On Feb 17, 2011, at 3:03 PM, Julio Huato wrote:
> ...Shane intervened and denied the
> theoretical possibility of a speculative bubble (or it appears to me
> that he did)...
To be clear, I deny no such thing. Speculative bubbles happen all the time, and collapse all the time, in futures markets and also in spot markets subject to hoarding. And market volatility always profits the well-informed at the expense of the informationally deprived just as extreme weather volatility damages agricultural productivity. My point is that, over whatever cyclical duration applies, the price level at the end is unrelated to the speculation at the beginning but is essentially determined by "fundamental" causes (market structure, demand, and physical supply). Speculation causes fluctuation around the trend but has no influence on the trend. What counts are population and income changes and, above all, the disruptive weather that becomes ever more frequent as the globe heats up. As for present price levels anyone who thinks they have been inflated by speculation should, if honest with himself, put up at least some money on the short side.
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