Greedy speculators?

Submitted by Bill St. Clair on Thu, 26 Jun 2008 09:02:11 GMT  <== Politics ==> 

Richard W. Rahn at The Washington Post - some in Congress want a "law" to reign in so-called "greedy speculators". Mr. Rahn reminds them that those speculators, in all the commodities markets, not just oil, actually help to reduce prices. Without them, many producers would not be able to stay in business, and supply would dwindle. Don't mess with things you don't understand, idiots.

"Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself." -- Mark Twain

The price of oil is higher than it would be in a totally free, private global market, because other countries' state oil companies own 88 percent of the proven reserves and many of them are part of the OPEC cartel. Much of the oil that could be produced in the U.S. and elsewhere by private parties has been made off-limits by governments. Speculators are not the problem; they are part of the solution, by reducing the risk for producers, refiners and other oil market participants. This risk reduction results in more production of oil, other fuel, food and metals where futures markets exist.

The next time you hear a politician ignorantly rant about greedy speculators and business people, tell him or her to go home and read a good, basic economics textbook.

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