Financial Illusion or the Real Deal?

I mention Financial Illusion, the attribution of effects to the financial market when the causality is really reversed.

Since 2000, oil and the dollar have been correlated. Is this an oil shortage or a shortage of any other reserve currency?

The authors mentioned in this post take a stab:

The disconnect between the Baltic Dry and commodity prices is unusual. So too is the way that commodity prices have been moving in sync with each other in recent years. A recent paper by economists Ke Tang at Renmin University in China and Wei Xiong at Princeton University documents how commodity prices have become increasingly correlated with one another and with stock prices.

The reason, the economists argue, is that commodities have become increasingly “financialized” by the creation of exchange-traded funds that allow investors to easily trade in and out of them. So when investors get worried by things like what’s going on in Europe, commodity prices can fall sharply even though actual demand for commodities may be running higher.

It would seem to me, though I have not read the paper, that oil and raw commodities are financialized because they are in relative short supply; not the other way around.