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Friday, November 27, 2009

Is Speculating Immoral?

In this thread on, someone was asking about greedy speculators. Is speculating a crime?

In a really free market, there's nothing wrong with speculating.

If you buy a lot of grain expecting a famine, then you're entitled to profit if a famine occurs. Under such circumstances, it's fair for you to sell your grain for whatever people are willing to pay. To suggest otherwise means that there's no incentive to plan for disasters.

In the present, the Federal Reserve credit monopoly encourages speculators.

In the housing bubble, mortgage rates were 6% while housing rates were going up 10%-20%/year due to inflation. This encouraged people to load up on the biggest mortgage they could and buy the biggest house they could. Banks borrowed at the Fed Funds Rate (around 4%) and lent out mortgages at 6%. Using leverage ratios of 30x-100x, this was very profitable.

When the bust occurred, individuals lost their homes and savings while insiders got a bailout.

Right now, the Fed Funds Rate is 0%-0.25%. That provides an incentive for the banksters to borrow as much as they can and buy stocks or other assets. As the housing bubble bursts, another bubble is inflating.

The Federal Reserve credit monopoly and negative real interest rates enable people to make unearned profits from speculating.

Taking advantage of cheap interest rates and low oil prices, some hedge funds borrowed at the Fed Funds Rate (0%-0.25%), bought oil, and paid to store it. They aren't providing a useful service. They're merely exploiting the Federal Reserve interest rate subsidy.

In a really free market, speculators earn profit by helping people. They buy undervalued assets and sell later when they're needed.

The Federal Reserve price-fixing cartel subsidizes speculators. Everyone else pays the profits of speculators via inflation. When insiders speculate and are wrong, they are "too big to fail" and qualify for a bailout. When non-insiders speculate and are wrong, then they lose their homes and their savings.


Anonymous said...

A real, actual speculator risks his own capital (and what his capital guarantees on leverage) on a forecasting bet.

This speculator is needed, as he serves a very useful economic purpose. His capital gets spent on buffering the effects of uncertainties.

Only one of many speculators will survive and multiply his capital. The rest will merely soften the fall for the rest of the economic players.

Now, what you are talking about FSK, these are not speculators. These are criminals, thieves. Do they risk their own capital? No. Do they lose capital as a result of mistake? No.

Why then you call them speculators? Because the government wants you to think that this is what speculation is about? The government takes regular crooks and calls them speculator. This is to conceal that these are simply crooks on contract with government. And it is to conceal that real speculators are shouting that we are going down, thereby disclosing that our leadership consist of crooks.

Then after your brainwashing session, you read about Doug Casey or someone like him, and upon hearing on what he has to say, you think: "ah,... just another speculator,... a crook...".

With this, you disregarding the real mccoy, their governmental mission is accomplished.

They know this trick very well. They have pulled it with the dollar earlier. They have named a worthless piece of paper "dollar" to confuse it with something else that was called dollar, but was real. The result? Now everyone thinks that worthless piece of TP with ink is real.

Talking about hyper fnords.

Anonymous said...

This is what is believed:

1999 - 2002, Gordon Brown sells 60% of UK gold for $275 a fine ounce average price.

Idiot? He created the "Brown Bottom" event, right?

This is what the conspiracy theory says:

From 1988 to 1996, they sell 60% of UK gold off the books for an average of $450 a fine ounce. To cover, a "foolish" "Brown Bottom" is executed. In effect, close to 25% of UK gold is taken for free.

However, this is only a fantasy, a conspiracy theory. After all, it is only for one's unbelievable stupidity that one can be elevated from a humble bean counter to be the Prime Minister.

Anonymous said...

Recycling Scam

The government collected fees at the point of sale of the beverages sold in containers to be recycled.

So, so far we can see that if 100% of those containers return to recycling centers, then there can be no default, as the money already collected.

However, the system is in default, because the recycling rate had risen from 67 to 85 % between 2007 and 2009. The program is 74 million dollars in the hole.

I say the only way this could possibly happen is someone took those 74 mils home late at night.

Apparently, the way the program was expected to operate was that the recycling rate was never to equal 100, so that those connected to the scam could count on steadily taking millions of dollars out of the program and bring them home, while covering the gullible public with their lies of how this is all about the environment.

Anonymous said...

No, speculators are actually providing a service! Speculators prevent shortages and surpluses. If a speculator goes long on something, he's saying "produce more of this to prevent a shortage". If a specualator goes short, he's saying "we have more than enough of this, use your capital goods to produce stuff we don't have enough of". Speculation balances supply and demand.

Anonymous said...

Of course I'm talking about free market speculation. In a forced market, the price signals are completely distorted. Speculation in a forced market is nothing but knowing who's gonna get the next bailout (and of course, Federal Reserve insiders always know in advance). Speculation in a forced market is immoral, because the profit isn't from balancing supply and demand, it's from the State stealing wealth from everyone else through inflation.

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