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post #9 of (permalink) Old 05-26-2011, 09:14 PM
With extra cheese.
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Originally Posted by Donutz View Post
Horse maneuvers. Futures trading (just to name one ferinstance) benefits no-one except the traders and generates a profit.

And I'm not sure about lawyers, either.
Maybe if you ignore the risk speculation mitigates for the producer. While the price can go up, it can also go down. The speculator provides a level of price stability and security for the farmer and the like. He buys the farmer's crop ahead of time. So he benefits the farmer (producer) in this way.

Most of speculation is done through trading of derivatives for example through futures contracts on exchange traded markets and forwards for more technical contracts traded off the exchange. If speculation was such a surefire way to make money, everyone would do it. Speculation is oftentimes involved in non-durable goods, mostly perishable commodities. These are goods the farmer must sell at the time or risk losing his crop and getting nothing in return. The function of the speculator is therefore twofold. He also creates acute aggregate demand for products that are subject to flux production and other asset risks for assets of these types. He stabilizes the price not only in a monetary sense but also in a temporal sense. He create a demand market for the farmer before he even harvests his crops given the farmer operating margin for things that can occur between sewing, growing, harvest and market.

Like I said, all services provide someone with a benefit. Whether it be liquidization of hard to exchange assets or mitigating risk by providing counterparty insurance protection, there is a benefit. Just because you cannot see the benefit, doesn't mean it doesn't exist. If the benefit didn't exist, the person would not make the trade.

If the farmer knew he could sell all his crops 8 months ahead of time directly to the consumer (distribution in the case of farmers who don't vend themselves at market) at cost and cut out the middlemen giving his consumer some extra coin further patronize his cropshare (or just charge the higher price himself), don't you think he'd do so? As it were, I'm sure he's very happy to get paid before he even has to worry about sewing his crops.

For the other matter, i don't agree with taxation on different asset classes nor do I agree with subsidy.


Yes, basic services can be funded, organized and paid for at a state and county level, I agree. There are a few Constitutional allowances for the things that may be organized at the Federal level (A.I S.VIII of The Constitution), and that is all it should without further ratified amendments. Fuel effiency is a joke, yes, but gas prices are also much lower than in other countries. In England, prices are around 1.49 sterling/litre right now ($9.22/ US gallon) for diesel. If our prices go up, people will be forced to cut back on gas related expenses. As it is, good ol' Bob doesn't want to compromise on paying $110 every week to fill up his F-250 Superduty.

Mass transit is also only an option in areas of heavy urbanized development. Urban sprawl developing from inner suburb growth will simply overwhelm our ability to build transit infrastructure around it. Energy prices being high also drive up development costs so the more expensive gas gets, the more expensive it is to design and power mass transit to offset the high gas costs in the first place. It's a self-perpetuated feedback mechanism.

Sorry, but these solutions seem practical at face value, but in detail won't hold up to scrutiny.
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