According to the Times, the recent crash in the commodities market was caused in part by exchanges increasing their margin requirements:
Worried about the speculative run-up and the increased volatility of the silver market, the officials concluded that it was time to raise the amount of money that buyers and sellers had to put down as collateral to guarantee their trades. The first increase in so-called margin requirements took hold the next day, effectively making it more expensive for speculators and other kinds of traders to play in the market.
But the price kept going up, reaching nearly $50 a troy ounce on April 28. Over the next week or so, the exchange decided to raise collateral requirements even higher, in four more steps that would kick in every couple of days.
Silver prices finally halted their ascent — and went into free fall. […]
Coffee, Cotton and Oil all took nosedives, but our elites know better:
Herman S. Kohlmeyer Jr., a commodities broker in New Orleans who is a managing director of Michael J. Nugent & Company, said that, in general, margins had little effect on speculators.
“The traders are not small,” Mr. Kohlmeyer said. “The traders are very well capitalized, very large funds, and I don’t think to the George Soros-type trader that margins are a focus at all.”
I really don’t know a lot about commodity markets, but I do know that people with a lot of cash tend to want to keep it, so they don’t sink huge amounts of it into speculative trades. People without a lot of cash, a huge risk tolerance, and the ability to make $100 trades with $10 of their money and a margin account, on the other hand, are probably the kind of investors who will run into a market and try to leverage themselves into a fortune. It just hurts the giant egos of our betters to admit that their market swings are powered by moochers and looters, and that the same kind of speculation and high margin trading that killed the stock market in 1929 is still going strong 80 years later.