The world is experiencing a ‘negative feedback loop’ decades in the making
27-Jul (BusinessInsider) — The world is experiencing a “negative feedback loop” as commodity prices fall, according to Goldman Sachs.
What’s more, this loop is a huge story decades in the making — and there isn’t a country on the planet that won’t be affected.
Slowing Chinese demand for raw materials has pushed the Bloomberg metals index down 25%. Liquidity is low. Cash is in shorter supply.
This is all part of a global market cycle, Goldman argues, and commodities are getting caught in the violent shuffle.
Three forces are working together to make this happen: a general oversupply of commodities, a strong US dollar, and weak economic growth in emerging-market economies such as Brazil and China.
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PG View: If you want stop the look and generate commodity price inflation, everyone needs to print more dollars, euros, yen, yuan etc . . .