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Financial speculation is zero sum, isn't it? So the fewer banks there are the more each one gets exposed to both sides? Your bank provides services for a person
by pbhjpbhj 4y ago
Financial speculation is zero sum, isn't it? So the fewer banks there are the more each one gets exposed to both sides? Your bank provides services for a person who monopolises some commodity, you have billions to loan out; but all your millions of other customers are hit by the price of that commodity and all deposit less, wiping out any increase in deposits.
Doesn't that mean unless they are specialised banks, that they necessarily must lose?
Maybe an economist can correct or confirm my instinct here?
- scotty79 4y ago> Financial speculation is zero sum, isn't it? Only if you play fair. If you can be bailed out it's no longer zero sum.
- RandomLensman 4y agoWhy would financial speculation be zero sum (or how do you define financial speculation here)?
- misja111 4y agoSome financial speculation is zero sum, other is not. E.g. if a bank takes on a lot of clients with risky mortgages, both risk and possible gains are only on this bank. (Barring possible bail out, contagion risk etc)