I'm not an expert in econ but I'm not sure to what degree Wall Street creates values. The existence of some kind of loan-giving...
-
-
-
...institution seems good, but I don't know how much hedge funds and weird derivatives add to that in a non-zero-sum way.
-
And I mean "don't know" literally - if some smart economist wants to tell me it's a lot, I'll consider believing them.
-
So the standard defense of hedge funds etc. involves a discussion of price signals as conveying useful info across parts of the economy. 1/
-
For example, consider a fund trading oil derivatives. Say they notice something that's going to cause Brazil to consume more oil next year
-
The firm bids up oil price futures, causing oil companies to invest more in production and oil consumers to plan to reduce consumption. 3/
-
That seems kinda useful. Theorists will tell you same applies to derivatives on currencies, interest rates, mortgage risk. At some point:

-
I agree that seems potentially useful, but is there any reason to think the right amount of resources are being allocated there?
- 6 more replies
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.