Posted by IndianaRed on May 14, 2011 at 10:18:39 from (75.46.72.132):
This comes up in discussion quite a bit and I found an article that explains it quite well. I knew speculation is important to the economy, now I know why.
Walter William Story -
Here's a non-rocket science question: If you expect a reduced harvest of wheat, corn, rice or any other commodity some time in the future, what would be the wise thing to do about your consumption today? I bet that the average person would answer: Consume less now so that more will be available in the future.
But how in the world can people be encouraged to consume less now? Enter the futures market, which consists of a worldwide group of millions upon millions of traders, often called speculators. Speculators, betting on a future shortage, buy up wheat, corn and rice today in the hopes of making money selling it for a higher price when the bad harvest hits. As speculators buy more and more wheat, corn and rice, they drive up today's prices. As today's price gets higher, people consume less, but more importantly, people do the intelligent thing without bureaucratic edicts. The vital role of the futures trader, or speculator, is to allocate goods over different time periods. And, it's not just wheat, corn and rice that must be allocated over time but all commodities including oil.
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Today's Featured Article - Engine Valves - Some Helpful Information - by Staff. Intake - On the intake stroke the piston moves doward, sucking in carburized fuel through the open intake valve. Exhaust valve is closed. Compression - With both the intake and exhaust valves closed, the pistons upward stroke compresses or squeezes the fuel into the combustion chamber. Firing - Ignited by the spark, the compressed fuel explodes and forces the piston downward on its power stroke. Intake and exhaust valves are closed. Exhaust valves and seats are exp
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