Does speculation hurt the economy and should it be regulated?

Question

Does speculation hurt the economy and should it be regulated?

Answer 1

Market prices are driven by supply and demand.  No amount of speculation in any sector, for any product, in any market could have enough of an impact to make a difference in an economy.  Speculation is healthy, and is the backbone of capitalism.

Answer 2

I personally think speculation is a necessary evil.  I absolutely think it should be regulated because as you can see, the prices of gas are rising purely on speculation.

Answer 3

http://www.economist.com/opinion/display...

Answer 4

No -- it is the engine that moves money around the world.

Maybe -- I would say full disclosure of all transactions yearly with fines and jail time for failure to comply should be sufficient.

Look at it this way -- commercial banking and mortgage loans are among the most heavily reviewed and regulated financial business in the world -- and what just collapsed?  Yeah, that's right, the mortgage loan business.  Which is really a repeat of the the Savings & Loan mess of the 1980's.

The problem isn't so much as the theoretical construction of regulation, whether conservative or liberal, but rather the practical, political limitations putting such plans in place:  by the time the politicians are done you have the very worst of both what regulation can do and the free market can do.

Answer 5

Speculation helps economies by providing products to users when they are needed.   They take the risk of purchasing commodities today so that they will be able to supply users at prices that are given.

Prices are controlled by supply and demand, the speculators are only responding to the market place.  If the supply of any commodity increases, the prices decrease

How can any agency, regulate a world market,  No one agency has such authority nor should any one agency have such authority.

In order to have a fair market are reasonable prices, governments should not be involved in those facets of industry or business they don't understand.  Every time you have government intervention, the people or industry has problems.

Answer 6

Mike L has expressed an opinion that is not based on fact.  The role of speculators in the oil markets has been investigated and found to be of no significance.

Speculation doesn't mean just buying oil.  In futures, it is just as easy to speculate on a price decrease (be short) as it is to speculate on a price increase (be long).  It is popular for politician to blame speculators for the increase in oil prices.  It deflects blame from the politicians who's unbalanced budgets are increasing the national debt, decreasing the value of the dollar and forcing prices up.

In fact, this is easy to disprove.  Brokers report positions to the government.  Analysis shows that speculators are about even on the long side and the short side, meaning that the speculators are basically trading with each other and the increase is due to real economic factors in the market.

http://cftc.gov/stellent/groups/public/@...