Jun 28 2007
Natural Gas Gambles & D.C.
Amaranth’s trading “caused wild price swings and socked consumers with high prices,” said Sen. Carl Levin, D-Mich., chairman of the panel. “It’s one thing when speculators gamble with their own money; it’s another when they turn U.S. energy natural gas) markets into a lottery.”
So says a politician whose done his fair share of messing with the economy in so many ways.
For example, it is Senator Levin’s Congress that continues to allow (and benefits from) laws that have created a fiat fractional reserve banking system in the U.S. That’s the same system that served to provide the credit from nothing that Amaranth used to mess with gas prices prices to such extremes. After all, Amaranth didn’t fall apart with trades backed fully by investor principle. No sir! These were leveraged trades that backfired, leaving the fund with pennies on the dollar as Amaranth was exposed on the wrong side of a big bet on natural gas prices.
No doubt Amaranth made serious mistakes, but such speculation among traders is a natural element of any market that is attempting to allocate resources. The Amaranths of the world would never have the ability to create such craziness without the use of leverage — leverage invented from nothing given the nature of fractional reserve banking.
But don’t expect the Carl Levine’s of the U.S. Congress to cut off their own golden goose — The same system of printing money from nothing provides the U.S. Congress with ready cash to cover shortfalls when tax raising is not politically viable or when the market balks at buying up official U.S. debt at the right rate.
Amaranth is guilty of blowing it, and nothing more. Mr. Levin and crew on the Potomac are guilty of dishonest monetary policy that is slowly strangling the U.S. economy. Remember that at election time.
