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The Speed Governor

Have you ever seen one of those old steam engines with the spinning three-ball governor? When the engine speeds up, the governor spins faster and centrifugal force makes the balls move outward, closing the throttle and slowing the engine. When the engine slows, the balls move inward and open the throttle.

Our present economic situation is like this engine. Every time recovery begins, oil prices climb and close the throttle, shutting the recovery down. If the economy starts to collapse again, oil prices fall and things pick up. So the economy putters along without any real growth, because as soon as people start whispering the word "recovery", the speculators pile into the futures market and drive oil prices up, choking off the recovery.

Until the oil price problem is addressed, recovery seems impossible. And our politicians seem incapable of dealing with the situation. Politicians of both parties have promised to control speculation, but nothing has been done. Republicans are more open to increasing supply, while Democrats want to limit demand. Supply and demand aren't really the problem, though. US demand is way down. Oil companies are shutting refineries because they can't sell product. They are also beginning to send product overseas to sell it, because there isn't enough demand for it here. Meanwhile, instead of prices falling with falling demand, they are skyrocketing.

The reason for this is speculation. We need to get the gamblers out of the futures market. This could be done fairly simply with all commodities, not just oil, by requiring buyers to take physical delivery of the product before reselling it. This would limit use of the futures markets to those actually dealing with the product.

If this isn't done soon, we will have war and revolution on a planetary scale. High food and fuel prices are behind most of the unrest in the Middle East (not a longing for democracy!). The economic situation here is starting to breed increasing crime.