indices. According to Minsky, financialization is the main force behind money managing capitalism, which dominates the global economy, characterized by highly leveraged funds that seek maximum gains in an environment that systematically underestimates risk.