> If it's useless then why does it make them money?
Is that really a line of reasoning? I can make money by drug and arms trafficking, helping other skirt the law, take advantage of legal loopholes, using violence where competitors cannot to strongarm others into submission, exploiting labor, etc.
If a hedge fund makes its money just by being faster in transactions in a way that gives no real benefit to actual creators of value, then it is of no use to society.
Thus far, the argument for liquidity seems shoddy, at best.
Hedge funds are opportunistic pools of capital. Like venture capital firms, they exist primarily to make a buck, only hedge funds play primarily in the financial markets.
Real estate firms exist to make money using real estate. Banks exist to make money using loans.
Finance exists to make money. By design, it doesn't care about real value.
> Is that really a line of reasoning? I can make money by drug and arms trafficking, helping other skirt the law, take advantage of legal loopholes, using violence where competitors cannot to strongarm others into submission, exploiting labor, etc.
By and large you can't, which is the point. We don't stop these things by appealing to people's better natures. We stop these things by making them unprofitable. When hedge funds misbehave it's usually a symptom, not a cause.
It's not the hedge funds that are paying dividends/repurchasing shares - it's the companies they invest in. The companies create value and pass the profits on to their investors. This has nothing to do with trading.
Is that really a line of reasoning? I can make money by drug and arms trafficking, helping other skirt the law, take advantage of legal loopholes, using violence where competitors cannot to strongarm others into submission, exploiting labor, etc.
If a hedge fund makes its money just by being faster in transactions in a way that gives no real benefit to actual creators of value, then it is of no use to society.
Thus far, the argument for liquidity seems shoddy, at best.