Sunday, 7 September 2014

The Secret Club that Runs the World by Kate Kelly

The Secret Club that Runs the World can be purchased in bookshops or on Amazon:
I don't normally recommend books that I haven't read yet, but in this case I shall. This comes after reading an interview with the author Kate Kelly in The Big Issue. She has just published a new book with a very HPANWO-esque title: The Secret Club that Runs the World. The book discusses the possibility that a secret cabal is operating inside the stock market, specifically the trade in commodity futures; this is a form of trading which bets on the future price of commodities- raw materials like oil, minerals and farm produce. There's nothing inherently wrong with this, in fact it can be useful. For example, if you run an airline you will need to plan your business for the year ahead, so you might ask a futures speculator for a forecast on the price of oil so that you know how much jet fuel is likely to cost during the coming twelve months. In doing so you might even invest in a direct futures contract yourself to compensate your company should your forecast be too low. Speculators today earn trillions of dollars, far more on average than conventional stockbrokers. The problem is that the futures market is starting to have an effect on the price of goods in the real world of the everyday consumer. This of course aggravates the poverty that is endemic in the world today from other causes. The influence of the futures market comes from the fact that those who trade in current commodities are trying to regulate their own prices to ensure a profit based on the futures speculators predictions. No doubt those who have insider knowledge will perhaps buy or sell that stock accordingly themselves. For example, if many airlines buy a futures contract based on a coming 10% price rise of oil over the year ahead, then the owners of oil company stock might be tempted to rig the price of their own trade in a self-fulfilling prophesy that ensures a good return for their futures contracts; and indeed the futures people might collude with them for the same reason. However if this spreads too far then this could result in a price war that the ordinary person ends up paying for... as usual. The reason for Kate Kelly's title for the book is that she believes there's a "club" of those who have access to the full extent of commodity futures predictions and therefore have the means to control to prices for their own benefit, and everybody else's loss. Obviously I have very different ideas about who literally rules for the world; however, from the economic perspective, there is good reason to be concerned that this club might well exist and that it could therefore become a pawn in the more widespread agenda to knock down the world's financial system and rebuild in the image of those real rulers.


Badriyah43 said...

I've always wanted to read that book. It's on my to buy list. I hope your well.

Ben Emlyn-Jones said...

Hi Badriyah. Fine thanks. Hope all's well with you. Let us know what it's like if you read it before me.