The title kind of says it all, but there are far more serious consequences to the price of oil reaching $126/barrel, or wheat, corn, rice, soybeans, copper et al reaching exorbitantly inflated prices than Cisco or Juniper Systems or Yahoo stock behaving similarly, as they did in the late 1990's.

Commodities are things the "real" economy needs and uses to function. Commodities have "use" value. Stocks have only "exchange" value.

Nobody needs to buy Cisco at $90 per share. But people do need to buy oil at $126 per barrel.

I'll try writing further articles on the fungibility of various commodities--e.g., coffee vs. tea--but for now I'll only comment thus:  Essential commodities are too important to the literal survival of the world to be treated as if they were common shares of Microsoft, mere vehicles of financial speculation. And these essential raw materials are now being transformed into speculative investment vehicles, probably through the ingenious proliferation of derivatives and the sudden attraction by "investors" to commodities as a better store of value than alternative investments.

Sometimes, most of the time, so-called free markets function quite efficiently. But there are exceptions, as even the most conservative of economists would agree.

We are right at the beginning of what could be a pernicious extension of free market, speculative capitalism into a sphere previously dominated by real-world economic conditions of supply and demand. For example, if suddenly the demand side for corn is radically increased not by more users of corn, but by speculators whose only concern is that the price of corn will rise, the use-market be damned, the risks of creating artificial non supply/demand dislocations to the real economy may have consequences that reach far beyond Forex traders.

This is a topic I'm researching and thinking about. It's very interesting, very complicated and urgently important.