… is from page 237 of the second edition (1976) of Leland Yeager’s magisterial International Monetary Relations: Theory, History, and Policy:
Arbitrage moves something from a submarket or place where it is less valuable to a submarket or place where it is more valuable. Speculation based on a correct diagnosis of fundamental supplies and demands is arbitrage in time. Speculators “move” foreign exchange (and, ultimately, the foreign-trade goods corresponding to it) from a point in time of lesser value to a point in time of greater value. The source of speculators’ profits is akin to that of arbitrageurs’ profits, or, for that matter, of truck drivers’ wages: speculators, arbitrageurs, and truck drivers alike share in the values that they almost literally create by transforming lower-valued into higher-valued goods through a relocation in time or space.
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