🎲 Speculation - is it good for the economy?

Speculation and speculators market role. Is speculation a useful function on the market? Or is the opposite true - its harmful and bad for the economy?
Learn Austrian Economics in a fun way!

LINKS

00:00 Economics and speculation problem
00:40 What is speculation?
02:27 Speculation market role
07:50 Summary

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Music on CC license:

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[toughbiblepassages]

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.

[matheusmanciniporfirionune]

Great job ! I was looking for answers to rather or not trading commodities was beneficial to the economy,

[lorenzofornasier]

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

[wertywerrtyson]

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.

[masol]

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.

[spartac]

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.

[tadamb]

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.

[samiorabi]

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

[Anti-CornLawLeague]

A land value tax is the least bad tax, so best to discourage land speculation by it.

[Google_Censored_Commenter]

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.

[lemans]

Speculators hurt millions of Americans financially.

[marunio]

Speculation shouldn't be banned. Nobody is forced to follow the speculators.

[hariomhari]

Many speculators don't hold commodity. They play betting. This is the actual truth