I am listening to Lou Dobbs talk to Bill O'Reilly about the evils of oil speculation. This is truly painful.
Dobbs points out that the supply is greater than demand right now so that it must be the fault of oil speculators. Morons!
If you had something that you knew was 6 months from now going to be worth twice as much as it is now would you sell it for the price it is going for now or would you hold on to it for six months and sell it then? Of course you would wait. And if someone wanted to buy it now how much more would they have to pay for it to get you to part with it now instead of waiting till the price went up? Probably something close to the price you expect it to be six months from now.
That is how the futures market drives up prices in the present. Because people are not idiots, unlike O'Reilly and Dobbs.
Dobbs points out that the supply is greater than demand right now so that it must be the fault of oil speculators. Morons!
If you had something that you knew was 6 months from now going to be worth twice as much as it is now would you sell it for the price it is going for now or would you hold on to it for six months and sell it then? Of course you would wait. And if someone wanted to buy it now how much more would they have to pay for it to get you to part with it now instead of waiting till the price went up? Probably something close to the price you expect it to be six months from now.
That is how the futures market drives up prices in the present. Because people are not idiots, unlike O'Reilly and Dobbs.
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