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> a well functioning finance industry I'm fully prepared to argue we don't have that, though. Traders are throwing many millions of dollars at projects without

> a well functioning finance industry I'm fully prepared to argue we don't have that, though. Traders are throwing many millions of dollars at projects without even a pretense of improving market accuracy, or adding meaningful liquidity. Algorithmic trading hasn't been especially good for accuracy - we suddenly have flash crashes with markets dropping 30% and recovering, based on no change in fundamentals. High speed trading hasn't been much good for it - paying to move your trading servers slightly closer to a T1 backbone doesn't improve liquidity meaningfully, or accuracy at all. And we already have serious, systematic fraud: was the money Goldman Sachs spent buying insider leaks from the Fed really good for the industry? I take your point, and I don't begrudge finance its enormous economic role. But suggesting that the industry's growth in the last ~decade is about improving accuracy seems pretty questionable.

simonh 10y ago
> But suggesting that the industry's growth in the last ~decade is about improving accuracy seems pretty questionable. Finance companies overwhelmingly make money by more accurately allocating capital whether that's channeling investment, arbitrage, executing a trade before the other guy, whatever. In every case that's money that went to a better place to do more economic work faster. It's what finance companies are for. Yes there's the occasional dodgy deal or rip off, but to read your post you'd think that is the only thing financial companies ever do. In reality trillions of dollars spent on research, technology, infrastructure, business growth and jobs got there via financing. Better financing means more and better quality of all of those things.