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Liquidity, mostly. They are 'market makers'. If you're a big {pension, real estate, rrsp}fund and want to make a trade, say a purchase, you need to call your t
by paulitex 16y ago
Liquidity, mostly.
They are 'market makers'. If you're a big {pension, real estate, rrsp}fund and want to make a trade, say a purchase, you need to call your trader directly. The trader will sell you some of their own (if they have it on their books), or will contact other people who they think may have extra supply on your behalf.
They are the 'grease of the economy'. In theory, it makes markets run smoother, which leads to greater efficiencies for everyone, and makes the world a better place.
(in theory)
- mixmax 16y agoThe thing is that it goes both ways. The liquidity that they provide can just as quickly be pulled back as we saw during the Lehman collapse. I'm not sure it provides value.
- arijo 16y agoSomeone has to create the wealth that supports liquidity.
- cturner 16y agoI think you are suggesting that there's something less worthwhile about wealth made via liquidity creation than other forms of wealth. On that theme - would you say that it is more noble to be a mechanic than programmer, and more noble to be a farmer than a mechanic?