Financial speculation: the good, the bad and the parasitic

Speculation diverts resources away from the real economy and channels it towards a purely derivative economy.

The Conversation

The word “speculation” carries a connotation of negativity. And it’s probably fair to say that pretty much every financial crisis since the tulip mania of the 1630s can be attributed to some sort of mass speculation. There is no question that speculation caused the financial crisis of 2008, first in housing, and then in derivative securities. Recent reports on the multiple advantages enjoyed by high-speed traders again brings speculation to the fore and, with it, the question of whether it is good, bad or indifferent for the economy.


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