Every month, the U.S. Department of Agriculture puts out a report that says how many soybeans there are. If there are more soybeans than people thought, soybeans will be worth less than people thought, and vice versa, because of supply and demand. If everyone thought that there were, like, 600 soybeans, and the USDA reports that there are in fact 500 soybeans, then the price of a soybean will rise: If it was $100 a minute before the report, it might be $110 a minute after. (I am simplifying here—these are not the actual prices or quantities of soybeans, and the report is more complicated than this—but who cares.)

This is good. At the new higher price, soybean farmers will want to grow more soybeans in order to make more money, and soybean users will cut back on their soybean use—switching to lima beans, say—to save money. The price signal conveyed by financial markets will direct resources toward their best use, and will make the world more efficient. And so the people who cre...

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