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The cost of the Fed’s scare story on commodities

Posted on 31 October 2016

John Dizard on the problems of banks not lending to a problematic asset class. Usually physical commodities prices increase at a faster rate towards the end of an economic expansion, and there is evidence that such a move has already begun. We have seen “surprise” increases in shipping rates, natural gas prices, cocoa, coal and iron ore.
What is different this time is the unwillingness of the large banks to increase their lending against commodities collateral. This is likely to lead to much greater volatility in commodities prices, and more frequent breaks in global supply chains. What should be modest price increases will turn into price spikes and even physical shortages……………………………………..Full Article: Source


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