food and gas prices defy theory
there is something i am not understanding here in regards to the current crisis of the cost of food and gas.
101 level lessons in economics teach us that demand drives cost - the more a product is in demand, the higher it's cost. biofuels are produced from food such as wheat and corn and gasoline obviously comes from oil. so, my question is: why is it that the price of food and gasoline are rising simultaneously? an increase in demand for one product precipitates the reduction in demand for the other, causing the price of the product with waning demand to fall. this means that the cost of oil should be in retreat. yet we see the cost of both oil and food going up.
this proves one of three things: the economic theory of "supply and demand" is incorrect and nothing more than theory; the lack of an alternative to capitalism means that capitalism no longer has to play nice, it has become a monopoly and those of us unfortunate enough to be caught within it's web have no choice, but to play it's game; or lastly, with the impending end of george bush's reign and the potential end to zero regulation, speculation is being pushed as a last gasp effort to maximize profits before he leaves.
is it possible that it's a combination of all three?
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