[ExI] Bad news for US customers of Intrade

[Adrian Tymes]

On Tue, Nov 27, 2012 at 3:59 PM, spike <spike66 at att.net> wrote:
> OK so let us ignore for the moment the propriety of governments interfering
> in oil speculation, and apply the logic to their control of gold prices.
> Speculators are driving up the price of gold.  Are we to assume this is a
> bad thing?  Why?  It seems to me like it is a good thing if the price of
> gold is speculated way up, for the amount of gold is what it is.  If its
> price is artificially sent way up, then we create money.  Perhaps
> governments want to keep that capability to themselves.  But governments
> hold huge reserves of gold, so they would benefit from speculators driving
> up the price.

Note that for every up, there's a down.  If up is good, down is bad - and
one can presume they ran into the bad at some point.

> Back to oil speculation, if speculators were sending the price of oil
> upward, I see this as mostly a positive thing: higher oil prices encourage
> the market to invest in oil alternative technologies, which even if not
> currently profitable, are at least interesting from an engineering point of
> view.  Furthermore the higher oil prices have environmental and safety
> benefits: it encourages people to buy smaller and lighter cars, which
> reduces emissions and reduces the risk to me if the drunken proles collide
> with Mister Lincoln.  It reduces the traffic on the roads as well.

This is all true, but it inflicts immediate, unescapable economic pain
on the average consumer, with an easy-to-trace cause.  This is a
Bad Thing, given the current government structure, and is therefore
fixed.

> If speculators are able to make a ton of money on oil, then it concentrates
> money into fewer hands, which also has its benefits: they invest that money
> into stuff that changes the world for the better, creates jobs and so forth.

In theory.  In practice, this doesn't happen so much.

> Regarding InTrade, that form of speculation does not influence the price of
> any commodity.  It is a zero sum game, where speculators play against each
> other.

Actually, it can.  If enough people bet on the price going down, then
there's a market to be made by tapping reserves to flood the market
with excess supply.  This happens often enough with the regular
markets; there is no reason to believe it wouldn't happen here either,
if enough volume was transacted.