Sunday, August 26, 2007

What's Wrong With the Price System?

Some folks tell us that money is the root of all evil. Yet those who tell us this or rail against the "Price System" perhaps do not understand what money is or how it really works. Money is simply a "unit of trade" and it makes the flow of goods and services and trading to get what you need a lot easier. So yes, we need a unit of trade.

Those who tell us money is evil, do not have a plan to replace it. If you remove "money" you still need a unit of trade, What is it going to be? Are you going to use "point system" based on productivity? If so, you better load me up, as I would be one of the largest point holders, due to my productivity out put. But as soon as I was the top "point" holder, everyone would feel bad about them selves call "me" with the most points the "Devil" and here we go again.

Ayn Rand predicts it, and it matters not which "unit of trade" you use, because those who cannot or will not perform due to whatever excuse or reason will attack those who have the most points - that is merely Human nature. Unless you take human nature out of the equation through social conditioning and brain washing any system of value will have the same response in society.

Even if you use social conditioning to replace the desire for money, still human nature is in DNA and chemicals of the brain so you have to modify the food and vibrational energy waves too if you wish to prevent humans from acting like humans. I do not believe you can remove human nature without modification of the animal. It is not the money system that is problematic it is rather the humans who are using it.

Many who rail against the price system also complain about private property rights. Private Property exists due to the human animal being territorial. We know that human civilization exist without property rights in a few places now and many have in the past, yet these have not been wildly successful civilizations. When you add more people to a system, people become more violent in their behavior and that territorial-ness is problematic.

There is nothing wrong with property rights or the money system, any blame of problems should not be placed on the human psyche and any solutions to such perceived challenges must also take that into consideration.

L. Winslow is an Economic Advisor to the Online Think Tank, a Futurist and retired entreprenuer. Currently he is planning a bicycle ride across the US to raise money for charity and is sponsored by and all the proceeds will go to various charities who sign up.


The Art of Futures and Options Trading

Options on currencies, Treasury bills, notes and bonds, stocks and bonds indexes, and futures contracts are currently being traded. Since they are derivatives of actual investments, they can be difficult for individuals to understand and use profitably. The fact is that options traders loose money 60% of the time. These types of options are appealing to traders that want to protect their investments against major swings in market prices, or speculate on the markets movements.

Buying put options on stock indexes is a way for investors to hedge their portfolios against sharp drops in the market. It gives them the right to sell their option and make a profit if the market falls. the money realized on a sale will hopefully cover the losses in their portfolios resulting from the falling market. In order for this technique to work, the options have to be on the index that most closely tracks the kind of stocks they own. Plus there has to be enough options to offset the total value of the portfolio. Because options cost money and they expire quickly, using this kind of insurance regularly can take a big bite out of any of the profits that the portfolio itself produces.

Speculators use index options to gamble on shifts in the market direction. like other methods of high risk investing, this one offers the chance of making a big killing if the investor gets it right. Otherwise there wouldn't be any takers. However the risks of getting the price and the time right are magnified by the short life span of the index options. A complicated factor is that indexes don't always move in the same direction as the markets they track. When indexes are out of kilter, there are big profits to be made by the arbitrage traders with computer programs that are fine-tuned enough to take advantage of the movements.

Options are traded through options trading firms on the futures exchanges on the Chicago Board Options Exchange, and on four other stock exchanges. like futures contracts, options contracts are traded exclusively on the exchange that makes, or originates, them. Trades are handled through the exchanges where they take place. buy and sell orders are matched anonymously, and can be canceled by using an offsetting contract.

The SEC has initiated a controversial program with stock options, they are allowing them to be listed, and made available for sale on all of the exchanges the way that stocks themselves are. Currently, the Chicago and American exchanges, which trade contracts in blue-chip stocks, controls more than 75% of the business, with Philadelphia and Pacific exchanges about 22%. One change that multiple listing means is a shift to the increased use of telephone and computer-generated trading, introducing opportunities for comparison shopping and for arbitrage.

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