I'm reading Edward Chancellor right now - his book "Devil Take the Hindmost" chronicles events of mass speculation in history, starting with the Tulip mania in the Netherlands and ending with unregulated Hedge Funds in the 2000s.
The question for economists is whether speculation should be regulated or not. Friedman and his kind (Reagan, Greenspan) are for deregulation on the basis that if people lose enough money they will stop speculating, whereas Keynes and his kind (Volcker, many Democrats) are for regulation to prevent mass speculation. They need to decide on what policy the Central Bank will take to prevent recessions. In light of the worsening economic conditions in the United States (the crash of the subprime market, the continued depreciation of the US dollar, the billions of dollars the US Tresury needs to print in order to pay foreign debts, and the trillions of dollars being speculated in hedge funds and private equity), the likelihood of a selloff of US Currency and Bonds, and a spike in interest rates is increasing.
Why should the man on the street care? The question for us non-insiders is will "MY FAMILY'S ECONOMY SUFFER?". The solution for the regular joe making $130,000 instead of a million a year is simple: STOP USING SPECULATIVE INSTRUMENTS TO FUND YOUR RETIREMENT. ONLY INSIDERS TRULY BENEFIT FROM SPECULATION.
