Re: hedging: good or bad?

[Bruce McFarling <brmcf@xxxxxxxxxxxxxx>]

On Tue, 18 Apr 1995, Doug Henwood wrote, in response to Paul Davidson,
and certainly not in response to anything i said (in other words, I'm
butting in again):

> That's all very interesting, but it doesn't answer the question - is
> hedging good for the macroeconomy or not? Does stabilizing price from the
> participants' point of view (i.e., if the gyrations mean nothing to a fully
> hedged producer or consumer) put too much of the burden of adjustment on
> quantity, as Newberry argued?

	I'm skeptical whether focusing on hedging itself is going to give
sufficient answer.  For example, in currency hedging, as was discussed on
pkt recently, is the question whether or not hedging is good or bad?  Or
is it, rather, whether a system is good or bad that encourage currency
speculation and increases the importance of hedging as an auxilliary to
international trade?  The second is a longer question, but I'd venture a
short answer: no, such a system is not good.
	So, in this context, in this evaluation of whether it is better
to take adverse hits on prices or quantities, do the author's take for
granted to many aspects of the system creating the adverse hits?

Bruce McFarling, Knoxville
brmcf@xxxxxxxxxxxxxx