Saturday, December 26, 2009

Brief: Investing in the price of food

When a trader buys food products (grains etc.) on the world markets in the hopes that the price will increase they do a huge disservice to poor people in poor nations who have difficulty finding enough money to purchase basic foods such as bread.

If the price of a grain doubles because a bunch of financial trading institutions deciding that grains are a better investment than some other areas (like the U.S. housing market or stocks etc.) then poor people go hungry because they can only afford half the bread! For the good of the poor these financial trading institutions should refrain from investing directly in the purchase of grains and other basic necessities where it would harm the poor if the price were to increase. Better yet it must be possible to create a government regulation that prevents this practice.