The Nature of Speculation

I ask myself why I post certain links when the viability of the assertions are at risk of being wrong. This Post is a Case in Point. Chris Dillow asserts that Carrots work best with the Rich, and Sticks work best with the Poor. I think that is a particularly British thing, and Americans react in an opposite manner. Lottery Tickets are not bought by the Wealthy, and they will spend more than it is worth to avoid payment of Taxes. American Poor will avoid Candy and Treats to maintain sufficient funds to buy Lottery Tickets. American incidence of sending back Products which do not meet their Expectations, even if the cost of Shipping the Product back exceeds the price of the Product. I think I include the link because I like the Reward of presenting a well-thought Post, and estimate that the loss from Reader adoption of spurious accounts for personal behavior is small.

It is interesting to note that so many Commentators must insist that high Oil prices are not the fault of Speculators. They sometimes enter into incredible calisthenics of logic to achieve their end goal, which is a defense of Speculator behavior. The real reason for high Oil prices is that there is an immense amount of Investor Cash out there, combined with little opportunity to invest wisely at a Profit; they take the open Option of dumping the funds in the Oil market, hoping for potential Profits in the most volatile of the Commodity markets. The vast influx of Cash into the Market is driving up the Demand price for Oil. The obvious Solution for the Situation is adequate taxation of Investment Profits, which would limit the excess funds, and lower the Profitability of high involvement, high-Risk ventures; no one, of course, would consider such a venue for Price controls.

Richard Green asks a Question which may be relevant to the discussion. Delinquencies at .81% at Freddie Mac are recognizably slight, but represent an image of a Stick. The sheer magnitude of Wealth may change the visual representation of Carrots and Sticks. The Poor’s Lottery tickets may be refocused as the Wealthy’s speculation in Oil. Lack of Food may be a strong Stick to the Poor, while the threat of Taxation stands as a major focal Injury to the Wealthy. It is my belief that Carrots and Sticks work equally as well for Rich and Poor; it is just that the content of those Carrots and Stick alter. The Chance of Winning the Lottery may be less than the Chance of winning Profits from Oil Speculation, but the Wealthy have always shown great acumen concerning financial matters; nothing altering the human nature to achieve quick, unearned Riches. lgl