We Didn't Run Out of Commodities, We Ran Out of Good Money

Unenumerated: Two Malthusian scares

For in reality, post-gold-standard prices for industrial commodities are not driven purely, or often even mostly, by industrial demand being met by appropriate changes in material supply. Instead, both supply and demand curves have been warped by a new role for the major industrial commodities -- they are no longer purely commodities; the are in part also money. In particular, they have since the late 1960s been increasingly used as a liquid store of value, easily tradeable for media of exchange (e.g. dollars), as an alternative to and hedge for the new regime of floating rate currencies.

...During the Bretton Woods era the U.S. dollar, pegged to gold at $35 an ounce, served the entire free world as a common and reliable standard of value. The transition from Bretton Woods to floating rates left the world with no common and reliable standard of value by which to guarantee future real returns on contracts or investments. As a result the most commonly traded commodities, and especially geopolitical commodities such as oil and phosphates, became Mengerian intermediate commodities, with a price premium as a store of value that waxed and waned with the weighted expected inflation among the world's various floating currencies. As a result, the prices of these commodities are much more volatile since 1970 than they were during the Bretton Woods era. Epochs of increasing inflation expectations have led to rapid, broad-based commodity price rises, where the market gives out false signals of scarcity, leading to Malthusian anxieties and panics that we face a future of diminishing natural resources. This in turn has fueled a major and sustainable growth in green ideology since the 1960s.