Galileo Blogs has a compact post on the value of market speculators. Lots of people seem to think that speculators are just irresponsible hustlers who do nothing but mindlessly gamble on whether some aspect of the market will go up or down. Nothing could be further from the truth.
In fact speculators actually help market downturns to correct sooner than they would if there were no speculators or if they were severely restricted by government regulations.
Walter Williams also has an article on the value of speculators at Capitalism Magazine.
3 comments:
My husband and I were just disagreeing on this very point last night. He was on the 'this is false value' side and I was on the 'it's real value if people are willing to pay it' side. Though he's got the better of me on these economic arguments--actually having read some while I haven't. We agreed that if banks had a less perverse interest system (not regulated by the fed) that some of these hedge funds and derivative markets would less 'speculative.' At least he was able to explain to me what those are! I hope he was right.
Kim
I'm not an economist either but I do agree that some speculative operations would be less speculative or less risky sans the regulations.
And the never-ending bail outs!
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