John Steward of Jesus
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The commodities market

October 22, 1980

The commodities market, as any equilibrium of opposing forces, can be thought of as a train on a single set of tracks connecting many towns, with dead ends at the towns at each end of the line. The conductor, after stopping a each town, decides whether to go one way or the other, on the basis of the money bids of the people on the train and at the station. If residents don’t take the train, they can walk, take another vehicle, etc. The train will go back and forth, spending great amounts of time in the middle, to shorten walking distances for travelers. Everyone knows there is a limit to how far the train can go in either direction.

 Trading commodities is analogous to predicting which way the train will move in the future. Fundamentalists count the people waiting at the stations. Technicians look which way the train is moving, because those on the train will pay to go further. Cyclists check past records of train movements, to learn the schedule patterns of the travelers.

Just as the conductor decides only to go to the next station, and never to go past five stations in one direction, so the market never “decides” to make a major move, but only to go to the next point in that direction.