The World Speculation Made

Aris Komporozos-Athanasiou in the Boston Review:

Speculation encompasses a duality at the core of all financial activity. When pushed to its outermost limit, it can unleash formidable destructive forces and lead to the burst of market bubbles, such as seventeenth-century Amsterdam’s notorious tulip craze, the Victorian era’s railway manias, last century’s Great Depression, or the more recent 2008 global financial crisis. During these periods, market “passions” take hold: traders venerate ethereal values with no material referents or links to “fundamentals.” Yet speculation is also the market’s indispensable lubricant. All speculative trades calibrate risks to generate yields and prevent markets from “overheating.”

More here.