>This makes no sense. Who did the placing? Every market has speculators, and even end-user-buyers base their decisions in some part on speculation.
Did you read the article?
These buyers and sellers of real stuff are the physical hedgers. The FDR administration recognized, however, that in order for the market to properly function, there needed to exist another kind of player - the speculator. The entire purpose of the speculator, as originally envisioned by the people who designed this market, was to guarantee that the physical hedgers, the real players, could always have a place to buy and/or sell their products.
>The speculator is there to make money, and providing liquidity is a side-effect.
Yes, speculators making money is fine. The liquidity side-effect is the reason to allow for some speculation in regulations.
> If supply is indeed artificially constricted by hoarding speculators, they will need to sell off their supply at some point.
Yes, that's why, as I said, consumers are subject to volatile price swings from investors, rather than steadier prices which would more accurately reflect supply and demand.
> The FDR administration recognized, however, that in order for the market to properly function, there needed to exist another kind of player - the speculator. The entire purpose of the speculator, as originally envisioned ...
My point is that free and open markets attract participants who exercise their self-interest. There is no central authority saying "you are the buyer", "you are the seller", and "you are the speculator". Speculation is an inherent property in any market participant. So-called "speculators" are merely those having no larger interests (i.e. taking delivery and consumption).
In a split-second, a "real player" can become a speculator, if he sees a market opportunity and takes on a position for which he never intends to take delivery. The point is, identifying who is a speculator and attempting to limit those activities is extremely difficult, because speculation is all about internal motivation, and central authorities have no real insight as to an individual's motivation.
I applaud FDR for not trying to prevent speculation, but I seriously doubt any capability for injecting speculation via "placement".
>but I seriously doubt any capability for injecting speculation via "placement".
You're reading my text too literally. I don't mean to an arm from the sky put speculators in the middle of the wheat market. As you correctly mention, an open market will attract those who exercise self-interest. Speculators are thereby effectively "placed" in a designed market by not regulating them out.
Did you read the article?
These buyers and sellers of real stuff are the physical hedgers. The FDR administration recognized, however, that in order for the market to properly function, there needed to exist another kind of player - the speculator. The entire purpose of the speculator, as originally envisioned by the people who designed this market, was to guarantee that the physical hedgers, the real players, could always have a place to buy and/or sell their products.
>The speculator is there to make money, and providing liquidity is a side-effect.
Yes, speculators making money is fine. The liquidity side-effect is the reason to allow for some speculation in regulations.
> If supply is indeed artificially constricted by hoarding speculators, they will need to sell off their supply at some point.
Yes, that's why, as I said, consumers are subject to volatile price swings from investors, rather than steadier prices which would more accurately reflect supply and demand.