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> you pay based on the supply and the demand Your argument takes the form "the market price is the right price," which is basically just a statement of ideolog
by rmrfstar 6y ago
> you pay based on the supply and the demand
Your argument takes the form "the market price is the right price," which is basically just a statement of ideology.
Supply/demand schedules are as much a product of market structure as they are a function of market participant preferences. You see the HFT folks--who probably agree with your ideology--make this argument any time anyone proposes changes to financial market micro-structure.
So, the statement "the market price is the right price" implicitly assumes that the current structure of the market optimizes whatever objective you think markets exist to optimize.
- imgabe 6y agoIf you think the market is giving a wrong price or structural issues are not optimizing the right thing, the correct action is to fix those structural issues, not to try and fix prices by fiat. The market will continue to operate around that and distort elsewhere, usually to the detriment of everyone involved. It is not an ideology, it is a fact of how markets operate. If something is in great supply and low demand, the price will be low, and vice versa. This is an observable, objective statement about the nature of the world. Having an ideology that makes you wish the price were something else, doesn't change the reality of how prices of things are determined. The "structural issues" are usually the result of artificial distortions on the supply or the demand that come from the result of well-meaning but misguided efforts to get the "right" price according to one side of the transaction.