Saving and Gambling

The buying and selling of investments has always been dominated by two different activities with opposing motivations. 

One activity is the need and desire to save, save for the future, save for rainy days and save for your children. These are normal human desires which have always been in humanity’s DNA, from the times when farmers saved grain and when hunters preserved meat. When abundance comes is the time to put some of the abundance aside, because hard times will inevitably follow.

The second activity of buying and selling investments is a desire to speculate, a desire to gamble. It is very odd that governments allow people who wish to save play in the same market as people who wish to gamble.

Of course, greed is present in both types of activities and a pensioner desiring to gain a better return on his or her investments may be foolish enough to be tempted into more speculative investments by greed, ignoring the risks and complaining when the chickens come home to roost in someone else’s barn. The fact that a saver may be so tempted is made more likely by the fact that the saver can see that many profit from the market, but not him (or her) and therefore the saver gets a mindset of following the speculator, which is just what the speculator wants.

The first type of activity desires a steady, market, which moves slowly in tiny increments. That way the savings are best preserved (the first duty of savers) and the risks of growth are reduced. The second type of activity desires large movements in the markets, the larger and the quicker the better, so that speculators can make bets which can leverage markets into positions that are false but which offer the speculator the best chance of gain, usually at the expense of the saver.

Since markets were liberalised (some would say virtually deregulated) in 1988 the market swings have got larger and more violent and the speculators have been able to thus take money from the savers. It is odd where governments whose prime duty is to protect their citizens allow devices which can slowly and surely remove the savings of most of the citizens and place the savings into the pockets of the wealthy speculators.

I can often identify a problem but less frequently can propose a solution.  There are many guises in which this problem appears – derivative instruments, future contracts which in a few hours set the price for food or a commodity which takes a year to produce, artificial trades in currencies which aggregate each day more than a hundred times the value of that currency and high frequency trading in which price variations in microseconds are exploited. All these things exist because it is in the interest of the speculators (who tend to be those who have wealth) not because the savers can get any benefit from such devices.

My solution is taxation; profits from short term investments should be taxed and highly taxed. In the United Kingdom most capital gains tax paid is no more than a tax on savings and wealth. It is time to change this.

2 Responses

  1. Re: New York worst ever blizzard yesterday.
    “So let me get this straight. Meteorologists got their forecasts for one blizzard spectacularly wrong just 24 hours in advance and yet we’re supposed to place our trust in the accuracy of climate models that stretch 100 years into the future?

    “But weather and climate are not the same thing!,” shriek the global warming alarmists. “You can’t cite weather to make arguments about climate change!” Except that global warming alarmists routinely fail to apply this rule to their own arguments about climate change. The Guardian kindly lectures us that “climate change” is responsible for the “super-charging” winter storm that never arrived on the east coast.

    Bill Nye also told MSNBC, “I just want to introduce the idea that this storm is connected to climate change. I want to introduce that idea….The strong winds that we had in southern California, the very strong winds that will be associated with this storm in the next couple of days, these could be connected to climate change.”

    When you’re arguing for man-made climate change, all weather is indicative of climate change. Snow, rain, dry, hot, cold. It doesn’t matter. Just shut up and pay your carbon taxes.

    I’m not a climate scientist, but when global warming alarmists are simultaneously arguing that large amounts of snow prove man-made global warming, while also heralding “the end of snow” as another indicator of anthropogenic climate change, there’s something wrong with this picture.

    From Infowars.

  2. The global warming idea was discovered by fluke science, by non other than Miriam Rothschild in her work in zoology and how the climate has changed dramatically, corals was the topic and where they grew in the higher latitudes, it was her husband Victor who cashed in on the idea much later, in fact most of the things we see today was funded by these moguls, listen and learn a little more about how their models of war and loans is creating the madness we all see today.

    Enjoy.

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