The global market in money – housed in the offshore ‘shadow’ banking system – holds …
But what is striking about the 2005–8 food shock is this fact: more food had been produced by 2008 than at any point in human history. At the same time, demand for food was falling as the global economy weakened and then collapsed from August 2007 onwards. The economic law of supply and demand, so often called upon as explanation of the cause of such crises, did not apply here. Instead, the price volatility that led to hunger and food riots was caused by the greater participation of financial speculators in food derivatives markets. That in turn was a direct result of the Clinton administration’s 2000 change to the Roosevelt administration’s 1936 Commodity Exchange Act, changes which removed quantitative restrictions on speculative positions in agricultural futures contracts.