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Speculators Perform No Useful Social Function

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From the Washington Times: "Farmers and food executives appealed fruitlessly to federal officials yesterday for regulatory steps to limit speculative buying that is helping to drive food prices higher.... 'Something is wrong,' said National Farmers Union President Tom Buis, adding that the CFTC's refusal to rein in speculators will force farmers and consumers to take their case to Congress.

"'It may warrant congressional intervention,' he said. 'The public is all too aware of the recent credit crisis on Wall Street. We don't want a lack of oversight and regulation to lead to a similar crisis in rural America.'"

(Yes, he really said the credit crisis was the result of a lack of oversight and regulation.)

Now for a little thoughtcrime. The speculator helps society adjust to changing circumstances by buying in anticipation of resale in the future when scarcity is expected to be greater and prices higher. In that way, he ensures additional supplies will be available in the future, diverting them from present use to their more urgently demanded uses in the future, and thus helps to smooth out disruptions caused by decreases in supply.

Tom Woods, a senior fellow of the Mises Institute, is the author of a dozen books, most recently Real Dissent: A Libertarian Sets Fire to the Index Card of Allowable Opinion. Tom's articles have appeared in dozens of popular and scholarly periodicals, and his books have been translated into a dozen languages. Tom hosts the Tom Woods Show, a libertarian podcast that releases a new episode every weekday. With Bob Murphy, he co-hosts Contra Krugman, a weekly podcast that refutes Paul Krugman's New York Times column.

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