4 ms·
Seems like a rather strange business model: don't produce any actual good, but find enough pieces of paper that award enough numbers to sit back and collect sho
by jsprogrammer 11y ago
Seems like a rather strange business model: don't produce any actual good, but find enough pieces of paper that award enough numbers to sit back and collect short term profit.
Surely the model is not perpetually sustainable?
- AJ007 11y agoThe underpinning to this business model is to receive capital which governments decide must be expended to meet some goal -- be it GDP, exports, local currency exchange rate. In other terms it could be viewed as arbitraging participants who don't care to participate in the market for a marketable good. For example, if Jet.com was selling an item at a fixed loss (to expand marketshare or hit some VC targeted numbers, etc) and you just kept buying that item and selling it at the market rate on another exchange. The other piece to this is that one is not simply just sitting back and doing nothing but rather accumulating a lot of risk from other parties who do not wish to do so. In itself that is reasonable, but when the parties involved don't have the capital to cover losses should they appear, that is another issue.
- jsprogrammer 11y agoI don't think a comparison with physical goods markets is applicable. Moving physical goods from market to market takes enormous work and space compared to the work and space needed to transmit some bits around to account for paper/electronic transactions. Accumulating risk might be an apt description of the model. However, the risk is not isolated. Do we really want people not only sitting back, doing nothing, but actively accumulating risk? Sounds like a disaster waiting to happen. When an involved party is a bank, they, by charter, will not have enough capital to survive some losses.