Fat Cats, Cool Cats, and Running Dogs

I don't want to be a fat cat or a cool cat when I grow up, I want to be a capitalist running dog. That's why I chose the nom de net of "Talks With Beagles" instead of "Talks With Kitties". Wasn't it Chairman Mao who was always talking about capitalist running dogs? That's probably an insult in Chinese, but it loses something in the translation. By "running dogs", I assume that he meant hounds, and I'm an old hound dog if there ever was one, and damn proud of it.

I made a little more sense out of those commodities futures while you were gone, but there are still some parts of it that I don't understand. I got most of my information from the Wiki article "Commodity Market", although I did spin off on a few tangents. Some of it contradicted what I thought I already knew, and I was unable to find the article I read a few years ago. This may be because a lot of new regulations have been passed in the last few years, making my old source obsolete.

It seems that there are two main types of futures contracts, the "cash contract" and the "derivative contract". The cash contract involves real commodities, which are called "actuals", and the derivative contract is derived from that, which is why they call it "derivative". I don't know exactly how the derivative is derived, just that it is indeed derived from the cash contract. In the derivative contract, the commodity is called the "underlyer", and it seems to be kind of a shadow commodity that underlies the actual commodity in the cash contract. When the commodity trader doesn't want to take delivery, as almost all of them don't, he can weasel out of it by "taking an opposite position", which "zeros out" his account. In the cash contract, somebody actually does take delivery, but they didn't talk about that very much.

Commodity futures are only the tip of the iceberg, there are all kinds of other derivative type products in the financial world, and they have been increasing exponentially during the last decade or two. Some experts believe that this is what's "wrong" with the economy and that we need more regulations, but the regulators are having a hard time keeping up with this stuff as it is. While I wouldn't go so far as to say that the fat cats and high rollers are "all crooks and fools", I think you made a good point when you said that it would be better if all this money were to be redirected into some productive use. I don't know exactly how this could be accomplished, but I think it's worth looking into. Either that, or we could talk about the French Revolution, or both, your call.