Many years ago I was chatting with a friend who is an economics professor about debt. It basically boils down to a simple rule, debt that is invested in someth

Many years ago I was chatting with a friend who is an economics professor about debt. It basically boils down to a simple rule, debt that is invested in something productive is a good idea and debt that isn't isn't. Take the parable and replace the finance industry with a Casino that lets you gamble on credit. The fisherman will all stop fishing, take credit, and play the roulette. For some time their debt will keep growing but they could end up with more cash vs. fishing. As long as the Casino makes sure they are fishing enough to pay back their debt then the Casino will get richer and the fisherman will get poorer. But that's what they get for gambling. If the government steps in and says you can borrow from the Casino forever, at zero interest rate, and you never have to pay it back, why wouldn't I go play the roulette? Futures make perfect sense when the two sides to the trade are protecting themselves against complementary eventualities and are simply seeking insurance. If they each consider the cost of that insurance there's no problem and that takes into account the cut the intermediary takes. If banks are making bad loans because they know that if the loan doesn't get repaid the government will step in and save them and if it does they'll make a lot of money, that's the point where the system breaks. EDIT: Also consider that without insurance, one bad year of fishing, and everyone on the island is dead. This is not hypothetical, in the not so distance past a draught was a death sentence to entire communities. The key is IMO speculation vs. legitimate use. The government needs to step in to discourage speculation through regulation and various other policies.