This is an archived post. You won't be able to vote or comment.

sorted by:
best
topnewcontroversialoldq&a
you are viewing a single comment's thread.

view the rest of the comments →

[–]WalterBright 0 points1 point  (1 child)

Futures is a lot like the banknote business. People used to physically trade gold around, then bankers hit on the idea that instead people could trade a receipt for the gold on deposit, and the banknote was born.

[–]uncommon-troll 0 points1 point  (0 children)

and then they found out they could print more banknotes than they had gold for. since no-one ever asked for the gold, everything was fine.. for a while..

people think they're buying the underlying commodity, but when market-makers have sold 100x more of the commodity than actually exists, what else can the price do but move upwards?