Commodity prices are going haywire, prompting fears of the next financial crisis

By Chris Matthews

The prices of commodities including oil CL00, -5.00%, wheat W00, -2.04% and palladium PA00, -2.56% have surged this year as much of the global economy shakes off COVID restrictions and as Russia’s invasion of Ukraine has led to a key commodity-exporting region to be cut off from the the rest of the world. This volatility has not only helped fuel levels of inflation not seen in 40 years —market observers are warning that it could put the stability of the global economy at risk unless regulators and central banks wake up to the threats posed.“One after another development related to Ukraine is exposing the long standing flaws in the increasingly obsolete post-Second World War framework” of global trade and financial regulation, Karen Petrou, managing partner of the financial-policy think tank Federal Financial Analytics, told MarketWatch. Petrou argued that rapidly increasing commodity prices are putting stresses on both commodity traders and the banks and other actors that fund them, and failures to properly regulate these entities could force the Federal Reserve to bail them out, a move that threatens popular backlash….