Article Review #2

In this article, David Stockman, the former businessman and director of the Office of Management and Budget under Ronald Reagan, discusses the current state of the commodities market in the United States. Commodities are basic goods that are traded that are considered interchangeable with other commodities of the same type. Quality may differ between commodities, but is found to be essentially uniform throughout the market. Examples of commodities are grains, gold, beef, oil, and natural gas. This reminded me about when we were first learning about elasticity and inelasticity and we learned that goods that are essentially the same no matter who the seller is, i.e. commodities, are the closest thing to perfectly elastic that exists. Stockman explains that there is a huge decline in the commodities market currently, mainly influenced by the decline of demand from China, a place that was hailed by Wall Street as a huge potentially growing market for commodities. Stockman believes that due to their highly profitable and quickly deflating steel market, they have the capacity to change prices of steel, cars, and other steel products, leading to the potential collapse of the steel market and already causing a crisis in the commodities market as a whole. Stockman then references an article from about a month ago that explains that the entire globe is potentially headed toward a global monetary deflation, with China at the center. The financial bubble that is developing now is even more combustible than the one that developed before the 2008 recession, a terrifying possibility for the global economy.