Friedman's proposition that destabilizing speculators must lose money is easily proved with partial equilibrium analysis. But this analysis proves too much. In a general equilibrium analysis, assuming speculation implies institutional arrangements for borrowing goods one period and repaying them the next, one party must gain and the other party and the whole community lose from destabilizing speculation; but whether the initiator gains or loses depends on tastes and the commodity denomination of the contract.

Friedman's proposition that destabilizing speculators must lose money is easily proved with partial equilibrium analysis. But this analysis proves too much. In a general equilibrium analysis, assuming speculation implies institutional arrangements for borrowing goods one period and repaying them the next, one party must gain and the other party and the whole community lose from destabilizing speculation; but whether the initiator gains or loses depends on tastes and the commodity denomination of the contract.