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Old Jul 9, 2008, 7:40 pm
  #21  
hotturnip
 
Join Date: Apr 2002
Location: Atlanta Metro
Programs: DL , AC, BA, Hhonors Diamond, IH Platinum, Bonvoy Gold, Hyatt Discoverist
Posts: 2,354
Economics?

This was Finlandia's comment in the other thread that got started:

[vent] Nonsense. It's impossible for futures trading to drive up spot prices because the value of futures contracts sold by sellers (who expect prices to fall) equals the value of contracts bought by buyers (who expect prices to rise). The net effect on the market must be zero. Besides, the futures contracts are paid for in cash, not oil. They're nothing more than bets on which way prices will go. Thus, futures trading in oil is like people betting on a World Cup match in progress - there is no effect on the outcome.
What?! So how do you explain the "tulip mania" in 17th-century Holland and all the other crazy economic bubbles that have happened through history? Speculation DOES drive up prices, most recently seen in the real estate market.
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