I am denying the existence in theory and in fact. The theory is based on a poor understanding. It is possible to invent many theories which fit most of the facts, but are still false. False theories always have at least some inconsistencies. Humorously, complete theories, one's which cover all the facts, are mostly useless, and incomplete ones help us to build stronger theories. In economics to assert the existence of manipulation is like asking whether unicorns with golden horns exist. Even if they do you can't demonstrate it.
Was Buffitt trying to corner the silver market with his large purchases? Why do you believe it is desirable to corner or monopolize a market? If you succeed at this, to whom will you sell? Economics is a closed universe. There is no infinite horizon to its end game. The result of a corner is the horizon locks you out in infinity, so you end up selling for nothing. This is the problem of the chaos theory of gold. If we had economic chaos, gold approaches priceless and therefore worthless because it wouldn't be exchangeable.
This is the error in Merton's long-short hedging price dynamic equations. They fail to contain proper infinite horizon boundary value constraints. LTCM has certain potential infinite losses in theory. It is always assumed that a finite cut-off to retain renormalizability in structure equations is available. The FED is the cut-off. But like chaos in gold price this assumption isn't valid theoretically and is added by hand. You can't find anyone to pay you $10,000,000 worth of greenbacks for your ounce of gold.
Therefore, the end of manipulation is absurd. This is what the specialist on the NYSE has to learn. They have to learn to let the market force them to do what they think they shouldn't do, rather than let their special knowledge of the book entice them into price manipulation. When they attempt manipulation their expected return falls and if they persist they will go bust. You'll never get the public as personified by Richard Ney to believe that. He knows there's a conspiracy, but it never helped him any. |
