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> What does the world gain from finance? Not sure whether you're asking seriously, but while there is a lot of scamming and rent seeking in finance (which is w
by FabHK 5y ago
> What does the world gain from finance?
Not sure whether you're asking seriously, but while there is a lot of scamming and rent seeking in finance (which is why it is subject to heavy regulation), it does provide many functions:
1. transfer of purchasing power through time (by saving/credit)
2. proper valuation
3. facilitation of investments (for companies, infrastructure, etc.)
4. investment allocation
5. risk transfer and management
etc. All valuable functions.
> most of us are actually and literally creating something out of nothing
Your labour and your computer and the electricity used to run that computer etc. are not nothing. The economy has always been about creating something more valuable out of inputs that are less valuable. Nothing new here.
- neilwilson 5y ago"transfer of purchasing power through time (by saving/credit)" Except that isn't true because banks create money when they advance credit and always have done. There is no transfer. There is a liquidity provision that aims to offset the drain of liquidity to financial savings. The two don't necessarily match, and mostly they don't, with a system tendency towards net financial saving. Purchasing power is improved by banks because they take things that are not liquid and provide a more liquid instrument in exchange. In that sense they are not that much different from market makers.