How The Finance Industry Destroys Economies

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Does the finance industry add value, or just chaos? From crashing economies to turning homes into gambling chips, it’s made billions while leaving us questioning its worth. We unpack its core role—connecting capital to land, labor, and ideas—and how it fueled the Industrial Revolution and consumer credit. But today’s mega-banks, high-frequency trades, and info gaps are sucking value dry, boosting inequality instead. Featuring insights from Rana Foroohar (Financial Times) and Warren Buffett’s casino warning—watch if finance is a tool or a trap!

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Writing credits: Hugh O'Reilly
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[mellowsunset]

One thing I learned is that the people who just make money from facilitating and structuring transactions even if they don’t have money in the transaction have very different incentives from anyone else. They just want an environment friendly to deal making and fees whether the investors doing the transaction or economy at large is going well or badly. An investment banker is not an investor and is not an economist. I think we would all do well to remember that.

[Lordatreides]

The world needed a video like this 20yrs ago, especially at university campuses

[aimeec.]

"Manufactured complexity"... 100% agree. I literally just said this to my daughter yesterday.

[juliansebastian]

15% productive vs 85% speculative investments is crazy! Thank you for speaking up about this!

[KevinCollins]

This makes me feel like finance is just a giant casino that benefits the house more than the players. If 85% of capital is just circulating within the financial system rather than fueling actual businesses or helping people build wealth, how is the average person supposed to get ahead? The way the industry is structured, it feels like a rigged game for those without insider knowledge.

[flolow]

The problem is not even the speculation. It is the speculatuon with other peoples money.
If you win, you win. If you lose you get bailed out

[bramstrijker]

Wow, this women in the interview is actually super honest. She just goes on admitting she benefits of the system because she has a large stock portfolio, without it even being asked. And even though she is probally not a "worker" in the active term, she does give a good explanation and lists the downsides of having a society with (large)wealth inequality. you Ms. you get a thumbs up

[gingerkilkus]

It's quite astonishing. We face a financial crisis driven by the greed and irresponsibility of financial institutions. In response, Congress enacts laws to curb their excesses. Yet, these institutions lobby to lift those restrictions, claiming it’s necessary for competitiveness. This cycle inevitably leads to another crisis, and it's a pattern we've been repeating since the Great Depression nearly a century ago.

[JSuperstar]

"Automated rent extraction" is a phrase I didn't think would immediately make total sense.

[igormarcos]

When the finance industry is developing their job is to make stuff more efficient. When they grow enough and take control of the economy their job is to make stuff more inefficient.

[peterhessedal]

When I was young I wanted to be one of 2 things. A military pilot (I was very hawkish) or an investment banker. I still wish I would have been the pilot, but I am disillusioned with the "war racketeering" of the last 80 years. I am even more disillusioned with the finance industry. It seems like so much of it is a parasite that sucks from an already overtaxed middleclass. Some days it feels like we are all just cattle to be fed on by the politicians and the financial elites.

[ArchesBro]

This is exactly it. Finance has shifted from around 10% of the US economy to 20%. How exactly does that make sense. Is that truly productive? Is it really that productive to move money around?

[alexeijz]

This could be your most important video yet, I've been thinking about this but you articulated it so well. It's become far too influential, creates bubbles, and sucks up money far better spent elsewhere. Thank you, sharing this with anyone who I think might give the slightest bit.

[Name-kdjj]

Tesla is a good example. They produce a small fraction of the cars of the legacy automakers yet tesla is worth more than almost all of the combined. Many years they lose money too. So how is their stock worth so much? Speculation. It shows the complete disconnect between the stock market and the real economy.

[SusCalvin]

I always fear the moment finance starts to bloat out the productive industries and services.

The City of London is always near that nightmare to me.

[talnreich]

I mean, the proposal of the tobin-tax - that is, a tax on all spot conversions between currencies - has been around for decades. Such a tax would vastely decrease short term speculation, thus greatly increasing the incentives towards using the capital towards actually productive purposes.

[BrandanLee]

Henry George was right! Speculation is a cause of poverty amid plenty. Creating artificial scarcity amid astonishing surplus.

[nicolasmancini]

Finance has destroyed my country (Argentina) since the late 70s. We forgot that economy should focus on producing goods and services. Instead, we produce lots of empty papers that destroy production and create external debt.

[banditski]

Your point @12:53 really resounds with me. I work in finance, at the relative level of a blue collar job - not some big shot, but I am constantly questioning what else the brilliant, hard working people around me could achieve if we weren't collectively "making rich people richer". For sure, the other points in the video are valid, but if John down the street has $500 less in his retirement fund, while undesirable, the real tragedy is that we don't have (pick a future tech - cold fusion, cure for cancer, people living on Mars, etc.) because so many smart people go into finance because of the high(er) financial rewards.

[Joshua-Carr]

Finance doesn't create wealth, it just bets on the creation on wealth by other people.
People who create wealth, ie, entrepreneurs and business owners are the actual drivers on the economy not financiers and traders