this video does a good job of explaining the benefits of traders on the commodities market, but these same benefits do not translate to the stock market because stocks aren’t “usable” and have a completely different paradigm of supply and demand.
Yes but the key point is what you mentioned: producing more quantity of product than the quantity demanded. Imagine being an investor with big capitals. You pump in money and say to firms "produce more, then you have to give me money back once you make profit". The firm will then invest those money to increase production and hire people. If the product is demanded they will set up higher prices. Then the firm will have someway to pay back the debt. But what happens if the firm doesn't sell an actual quantity*price that pairs the expected profit? They have to cut expenses (the higher cost is actually employees), so then you'll have people without job, regression ecc... The difference is that the speculator made tons of money and the firm didn't. This is one of the reason why money isn't real
I’ve wondered about this since at first glance it seems they only benefit from the actual entrepreneurs like a leech. However sometimes it does seem it hurt like how homes are bought up and not used just to sell them later. It seems wasteful to let a resource sit and do nothing when it could be used. Of course there are other factors involved in house prices increasing but it still seems wrong.
I buy copper but I buy it because it has potential to grow as a valuable resource. My problem is I don't like it when the price falls and I lose my money to my stock broker. smh so i will resort to buying copper and storing it in a warehouse one day.
In 2008 crude oil hit $140 / barrel even as demand plummeted and the economy crashed purely based on speculator market manipulation. More oil was being traded daily than has ever actually existed on planet earth. This pushed GM and Chrysler into bankruptcy as everyone scrambled to buy economy cars. The speculators got filthy rich on the backs of the rest of us. They utilize strategies and products (e.g. derivatives) that most people can't even conceptually understand. A service? I'm not buying it.
not "purely based", the huge bubbles are not due to speculation, but due to money creation on a large scale. This extra money have to go somewhere. Derivates, realty, and commodities are the great examples of that.
Speculation on things doesn't do an actual work. The money of the speculator, if he/she is the winner is made off of somebody else's loss. It's all about the intention and the action accordingly ... Trying to find few benefits of speculation doesn't wash away its nature.
When saving is profitable, bargaining power falls through the floor. It offers an alternative to everything. A safe haven. If the price of housing is being bidded up by speculative borrowers & flippers, then people will withdraw their acquisition of housing & hold appreciating currency. That currency is then lent out, but because they've withdrawn their acquisition of housing in turn for saving, then lenders don't lend into housing (as its demand has fallen). Instead funds are allocated elsewhere to actually demanded sectors, which draws people in the housing market away to those sectors. The ones who stay face the greater fool scenario. Under a scarce divisible currency there's no credit either. Inflationary borrowing ends. This is why housing pricing throughout most of the 1800s was flat, even with unprecedented immigration. I'd rather have a flat consumption tax to encourage savings.
When the speculater is big enough and has a lot of liquid, then it can change the direction of the market, so he is not just taking the risk he creates a situation
I feel like this video didn't really touch on the actual downsides to speculation. In terms of assets, it is undeniable that while the speculator is holding onto the asset, it's no longer on the market. The asset could be providing usefulness to someone, but instead if collects dust in a speculator's hypothetical closet. And in terms of cash, the successful speculator the video praises, by definition is making a profit. And that profit is coming from someone else. Another unfortunate investor. Once again, if the speculator did not exist, this cash would instead reside at someone else who needs it more, who might actually trade it for goods and services. Thirdly, the video makes this mind boggling claim that a speculator buying assets when they're cheap, forcing up prices during a shortage, is somehow good for the consumer, because it reduces their consumption. Excuse me? What about their freaking wallet? How are you completely neglecting the negative impact of them having less money, and less of whatever asset they wanted to consume? They didn't buy it for fun, they needed it, hence why they bought it. And the speculator just made it harder, and more expensive to get.
It depends on what is being speculated on. Land speculation is not a hypothetical exercise, it denies real land that people need. Land speculators benefit from the hard work of those who work, without doing any productive work themselves. It actually depresses overall production, and extracts a lot of what actually is produced. I cannot see how land speculation is good, except for the speculators of course.
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this video does a good job of explaining the benefits of traders on the commodities market, but these same benefits do not translate to the stock market because stocks aren’t “usable” and have a completely different paradigm of supply and demand.
Yes but the key point is what you mentioned: producing more quantity of product than the quantity demanded. Imagine being an investor with big capitals. You pump in money and say to firms "produce more, then you have to give me money back once you make profit". The firm will then invest those money to increase production and hire people. If the product is demanded they will set up higher prices. Then the firm will have someway to pay back the debt. But what happens if the firm doesn't sell an actual quantity*price that pairs the expected profit? They have to cut expenses (the higher cost is actually employees), so then you'll have people without job, regression ecc... The difference is that the speculator made tons of money and the firm didn't. This is one of the reason why money isn't real
Great job ! I was looking for answers to rather or not trading commodities was beneficial to the economy,
I’ve wondered about this since at first glance it seems they only benefit from the actual entrepreneurs like a leech. However sometimes it does seem it hurt like how homes are bought up and not used just to sell them later. It seems wasteful to let a resource sit and do nothing when it could be used. Of course there are other factors involved in house prices increasing but it still seems wrong.
yes
I buy copper but I buy it because it has potential to grow as a valuable resource. My problem is I don't like it when the price falls and I lose my money to my stock broker.
smh so i will resort to buying copper and storing it in a warehouse one day.
In 2008 crude oil hit $140 / barrel even as demand plummeted and the economy crashed purely based on speculator market manipulation. More oil was being traded daily than has ever actually existed on planet earth. This pushed GM and Chrysler into bankruptcy as everyone scrambled to buy economy cars. The speculators got filthy rich on the backs of the rest of us. They utilize strategies and products (e.g. derivatives) that most people can't even conceptually understand. A service? I'm not buying it.
not "purely based", the huge bubbles are not due to speculation, but due to money creation on a large scale. This extra money have to go somewhere. Derivates, realty, and commodities are the great examples of that.
Speculation on things doesn't do an actual work. The money of the speculator, if he/she is the winner is made off of somebody else's loss. It's all about the intention and the action accordingly ... Trying to find few benefits of speculation doesn't wash away its nature.
Exactly. Speculation hurt many Americans financially.
A land value tax is the least bad tax, so best to discourage land speculation by it.
When saving is profitable, bargaining power falls through the floor. It offers an alternative to everything. A safe haven. If the price of housing is being bidded up by speculative borrowers & flippers, then people will withdraw their acquisition of housing & hold appreciating currency. That currency is then lent out, but because they've withdrawn their acquisition of housing in turn for saving, then lenders don't lend into housing (as its demand has fallen). Instead funds are allocated elsewhere to actually demanded sectors, which draws people in the housing market away to those sectors. The ones who stay face the greater fool scenario. Under a scarce divisible currency there's no credit either. Inflationary borrowing ends. This is why housing pricing throughout most of the 1800s was flat, even with unprecedented immigration.
I'd rather have a flat consumption tax to encourage savings.
When the speculater is big enough and has a lot of liquid, then it can change the direction of the market, so he is not just taking the risk he creates a situation
That sounds like what governments do.
@@richierich8245 or for better example the crypto market and elon musk
Smart money.
Nice 👌
I feel like this video didn't really touch on the actual downsides to speculation. In terms of assets, it is undeniable that while the speculator is holding onto the asset, it's no longer on the market. The asset could be providing usefulness to someone, but instead if collects dust in a speculator's hypothetical closet.
And in terms of cash, the successful speculator the video praises, by definition is making a profit. And that profit is coming from someone else. Another unfortunate investor. Once again, if the speculator did not exist, this cash would instead reside at someone else who needs it more, who might actually trade it for goods and services.
Thirdly, the video makes this mind boggling claim that a speculator buying assets when they're cheap, forcing up prices during a shortage, is somehow good for the consumer, because it reduces their consumption. Excuse me? What about their freaking wallet? How are you completely neglecting the negative impact of them having less money, and less of whatever asset they wanted to consume? They didn't buy it for fun, they needed it, hence why they bought it. And the speculator just made it harder, and more expensive to get.
Speculators hurt millions of Americans financially.
Many speculators don't hold commodity. They play betting. This is the actual truth
he literally said that in the video. did you watch?
Speculation shouldn't be banned. Nobody is forced to follow the speculators.
It depends on what is being speculated on. Land speculation is not a hypothetical exercise, it denies real land that people need. Land speculators benefit from the hard work of those who work, without doing any productive work themselves. It actually depresses overall production, and extracts a lot of what actually is produced. I cannot see how land speculation is good, except for the speculators of course.