Reduce Oil Prices by Regulating Speculators? - July 12, 2008
No…
Government intervention will make the problem worse. Didn’t we already experience what happens when government interferes with the free market while Carter was president?
Speculation makes markets react faster and increases liquidity. Without liquidity the market could be much worse and subject to larger price fluctuations.
Speculators are not the problem. The number 1 problem is government created: The Gulf War has cost 600 Billion dollars. Rather than force Americans to pay for this in taxes, the government has borrowed and printed money. This has caused the dollar to crash in value. Oil is a commodity, just like gold, copper, and steel. All of these items have gone up in dollars as the dollar has gone done in value.
If the dollar held it’s past value, oil would be under $100 a barrel.
Besides the crashing dollar, other significant causes are: increasing demand from Asia, decrease in new discoveries, subsidized gas in China, and high per capita consumption in the U.S.
Speculation is a debatable factor. I don’t think it hurts us, but I know government interference will!
Tags: commodity, government interference, gulf war, liquidity, Oil prices, price fluctuations
Great blog – I read quite a few articles and couldn’t agree more. People are idiots. Every time there is a crisis they look to government to solve it. No wonder government has grown into a money-sucking behemoth!
BS! Oil speculators are making millions while everyday Americans suffer at the pumps!
Total BS you’re a total moron. It’s idiots like you that are turning America into a communist shit-hole!
The word speculating has been thrown around a lot lately and usually as a diversionary tactic in reference to blame for rising gas prices… Simply put – Speculating is a big fancy word for the very act of betting on whether a commodities price will rise or fall. It is a legalized form of betting and the author here is quite correct in stating that speculation keeps market segments liquid. It IS the actual act of trading. And while rampant speculation may drive short term price fluctuations (as they’ve always done) – The very real consequences of a devalued dollar by way of borrowing to pay for an intractable war is far and away the true culprit for why things cost more. Anything else is a distraction and dare I say “speculation”?
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