Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

There’s probably some short-term effect. I think there may be something to what you suggest, but my own assertion is that it would probably have a short-term effect on prices. Whether that’s a matter of days or weeks or maybe longer, it’s hard to put a time dimension on it. I was trying to make the point in my remarks, especially about natural gas, that most people just assume that last week’s price movements in natural gas—I believe a very sharp drop occurred on Thursday—were related to the closeout of some of these positions from the one hedge fund, and the presumption is that other hedge funds that made money in energy earlier this year were also getting out of some of these trades. So that would support what you were saying. Now, whether that element has an effect on prices for a week or two weeks is very hard to know, but it probably does have some effect. I think Karen is probably right in the sense that over the long term there are inventory effects, and at some point, those speculative effects get washed out.

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