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Holding Oil for speculative reason is illegal from tomorrow .....
- Thread starter trillenium
- Start date
Quote from Cutten:
A tax increase on imports will make all imported crude being supplied at the current price become more expensive. In other words it'll reduce the total supply available at the current price. Why would reducing the supply of crude available result in a price fall?
"Current price" is result of pricing power -- the exercise of that power. Tax would grab and reduce some of that power, reducing incentive for its exercise, and thus price would fall. Of course, to believe that explanation, you have to believe in the pricing power, or what I refer to as the "corner."
Sellers thrilled with 110 today would take 65 tomorrow, just as many sellers with just as many barrels.
Great posts there Cutten- Nice to see someone with such a solid grasp on how laissez-faire capitalism works, and why it's better than any other alternative.
Speculation and speculative prices help to shift the consumption and production of goods and services over time.
High prices cause consumers of the resource to cut back. At the same time, high prices create incentives for capitalists to invest in new productive facilities, entrepreneurs to discover alternatives/energy saving products, and scientists and engineers to create entirely new alternatives. We have speculators and speculation to thank for the possibility of a better future we all hope to enjoy. For the alternative, please study the many failed totalitarian "systems" that keep the masses living in pathetic poverty as no one is able to rationally plan and adjust to a changing reality, there are no entrepreneurial incentives, and there is no rational method for making consumption/investment/allocation decisions.
AFTER THE FACT speculators always look to have been wrong. In hindsight, many specs always are wrong. IN hindsight, we all laugh our smug laughs and wonder, âhow could anyone have been so stupid as to believe âthatâ would happen? Well, to travel back in time and look at it objectively, whatever IT was.. Guess what, it âcouldâ have happened, because the future was not, and never is, written until it has past.
During the inflation, economic collapse, and rally in commodities/gold in the 70âs, it was actually very possible that the currency would enter into a death spiral and never recover. We had only been completely off gold for only a short time, and at that time (as always is the caseâ no one really new what would happen! The activities of speculators, then as now, helped to short-circuit the nightmare scenario that we fortunately never suffered. Govt finally responded to the crisis conditions with appropriate policy before it was too late.
It was precisely the speculative activity that caused the future speculators anticipated not to come true, as it created the incentives for acting individuals to plan, adjust, and overcome in a changing environment.
Prices are not passive reflections of reality, some "pure" notion of what price should be now. Prices are an active, dynamic, anticipatory, and critical part, perhaps the most critical part, of our modern, dynamic, division of labor economy.
To see so many specs here with such little understanding of speculation and its role in the dynamic thing we call capitalism⦠itâs a bit sad.
High prices cause consumers of the resource to cut back. At the same time, high prices create incentives for capitalists to invest in new productive facilities, entrepreneurs to discover alternatives/energy saving products, and scientists and engineers to create entirely new alternatives. We have speculators and speculation to thank for the possibility of a better future we all hope to enjoy. For the alternative, please study the many failed totalitarian "systems" that keep the masses living in pathetic poverty as no one is able to rationally plan and adjust to a changing reality, there are no entrepreneurial incentives, and there is no rational method for making consumption/investment/allocation decisions.
AFTER THE FACT speculators always look to have been wrong. In hindsight, many specs always are wrong. IN hindsight, we all laugh our smug laughs and wonder, âhow could anyone have been so stupid as to believe âthatâ would happen? Well, to travel back in time and look at it objectively, whatever IT was.. Guess what, it âcouldâ have happened, because the future was not, and never is, written until it has past.
During the inflation, economic collapse, and rally in commodities/gold in the 70âs, it was actually very possible that the currency would enter into a death spiral and never recover. We had only been completely off gold for only a short time, and at that time (as always is the caseâ no one really new what would happen! The activities of speculators, then as now, helped to short-circuit the nightmare scenario that we fortunately never suffered. Govt finally responded to the crisis conditions with appropriate policy before it was too late.
It was precisely the speculative activity that caused the future speculators anticipated not to come true, as it created the incentives for acting individuals to plan, adjust, and overcome in a changing environment.
Prices are not passive reflections of reality, some "pure" notion of what price should be now. Prices are an active, dynamic, anticipatory, and critical part, perhaps the most critical part, of our modern, dynamic, division of labor economy.
To see so many specs here with such little understanding of speculation and its role in the dynamic thing we call capitalism⦠itâs a bit sad.
Some of you like might to read a short essay that Bruce Kovner wrote back in the early 90's on a related topic. If i remember correctly the paper's central idea is that financial markets help governments to make "More" rational decisions than they otherwise would, which is of course a huge benefit to all of us. It was either For the Cato institute, or the American enterprise institute, I do not remember.