3 ms·

> many bank/insurance/pension calculations It will also clearly show how big banks, HFT companies are making huge profits. They are slowly pulling money out of

by dgregd 12y ago

> many bank/insurance/pension calculations It will also clearly show how big banks, HFT companies are making huge profits. They are slowly pulling money out of your pension fund. Banks do not produce, they have no income from dividends, so how they earn?

hnnewguy 12y ago
>HFT companies are making huge profits Were. Regulation and competition are chipping away at those profits. The days of obscene profits in the Wild West are done.
zo1 12y ago
>"Banks do not produce, they have no income from dividends, so how they earn?" They provide a service. Just because they don't "produce" something by processing raw materials, or less-processed goods, doesn't meant they're not providing something of value to someone. But, additionally and simplistically, they make money from giving out loans at higher interest rates than what they give out at in deposits.
- jsprogrammer 12y ago
  They don't just give out loans, they create brand new money. They also have a state-enforced and -backed monopoly on this creation of new money. So they do "produce", it's just that what they produce is more or less "fictional" violence tokens.
sumedh 12y ago
> Banks do not produce, they have no income from dividends, so how they earn? They provide capital without which you cannot produce anything. They make money by difference of rates between deposits and lending.
- curun1r 12y ago
  That's the theory and few rational people would argue that those services are necessary. But we've been in a tail-wagging-the-dog situation for a while now. The industry seems to believe that they're entitled to an increasingly large share of the world's wealth. They've seemingly forgotten that they're a facilitator of progress and don't represent progress in and of themselves. They recruit the best and the brightest to create ever-more-complicated financial instruments robbing society of the contributions those engineers/scientists would have made elsewhere. Much like the same cellular mechanisms that sustain life become cancerous when there is unchecked growth, the same financial apparatus that we need to facilitate progress becomes cancerous when its growth is unchecked and it loses focus of the purpose that it serves.
- dgregd 12y ago
  1. Banks do not need deposits to lend money to ordinary people. They lend money from FED, which 'prints' them. 2. If interest rates are low then Banks profits should be also low because of small difference between deposits and lending rates. Am I right? 3. Just like casinos in Vegas need capital donors, the ultimate casino also needs capital donors. Don't want to play on Wall Street? No problem, your pension fund (dumb money) is more than enough.
- logfromblammo 12y ago
  They provide currency, which can be used to acquire capital. Do not confuse this with providing capital. The person who gives you a fence-painting robot is providing capital. The person who gives you 10000 coupons for a free fence-painting robot is not providing anything, if the person who issued the coupons does not actually have any robots. Banks lubricate the machinery of business, theoretically making productive work more efficient. To the extent they do so, they can reasonably capture a share of those gains. But once they are trusted in that capacity, they are now in a position to take money by less-honest means, in a manner largely indistinguishable from their legitimate functions by the casual observer.
cmdkeen 12y ago
HFT are making huge profit margins - their entire industry profit is estimated at around $1bn, or a percentage of what a single large financial institution will make in a year. It's all relative - they can only make so much profit before they move the market too much themselves, they are limited by their size. Your pension fund is not trading in a way which is significantly adversely affected by HFTs, the CEO of Vanguard is even on the record as saying that HFTs make his traders more efficient. Fund managers employ their own dealers to ensure best execution, if HFTs were causing significant losses you can be sure they would be raising hell - and that regulators and governments would listen.
jsprogrammer 12y ago
Commercial banks in the US receive a 6% annual dividend from the USFRB.

by dgregd 12y ago

hnnewguy 12y ago

>HFT companies are making huge profits Were. Regulation and competition are chipping away at those profits. The days of obscene profits in the Wild West are done.

zo1 12y ago

>"Banks do not produce, they have no income from dividends, so how they earn?" They provide a service. Just because they don't "produce" something by processing raw materials, or less-processed goods, doesn't meant they're not providing something of value to someone. But, additionally and simplistically, they make money from giving out loans at higher interest rates than what they give out at in deposits.

jsprogrammer 12y ago
They don't just give out loans, they create brand new money. They also have a state-enforced and -backed monopoly on this creation of new money. So they do "produce", it's just that what they produce is more or less "fictional" violence tokens.

sumedh 12y ago

> Banks do not produce, they have no income from dividends, so how they earn? They provide capital without which you cannot produce anything. They make money by difference of rates between deposits and lending.

curun1r 12y ago
That's the theory and few rational people would argue that those services are necessary. But we've been in a tail-wagging-the-dog situation for a while now. The industry seems to believe that they're entitled to an increasingly large share of the world's wealth. They've seemingly forgotten that they're a facilitator of progress and don't represent progress in and of themselves. They recruit the best and the brightest to create ever-more-complicated financial instruments robbing society of the contributions those engineers/scientists would have made elsewhere. Much like the same cellular mechanisms that sustain life become cancerous when there is unchecked growth, the same financial apparatus that we need to facilitate progress becomes cancerous when its growth is unchecked and it loses focus of the purpose that it serves.
dgregd 12y ago
1. Banks do not need deposits to lend money to ordinary people. They lend money from FED, which 'prints' them. 2. If interest rates are low then Banks profits should be also low because of small difference between deposits and lending rates. Am I right? 3. Just like casinos in Vegas need capital donors, the ultimate casino also needs capital donors. Don't want to play on Wall Street? No problem, your pension fund (dumb money) is more than enough.
logfromblammo 12y ago
They provide currency, which can be used to acquire capital. Do not confuse this with providing capital. The person who gives you a fence-painting robot is providing capital. The person who gives you 10000 coupons for a free fence-painting robot is not providing anything, if the person who issued the coupons does not actually have any robots. Banks lubricate the machinery of business, theoretically making productive work more efficient. To the extent they do so, they can reasonably capture a share of those gains. But once they are trusted in that capacity, they are now in a position to take money by less-honest means, in a manner largely indistinguishable from their legitimate functions by the casual observer.

cmdkeen 12y ago

HFT are making huge profit margins - their entire industry profit is estimated at around $1bn, or a percentage of what a single large financial institution will make in a year. It's all relative - they can only make so much profit before they move the market too much themselves, they are limited by their size. Your pension fund is not trading in a way which is significantly adversely affected by HFTs, the CEO of Vanguard is even on the record as saying that HFTs make his traders more efficient. Fund managers employ their own dealers to ensure best execution, if HFTs were causing significant losses you can be sure they would be raising hell - and that regulators and governments would listen.

jsprogrammer 12y ago

Commercial banks in the US receive a 6% annual dividend from the USFRB.