[quote=FlyerInHi][quote=CA renter]
We can wish all we want, but if you look at the numbers, it doesn’t look good, IMO.[/quote]
If you’re so sure, what are you doing to prepare?
Talking about speculation in commodities, higher prices of oil did lead to new technologies — more oil production, more alternative energy. We are now reaping the benefits.
GDP is total value of goods and services produced(not asset prices). There’s nothing fake about that. Why would you ever want GDP to go down? If something is not produced for lack of liquidity, that thing/service is lost forever (unless you’re talking about a finite resource such as oil). But human labor/productivity is infinite.[/quote]
Asset prices can affect GDP numbers, too. The prices of raw commodities is priced into things that we buy.
Additionally, when asset/commodity prices are artificially inflated, it causes a misallocation of resources. You’ve noted energy, so let’s use that as an example. If prices are being driven up by speculation, it will cause people in the energy industry to commit more resources to drilling for oil, or building massive solar or wind farms, etc. That’s good IF the prices are based on real supply and demand (not speculators of any sort). If the prices increases were caused by speculation or other market manipulations, then the boom will eventually go bust, and all of those direct and indirect jobs will be lost, the equipment will be sidelined (possibly only working a fraction of its intended lifespan), the environment will be damaged (and the companies responsible for the damage might go BK, leaving the mess for taxpayers to clean up) and the economy will be decimated, especially in the regions where all of this work was happening.
This is just one example. Market manipulations have a ripple effect on the economy, and if booms are allowed to grow to bubble proportions, they can take down whole sectors of the economy for a prolonged period of time.
And I doubt that a “lack of liquidity” will exist for very long. If the economy is that dicey, it will usually collapse, then the money from elsewhere comes rushing in during the vulture stage. Of course, I favor a public bank, so in my theoretically ideal world, there would almost always be liquidity in the system, especially if the boom-bust cycle was damped as speculators are prevented from controlling or greatly affecting the market.
