On Apr 11, 2011, at 1:12 PM, Doug Henwood wrote:
>
> On Apr 11, 2011, at 1:06 PM, Shane Mage wrote:
>
>> Price counts for many things--but whatever the price the identity
>> of long and short intersts remains.
>
> So what?
My point was that the graph allegedly showing QE driving up prices
would be the same graph if it used short rather than long interest.
And the question then is, why does anybody claim that it shows what it
*obviously* does not?
> If buyer and seller agree to a price today that's 3% higher than
> yesterday, the identity remains, but the price is up. And when
> thousands of new buyers come in, prices tend to rise.
That's the nature of a speculative bubble--because prices are seen to
be rising "thousands" of relatively less-informed speculators buy
future goods because they expect prices to go on rising long enough to
make a killing while some fewer but richer other speculators, at a
certain stage better-informed or better positioned, sell them those
future goods (applying the Rothschild maxim, leave the last ten
percent to the marks). And once that ten percent of the price-rise
has occurred the price collapses back to or below its starting point,
leaving the "Rothschilds" even richer while the marks have lost their
shirts. Stiglitz got a Nobel Award essentially for pointing out the
obvious fact (not undeservedly, since scientific discovery is
basically recognition of obvious realities that self-interest or
ideology have kept everybody from paying attention to) that
differential access to and control of information are determinant in
that sort of market behavior.
>
> But of course, it violates a certain Vol. 1 fundamentalism that
> finance can influence the real world.
Ever since the days of John Law (three centuries ago) the mechanics of speculative markets have been well known (at least to perceptive economists as well as to the "Rothschilds"). What has that to do with Kapital, v.1? Is the sneer meant to dispute Marx's contention, as explicit in v.3 and Theorien as in v.1, that finance produces no surplus-value or, as we put it now, is a "zero-sum (excepting the vigorish) game?"
Shane Mage
"All things are an equal exchange for fire and fire for all things, as goods are for gold and gold for goods."
Herakleitos of Ephesos, fr, 90