Mike Konczal has a thought provoking article in TheNewInquiry that connects the dots on futures trading and comes a full circle:
For example, contracts for the future delivery of cattle have existed since at least the 1850s, when farmers met in Chicago agreed to buy and sell corn. But how do you know that you aren’t going to get screwed on delivery? If you agree to buy new cattle years from now, what’s to say that you won’t get the weakest, malnourished cattle available?
The CME’s rulebook for a Live Cattle Future specifies what qualifies as a “deliverable” cattle. First off, “No individual animal weighing less than 1,050 pounds or more than 1,500 pounds” shall be deliverable as a cattle. “Unmerchantable” cattle, such as those that are “crippled, sick, obviously damaged or bruised,” are not acceptable.
Cattle that don’t fit the relatively wide characteristics aren’t tossed aside. They are “discounted” — sold at a loss for a smaller percentage of the contract. This discount is meant to penalize the grower while reducing immediate waste of unsellable merchandise.
And now comes the scary part:
Can “human capital” be traded?
Read the whole thing: Buying the Future