2009-04-21

Solar Cycle & Agricultural Commodities

The Sun remains quiet, and some scientists speculate that this could be the start of a cooling period not unlike the Maunder Minimum 蒙德极小期 of the 17th Century, which triggered the "mini ice-age".

The economy used to closely track the weather because agriculture was the dominant industry, and it played a prominent role in Kondratieff waves. Industrialization replaced the farm with factories, and the service economy has replaced the factories, such that the supply of credit, rather than favorable weather, controls the boom-bust cycle of the economy.

However, the 1930s saw widespread droughts in the U.S., and the 1970s was relatively cool, leading some scientists to predict a coming ice-age. These were not causal factors for the economy, but they made an already difficult economic situation worse. Significant cooling would lead to an increase in demand for fossil fuels and shorten the growing season for agricultural commodities, directing resources away from other sectors of the economy and into the energy and commodity sectors. More income would be consumed by energy and food, leaving less capital to repay debt.

Though speculative at this point, solar output is a potential X factor in the future direction of commodity prices.

No comments:

Post a Comment