Naked Capitalism Link of the Day

Today's link: The commodity bubble, at MacroBusiness:

His analysis reads:

We really need to define our terms here. What are these “fundamentals”? We began the paper by describing how it is that markets that have inelastic supply have increased volatility. The reason for that is that as the supply shortage is recognised, regular buyers begin to hoard, and speculators move in to take advantage of higher prices. Buyers then hoard more and speculators buy more still. Prices rise until supply responds (usually over responds) and prices crash. Hence volatility. It’s is logically inconsistent for this paper to simultaneously claim that there is reason to the volatility but no speculation in that reason. If fundamentals are as strong as this paper supposes, then it is silly to not expect speculators to be jumping all over commodities.

I think this gets at the heart of it.  There are fundamental issues driving prices higher.  That leads to inflation concerns, which leads to speculators coming in to buy, which leads to higher prices, which leads to inflation concerns, etc.  Kind of what I was getting at here.