High prices in food that has led to starvation, high prices in oil, and high prices in other needed commodities are rarely caused by the normal market forces of supply and demand, but rather as a result of speculation by companies like Goldman Sachs. These speculators also have a negative impact on matters like sovereign debt.
Speculation needs to be outright banned or tightly controlled so that the activity does not distort markets and harm people, as happened (and will likely happen again) with the rise of food prices at a time when there were large food supplies and diminished demand.
For example, from Speculation Blamed for Global Food Price Weirdness,
Speculation is bad, a form of economic thuggery. It takes commodities and products out of the "real" economy and puts them in a casino where the rich trade them and in doing so inflates prices irrationally. No benefit flows to people, the market, or nations, only harm as money is, in effect, stolen from the poor and transferred to the rich.The link between commodity speculation and global food price weirdness just got stronger, and researchers warn that a new and potentially calamitous price bubble is imminent.
Since 2007, global food prices have surged twice, each time rising by more than 50 percent in less than a year, putting people in poor countries at risk and sparking social unrest around the world. Economists have argued over what drove the surges: Maybe it was bad weather, or changing dietary habits, or changing farming practices, or even a change in how global food markets now work.
In earlier work Bar-Yam’s group used mathematical models to test links between food prices and proposed explanations for market behavior. They identified two culprits: replacing food crops with biofuel crops seemed to be driving food prices slowly upward, while commodity speculation — investors betting on food prices — appeared to cause the spikes.
The rising price of gasoline in America is not because of reduced oil supplies or increased demand but largely because of speculation. Indeed, the US today is a net exporter of oil.
Speculation, as I say, needs to be either banned or confined to a small range of items that only the rich can afford; art and antiques come to mind. No speculation should be permitted in the resources and commodities that real people and the real, productive economy requires to operate properly.