COMMON ELEMENTS IN FUTURES MARKETS FOR COMMODITIES AND BONDS.

The purpose of this article is to summarize some of the results of studies, part of a larger investigation, into different kinds of well-developed futures markets related to commodities and bonds with an eye toward establishing certain of their common elements that may facilitate a proper evaluation of their role. The article asserts that the key role of a futures market is in facilitating equilibrium across time. If all goods were instantaneously perishable, the future would be irrelevant to equilibrium in the present. On the other hand, the opportunity for storing goods, whether in the form of commodity inventories or congealed as plant and equipment, opens up a potential for tinkering with present and future equilibrium. One of the most interesting aspects of this opportunity for inter-temporal adjustment is its asymmetry. The fact that currently produced goods can be held for future consumption, but, in general, it is not possible to live off the bounty of future generations. Thus, the article discusses the cases of certainty and uncertainty linked with future markets.