Exactly. Notice how mainstreet and politicians are happy as clams when the DJIA is near all time highs? Or homes appraised at all time highs? The populists revel in their new fortunes. But when they start feeling the pinch, damn those evil speculators. And high equities and commodities go hand-in-hand. I interpret these rumblings from DC as a prelude to controls. US exchanges can't curb margin excessively or they'll lose volume overseas.
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Senator Bernie Sanders Demands Action From Obama On Wall Street Oil 'Gambling'
- Thread starter BCE
- Start date
Exactly. Notice how mainstreet and politicians are happy as clams when the DJIA is near all time highs? Or homes appraised at all time highs? The populists revel in their new fortunes. But when they start feeling the pinch, damn those evil speculators. And high equities and commodities go hand-in-hand. I interpret these rumblings from DC as a prelude to controls. US exchanges can't curb margin excessively or they'll lose volume overseas.
Quote from MKTrader:
That would be you. There aren't any pre-set "realistic norms." Read Extraordinary Popular Delusions & the Madness of Crowds . Markets have always been about speculation; about making money as they go to extremes and when they reverse. That's why we play this game.
If you want "realistic norms," see if you can set up a simulated trading community where no wild speculation takes place. It will be the equivalent of "no-score, no-competition" T-ball for kids.
Sheesh.
If you're worried about economic damage, go after those setting up the pre-conditions for these things: the Fed, draconian regulators and anti-drillers, mega-deficit spenders, etc. There will always be speculation and "unrealistic" norms, but much less with a sound currency and better fiscal discipline.
markets work best when designed to reflect signals from supply and demand. if powerprokers are allowed to manipulate price into not reflecting those forces markets break down.
just because there have always bubbles that a few profit from does not mean they should not be discouraged.
Quote from MKTrader:If we donât like commodity speculation, we could easily outlaw it. That way, for example, even though there might be every indication of a reduced fall wheat harvest, todayâs price of wheat wouldnât rise. We could consume wheat today and not fret about fall.
© 2011 CREATORS.COM [/B]
This is totally wrong
If we ban all speculation but spot trading which is not speculation, then you would see prices rise and fall depending on the demand and supply
The difference is there would be no speculators making money out of it. There will be hoarding but that will be limited because how long can you store food without rotting. And even there is hoarding, it will have a lesser price effect compared to shorting or options trading.
So the above statement is wrong.
Quote from Free Thinker:
markets work best when designed to reflect signals from supply and demand. if powerprokers are allowed to manipulate price into not reflecting those forces markets break down.
just because there have always bubbles that a few profit from does not mean they should not be discouraged.
Statist thinking(?) at its worst. So we need some csar or new regulatory agency to sniff out âpowerprokersâ (what?) and punish them? Of course, it will never work and will just be gamed by the well-connected as always. But it would a tool to punish whomever the csar or bureaucrats wants to go after.
Look at Dodd-Frank. No effect on Fannie, Freddie, the Fed, big corporatist banks or other key players in the last crisis. But it sure gets after those little retail forex traders (and many others who had nothing to do with the meltdown).
Higher prices are the best cure for high prices. I kept hearing a wise trader say this the last time oil went above $110/b, when everyone else was calling for $200/b or new regulations.
Quote from Free Thinker:
markets work best when designed to reflect signals from supply and demand.
that sounds reasonable but it is totally incorrect, and it's why the futures market is so important to the economy. If price was simply determined by supply and demand, we would all be screwed when droughts wipe out massive amounts of crops. The speculators are needed to help smooth out those wild price swings when supply and demand get out of whack.
Just go research how the commodity markets were started and what they exist for. It's commodities 101, and it contradicts the logic of Sanders and everyone else that wants to blame speculators. Please open up to the idea that you might be wrong on this issue.
Quote from olias:
that sounds reasonable but it is totally incorrect, and it's why the futures market is so important to the economy. If price was simply determined by supply and demand, we would all be screwed when droughts wipe out massive amounts of crops. The speculators are needed to help smooth out those wild price swings when supply and demand get out of whack.
Just go research how the commodity markets were started and what they exist for. It's commodities 101, and it contradicts the logic of Sanders and everyone else that wants to blame speculators. Please open up to the idea that you might be wrong on this issue.
Nice reply and I'll give you more credit than I was willing to the other day. It also takes care of Misterno's LSD trip of a comment (in which tried to make me a syndicated columnist).
Quote from olias:
that sounds reasonable but it is totally incorrect, and it's why the futures market is so important to the economy. If price was simply determined by supply and demand, we would all be screwed when droughts wipe out massive amounts of crops. The speculators are needed to help smooth out those wild price swings when supply and demand get out of whack.
Just go research how the commodity markets were started and what they exist for. It's commodities 101, and it contradicts the logic of Sanders and everyone else that wants to blame speculators. Please open up to the idea that you might be wrong on this issue.
price ideally should be determined by supply and demand. when supply is low price rises to stem demand. when supply is great price should fall to stimulate demand.
futures markets were set up as a way for producers and consumers to hedge risk between each other of unanticipated price swings. that has been allowed to grow to a point where parties not connected with the commodity can make paper bets with each other on the future price of that commodity.
Quote from MKTrader:
Statist thinking(?) at its worst. So we need some csar or new regulatory agency to sniff out âpowerprokersâ (what?) and punish them? Of course, it will never work and will just be gamed by the well-connected as always. But it would a tool to punish whomever the csar or bureaucrats wants to go after.
Look at Dodd-Frank. No effect on Fannie, Freddie, the Fed, big corporatist banks or other key players in the last crisis. But it sure gets after those little retail forex traders (and many others who had nothing to do with the meltdown).
Higher prices are the best cure for high prices. I kept hearing a wise trader say this the last time oil went above $110/b, when everyone else was calling for $200/b or new regulations.
any student of history should know there are many examples of people cornering or attempting to corner markets. most of the time it is limited to a commodity not necessary for our economy to function,like the hunt brothers silver manipulation but if it is a product that can cripple our economy like oil why should we not make regulatons to discourage it before it happens?
Quote from Free Thinker:
any student of history should know there are many examples of people cornering or attempting to corner markets. most of the time it is limited to a commodity not necessary for our economy to function,like the hunt brothers silver manipulation but if it is a product that can cripple our economy like oil why should we not make regulatons to discourage it before it happens?
Because excessive regulation always has its costs and unintended consequences. And it's practically always manipulated by certain players (i.e., big ones well-connected to D.C.) to hurt the smaller ones.
There's no point debating any further. The idea that we make all kinds of pre-emptive regulations to "prevent" things before they happen is as preposterous as it is scary. We made it through the gold/silver run in the 70s fine. If we did it your way, markets would have been so over-regulated afterwards that we never would've had the huge selloff in commodities and run-up in stocks. We'd only be trading food stamps and cans of Spam with each other by this point.
Quote from MKTrader:
Because excessive regulation always has its costs and unintended consequences. And it's practically always manipulated by certain players (i.e., big ones well-connected to D.C.) to hurt the smaller ones.
There's no point debating any further. The idea that we make all kinds of pre-emptive regulations to "prevent" things before they happen is as preposterous as it is scary. We made it through the gold/silver run in the 70s fine. If we did it your way, markets would have been so over-regulated afterwards that we never would've had the huge selloff in commodities and run-up in stocks. We'd only be trading food stamps and cans of Spam with each other by this point.
so if we allow speculators to run up the price of oil to say 300 for a year or so, even though there is plenty of supply, until it crashes back down that is fine with you?
what should we do if in the meantime the us airline industry,the auto industry,and other industries that depend on oil are destroyed and the jobs they provide are destroyed? the government has an interest in orderly markets because they have to pick up the pieces. we just went through this with the bank bailout.