15252Re: 70% of oil price is speculation
- Feb 28 7:51 AM--- In LandCafe@yahoogroups.com, "Scott on the Spot" <ssbaker305@...> wrote:
> Matt & Harry -
> Do you really think George agrees with you?
> You'd better read himThat won't be necessary, as I've read all of his major works at least several times.
> George (and I) are saying the same thing (I love it when thatI find it bizarre that you quote this passage in defense of your position, seeing as how I have already quoted it to show that George disagrees with you. You snipped the part directly before, but he's talking about how the cause of depressions is not to be found in speculation in commodities, but speculation in land.
> happens!). George explicitly says speculation is...
> "Certainly not of speculation in things which are the products of labor
> -in agricultural or mineral productions, or manufactured goods, for the
> effect of speculation in such things, as is well shown in current
> treatises that spare me the necessity of illustration, is simply to
> equalize supply and demand, and to steady the interplay of production
> and consumption by an action analogous to that of a fly-wheel in a
> Well, that is exactly what I said. It is not speculation in productionNo, false. Copper, oil, and other minerals are classified as land *in situ*. Once extracted, they are no longer land in Georgist theory, but wealth or capital. He's very clear on that. You may argue that he's wrong, but that's definitely how he viewed it.
> - that always adjusts to meet the market demand (like a flywheel, as
> George says).
> "(I)t must be speculation in land" just as George says (oh, we don't
> really need to establish that land in classical economics, and under
> George, means ALL of nature's resources, do we? That includes
> commodities, like oil, copper, etc.).
> As for empirical proof, I toss out, again, that oil was $147/barrel inThat's not proof. It's evidence, at best. Others have already provided mitigating explanations.
> the summer of 2008, and just $35/barrel only 7 months later.
> Demand didHow do you make money selling low? ISTM, when demand went ultra-low as the world was on the brink of ruin, the speculative market kicked in, supplying cheap oil, thus somewhat offsetting the damage. No doubt, speculators lost their shirts. That's the flywheel effect in action. Prices have largely recovered since.
> NOT slack off by 3/4!!! We would have been living in unheated caves and
> bicycling to work if it had...if there was work to go to at all. No,
> this was a result of speculators being forced, or in some cases,
> voluntarily, cashing in their long positions in the price-setting
> futures market, selling their contracts, in other words, or even
> shorting them. That is what speculation is.
> You say "It's pretty basic economic theory that speculators inI see no evidence for that.
> commodities smooth out prices, thus mitigating sudden shocks. " It's
> NOT basic economic theory at all. It's Free Market Austrian theory,
> which is thoroughly discredited by Gresham's Law, among many, many,
> other practical real-world rebuttals. We live in a gambler's economy,
> but not even in the benign sense of the casino. In the casino there are
> consistent rules, and losers get booted out, not bailed out. Really,
> this is too ridiculous a statement to dissect further.
> George would understand the oil speculation market completely, and he
> would be horrified and furious about it.
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