Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: An.American.Expatriate
Um, ok. Speculators may not be noble business persons - I really don't know all of them, but they absolutely provide a valuable service. It is extremely dishonest to say otherwise. Maybe you just aren't aware of how speculation works.

I didn't take your comments out of context. That's absurd and you are free to stand by your absurdity. You said what you said and your meaning is crystal clear. You are wrong. Deal with it.

Speculators make money if the price goes up or down, that is true. However, regardless of which way the market moves, higher spreads will lead to higher prices for consumers and lower spreads will lead to lower prices. Speculators are good for the market and for consumers because they lower the spreads, and that is contrary to your earlier statement that claimed that it is dishonest to say so.

Speculators absolutely act in the public interest even if that is not their goal. Anyone who understands how markets function, or how they are supposed to function, wouldn't have made the statement you did.

25 posted on 05/02/2012 10:59:37 AM PDT by Mase (Save me from the people who would save me from myself!)
[ Post Reply | Private Reply | To 24 | View Replies ]


To: Mase

The market would function without speculators and the price the consumer paid would be the price the producer charged, plus any costs involved in the actual movement and storage of the goods between the point of production and the point of sale (and a margin of course).

Speculators add a level of abstraction that only hurts the consumer as they too want a profit. IOW, prices would ALWAYS be lower without the speculator involved.

Of course, speculators take some risk from the producer which tends level out major swings in prices - IOW the speculator earns his money.

Without the speculator, prices for most commodities would vary greatly due to seasonal demands - but the consumer would pay less, and the producer would earn more, “in the end”. There would also be no “spread” since that only exists in the speculative market.

Finally, in todays market - with HFT and all the rest of the dishonest practices which serve ONLY to drive the price - liquidity is an illusion and your “spreads” are meaningless. Trades are introduced with NO intent of having them actually acted upon - simply to drive a price - and the only beneficiary is the speculator.

The only absurdity here, is attesting noble traits to the speculator - as if we should celebrate his accomplishments and goodness. That is normally reserved for persons that act in the public interest first, and then for themselves; not for those whose only value to society is a by-product of thier own self interest.


26 posted on 05/02/2012 11:46:08 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
[ Post Reply | Private Reply | To 25 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson