Mr Khan said:
I suppose my post let on an implication that i was opposed to all finance, which is absolutely untrue, since i am a modernizationist at heart and the ability for individuals to invest and for corporations to gather funding from stock ownership is a critical part of our modern world, however we have gotten well beyond simple investment in a corporation, and i would argue that this has occurred to an unhealthy degree. It creates the aforementioned nonproductive money handling class. What of commodities paper-trading, derivatives, short-selling, credit-default swaps, points upon which the gain of money is tied to nothing but shifting around digital points, creating money from nothing, hence "funny money" |
I would actually argue that none of those are just "shifting around digital points" and only looks that way to people who don't look deeply into what they are.
For example short selling essentially is a bit of insurance and a way for mutal funds and hedgefunds to recoup money they may lose on stocks they own by loaning it to lenders.
Really, it doesn't actually create any value at all... and in general kinda helps most of the time because Wall-street tends to be very optimistic. Short Sellers can't work if there aren't buyers willing to pay that price anyway.
Credit Default swaps are also more or less an insurance policy.
Furthermore, all these actions make stocks more attractive to own. Which makes venture capitalists go after new IPO's harder... because it's all the more valuable to be on the ground floor.