It allows corn farmers to grow wheat instead, because he is selling it right now and wheat is more profitable right now.
The main reason why it doesn't go astray and make people hungry is because people that isn't involved in any way can go, study the factors that make wheat more profitable to corn, do their predictions of what will be the case at the point of delivery, and if they predict correctly that the price is wrong they can go and adjust it making a lot of money on the process.
I'm not sure why I'm being downvoted, as I didn't think this is all that controversial. Historically, finance was a much more boring and less lucrative field than it is now, and consequently much smaller. "I'm a super smart 18 year old and I want to get rich, so obviously I should go into banking" is a relatively recent phenomenon. I agree with everyone else here that the industry has value, so presumably its recent explosion in size has brought some additional value, but it's very hard to believe that value is large enough to offset the opportunity cost of a generation of ambitious geniuses not going in to science or industry or becoming entrepreneurs.
I’m not sure why you care so much about financial speculation, it provides more accurate pricing and lowers transaction costs for the actual users of the futures contracts who take delivery of the commodity.
If you were upset about cryptocurrency speculation, I’m with you 100%.
In my opinion, your arguments are coming from an emotional place. Try and examine futures markets from a place where you aren’t thinking about greedy rich Wall Street guys, the amount of money they make is irrelevant to futures markets being useful tools for producers and consumers of commodities.
I understand and agree, as I've said pretty explicitly in both of the comments you responded to. I'm arguing that the finance sector should ideally be smaller than it is, but you're responding as if I said it should disappear entirely.
> In my opinion, your arguments are coming from an emotional place. Try and examine futures markets from a place where you aren’t thinking about greedy rich Wall Street guys, the amount of money they make is irrelevant to futures markets being useful tools for producers and consumers of commodities.
I don't have any an animus against speculators; please try to read more charitably. The rapid growth of the finance industry over the last two generations is a result of the policies we've enacted, and the position that it should be smaller is an argument for different policies. Similarly, "it seems like we are pouring [too much] of our resources and brainpower in to designing exotic new ways to bet on the corn harvest" is a complaint about the system that incentivizes that outcome and the policies that produced it, not about the individuals acting within that system.
> I’m not sure what you’re trying to imply...
I wasn't suggesting that commodities are similar to housing in any way; I was saying that, since a lot of people seem to recognize the societal cost of speculation on housing specifically, that I was surprised to be downvoted for complaining about the cost of speculation more generally (which, I remind you again, is not the same as saying it shouldn't exist, only that our economy ought ideally to produce less of it).