The “wild assertions about speculation and manipulation are defective and completely unsupported by reliable evidence,” said Craig Pirrong, writing in the WSJ about congressional proposals to scapegoat speculator participation in oil futures trading.
Restricting these speculators won’t reduce the price of oil — but they are likely to make consumers and investors worse off. Futures and swap markets facilitate the efficient management of price risks, and speculators are an important part of that process.
Nothing in the article represents breath-taking new insight, Pirrong is just patiently explaining the standard economic view.
It isn’t clear to me that patience is called for when politicians engage in populist demagoguery in the vain attempt to look busy because consumers are really unhappy. These proposals would be harmful if implemented, I assume that most members of Congress are smart enough to understand that the proposals are harmful, they advocate the proposals anyway, it is despicable behavior. Of course scapegoating by politician-demagogues is nothing new, and the republic will survive this particular bunch of despicable Congressional behavior.
(HT to Streetwise Professor)