Thursday, May 08, 2008

1970s vintage inflation control

Yesterday, I wrote about 1970s vintage monetary economics breeding 1970s vintage inflation control. Today I read that FMC has banned futures trading in four products for four months.

1 comment:

  1. I don't understand how exactly the futures / forward markets work. But presumably, they are meant to hedge the risks. So if a farmer can enter into a futures contract, that will shield him from the price movements experienced at the time of harvest, both up and down. Further, it would also help him in deciding how much to produce. If thats the case, then futures/ forwards markets are helpful to the farmer.

    But does an Indian farmer an active participant in these markets ? Is there any evidence (empirical or anecdotal) about benefits of these markets for the farmers ? If not, has any attempt made to spread awareness about these markets ? I have read some news recently about MCX and NCDEX trying to do something about it.

    Who are the participants in these markets then ?

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