[ETH_start]

Speculation is productive. All investment is a form of speculation about the future.

Even speculation in the secondary market is productive. It supports the valuation of securities, which allows companies to raise more capital on issuances of new societies, which in turn provides firms with funding for the formation of productive assets.

[tharmas]

My bad. I wasn't clear on how I define "speculation". When i use the term "speculation" i refer to things like buying up assets such as housing to extract more wealth from those assets or even to help drive the price up of said asset.

However, buying shares in a startup can be interpreted as "speculation" but I would see it as a good thing, so my choice of terms was not the best.

I dont see Blackrock or Blackstone buying up houses as a good thing. I see that as "speculation". But I realize now my definition of the term is much different from most other people.

[ETH_start]

I know it seems counter-intuitive, but investors buying up scarce resources like housing, and pushing up their price, is what you want to happen. When the price rises to reflect the scarcity of the product, then the profit motive to produce more of that product increases. That means more houses get built. A high price has a real purpose in the economy, so we should let investors buy up the assets they want so that the price of assets aligns with their respective scarcitym

Now Single Family Houses are a slightly different thing, as much of their value derives from the land that they're built on, and you can't build more land. So the benefit of investors buying up SFHs is going to be much less significant than investors buying up units in high-density developments like condo towers.