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It does provide liquidity.
by 10ren 17y ago
It does provide liquidity.
- fauigerzigerk 17y agoIt does, so the reasoning would be that if an asset is actively traded that provides an incentive to invest in it because you know there's a place to sell it if you want to. This seems plausible, but of course, it comes at a cost. Part of that cost is that for smart people it can be more lucrative to trade something than to make something.
- eru 17y agoBut if they can provide more value by trading than by making, why should you value making above trading?
- deleted 17y ago[deleted]
- fauigerzigerk 17y agoI don't. I just questioned whether they actually do provide more value by trading or if it just appears that way during a financial bubble. Don't forget that the sole purpose of trading is to finance making. Trading has no intrinsic value. It's the bureaucracy of capitalism ;-)
- eru 17y agoThat sounds an awful lot like the greek philosophers who did not hold merchants in high regard. Making is ultimatively just pushing atoms (or ideas), too.
- fauigerzigerk 17y agoI'm just making a difference between the goals and the means to achieve those goals. The goal is to produce the goods and services we want. Trading is a means to do that efficiently, similar to computing. Computing, just as trading, has no intrinsic value. It has value only insofar as it achieves its goals. I doubt that trading has been achieving its goals in the most efficient and effective way possible recently. In 2007 the financial industry in the US made 70% of all corporate profits. Obviously, something was out of balance and it's rebalancing now. Part of that rebalancing will no doubt be a shift of labor away from that bloated financial services sector. I don't think this critique should be taken as offensive or disparaging at all.
- eru 17y agoYes, I agree it was out of balance. No offense taken.