Re:Goldman Sachs is spending $100M to shave milliseconds off...
by Merrill on Friday August 02, 2019 @08:43AM
(#20592521)
Those are the weak connections I referred to. Last I looked, the volume of financial transactions was about two orders of magnitude larger than the volume of purchases of goods and services. So maybe a couple percent of futures transactions involve actual buyers and sellers of the commodity, while most trades are among financial system players.
But finance is also products & services.
Think of a corn farmer. It's easier to think of him adding tangible value to society because "corn == food".
In contrast, finance just seems like useless office workers copy pasting numbers around in Excel spreadsheets. (This is probably true in many cases.)
But the farmer often wants to sell "futures" which is a product & service provided by the financial industry. Instead of using the jargon of "futures", we can just say the farmer wants a product/service to give him a "guaranteed-selling-price-regardless-of-future-volatility-of-corn-prices-so-I-can-sleep-at-night".
Other examples of desirable finance products that farmers want include crop insurance and equipment loans/leases.
>They are two weakly-connected systems.
Farmers' food crops and the financial products/services of of futures is an example of how businesses making tangible products and the finance industry are strongly connected.