How Does the Shape of Money Shape Life?
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- Опубліковано 27 вер 2024
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Why are coins … round? It used to be, waaay back, there were more irregularly shaped, and even squared coins. But now there are only a few countries that do this. The Bahamanian 15 cent coin was minted until 2005; The Netherlands Antilles 5 cent piece got axed in 1985, but their 50c piece is still in production! There are a few others - but not many! Our money has the physical properties it does because, given the fervor of life, it’s gotta go fast. The circle is a convenient shape for coin speed; the rectangle, for similar reasons, for bills. But... there is a point at which, if money needs to move VERY quickly, it has to become something else entirely. That’s basically what we’re gonna talk about in this episode: how what we want money to be able to DO determines what it IS… and how what money is then determines, how we live. So join us today as we head to Wall Street, the New York Stock Exchange and beyond!
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It's funny because the UK is introducing a new angular pound coin.
NO WAY - really? Harder to counterfeit? Isn't the pound coin the single most counterfeited piece of currency? If not I think it's up there.
Judging by the pile of obvious fakes I'm building in my room...yeah, it's pretty easy to counterfeit. The new design is 12 sided, joining the seven sided 50 pence piece and 20 pence piece, which we've kept around for a while now. Also there's probably an interesting thing to think about with the different sizes of bank notes around the world. The US has a standardised bill size, whereas many countries have varying sizes of dominations for various reasons; the vision impaired and the blind may find it easier to determine what size of bill they are handing over the size of the note scales with the size of the denomination; for example the £5 note is smaller than the £10 note which is smaller than the £20. I'd have to check if it also helps automated payment systems sort of the notes? I feel like it should since they often use size but I'd need to check.
The UK has 3 angular coins.
£1 imgur.com/8vWdJDP
Fifty pence (50p) imgur.com/4gDcWgz
Twenty pence (20p) imgur.com/C2QIgB2
Of course, 12-sided currency is elegant, because 12 is elegant.
The 20p and 50p coins have curved edges so they are of constant width (like a reuleaux triangle). That means machines can measure them at any angle and always get the same result, like Mike mentioned with round coins. The new £1 coin isn't so I don't know how machines are dealing with that.
The episodes outside of the studio are alway my favorite
Don't know if this the correct place for it, but a few episode ideas:
-Skateboarding as the ballet of our time (there's set moves you have to learn, it goes better with music, movement for movement's sake, etc).
-Unavoidable debt as a form of neo-fuedalism, with financial and bureaucratic motivations replacing those of military force and honor.
-And lastly, biological evolution as an analogy for the development of technology, with the creation of niches as an opportunity for innovation, intra-niche competition usually resulting in a dominant format, and marketing as sexual selection resulting in the occasional dominance of a non-superior trait.
Love the show, keep up the great work!
Speaking as a programmer at a hedge fund whose job it is to enable high frequency trading, I caught two misrepresentations of the field in this video.
1- Derivative trading is not high frequency trading. HFT only happens when some product is under a high demand, and there is a race to get it at the established price. This popularity only exists for stocks and a some of the simpler options and futures.
2- More importantly, because Rolling Stone Magazine and the previous administration got this wrong as well...
The people HFT squeezes out are people big enough to have their own portfolio, and knowledgeable enough to want to do their own trading. These people are at least upper middle class. Whereas, the people who manage the investments of the majority of Americans, and certainly all the working class, are the kinds of people who benefit from High Frequency Trading. Such as pensions and other retirement funds (401Ks and the like), where most of the investments of the majority 95% have their money, are actually in places like hedge funds. Similarly, any interest you may be paid on your savings account. And wouldn't you prefer your college make money investing rather than raising tuition? Again, generally that money is in managed funds.
High frequency trading is not how the rich get richer. Although the people in the offices above mine certainly make commissions and bonuses that make me drool. But it's more how the common man, the person who isn't literate about Wall Street, makes his investment profits too.
Micha Berger You might be able to help me out with something: Why/how is there always a buyer for these HF trades? The idea of a guaranteed sell and guaranteed profit seems to go counter to my limited knowledge of the market. Can HFT users never be left 'holding the bag'?
The job of an exchange is to post the best bid (price someone wants to buy at) and offer (seelling price), and often a few bid and offer prices and then pair off the person who wants to buy at a given price (or better) with someone who wants to sell.
And so, the "market price" is a number within that bid-ask range.
The HFT is trying to pick up on someone who for some reason is willing to sell at a price that you expect is lower than where things are headed, or someone who is looking to buy for more. And if you go fast enough, you can pick up on that off price before the market gets in line with where your math says it should be.
So, if there isn't a matching bid or offer out there already, there won't be a trade.
Somthig that came to mind watching this is the "history of money" series by ExtraCredits. This idea of shape/non-shape of money=speed of money=speed of "life" is inherently part of what money is symbolically attached to. In one way th shape of a money can be described less by its actual physical/digital shape but the shape of what it represents. like gold. once actual gold, its actual mass and weight limited its movement regardless of its actual shape (unless you cound the shape of its stamp maybe? where one nations gold coin was at a different value). Then it was paper receipts of that gold from a bank that allowed traders to more efficiently exchange goods for redemable receipts of gold. Then even later, the idea of monetary receipts of gold in the bank was torn from the actual mass and shape of the gold standard entirely. This i think becomes most salient with the introduction of the general public access to the idea of credit with the Dinners Club Card among other things. Money and life itself could move around not at the speed of gold but at the speed of which one can acquire debt.
Mm. I'd especially be curious as to what the Rai stones of Yap, where what was tracked wasn't where it was but who owned it because once they got to them to Yap (or in one case, didn't - The one under the ocean due to shipwreck that they decided still counts) - does to this idea. The first example of a data based economy, albeit one that was done with human memory and record keeping)?
Gizensha Fox perhaps it fluids the idea of movement a bit where the value of the rai stone isnt necessarily attached to an actual value until its in someones hands. am i getting this wrong? i feel i am
The Rai stones are (were?) the unit of currency, they just... Stay put and who owns them is tracked, as I understand it. So one Rai stone is worth the same no matter where it is, but it's the concept of owning it
that has a set value which is used to facilitate buying and selling other goods. (Not sure if that's part of a single tier or two tier economy, either, which is a fascinating concept - Economies where there's a currency used for luxury goods, and a seperate one use for necessities, and it works perfectly fine until European colonial powers come in and buy a basic commodity with the luxury currency then chaos, iirc what happened with a lot of those... I'm forgetting on where I read about that and am vague on the details... Feels like Germs, Guns and Steel, though?)
That coin evolution graphic there toward the end is fantastic. Kudos to whomever made it.
Been watching for years yet never commented before: Just wanted to say keep doing what you're doing, the show gets better and better
Another fact: coins used to be irregularly shaped so people would chip off pieces of metal off their sides, especially golden and silver coins. A solid shape had to be picked to stop those metal thieves, and a circle is more difficult to change without the modification being obvious.
I see you're trying something new with the precise format of these (a mock-panel, a field trip...). I like it!
Because the word coin sounds round
I have synesthesia, some sounds/words sound like shapes. I forget that (or don't entirely understand how) some people don't hear shapes in language and woven into music
This felt more like a VSauce or similar educational channel video rather than a normal Idea channel video.
That's not a bad thing. I like this.
This is one of the best episodes I've seen in a long time.
I love the fact that this episode began with an electronic video ad and ended with a dude wearing a sandwich board.
Over the last 6-ish months the UK has released new £5 notes, made of plastic, and new £1 coins. Later this year, the old money will no longer be legal tender - although shops and banks can still accept them at their discretion. The businesses around my rural village are putting up signs announcing their stance - accept or refuse - meaning you might be stuck with dead, unspendable paper fivers or quid until the off chance you need something from the right shop.
I really like this format of video instead of the studio a interaction with the real world. Good Job.
Something else about the shape of money that shapes our lives is the Denomination Effect, especially when talking about the usage of coins vs notes (totally different shapes). We tend to give smaller value and consequently spend more easily coins than notes worth the same amount of money.
This video was focused more on real culture versus the usual pop culture reference to get the idea going. Good Job.
Hey I just wanted to say I really liked this. I have nothing substantive about the shape of money but I like it when y'all do things like this. I felt like I was on the rare fun field trip.
On more historical terms when the economy was doing well and capital was extremely fluid during 1950 we had a boom in social well-being for much of the country the average newlywed wife was around 22y/o and suburban living was being created and defined as we know it today. Compared to now where we live in a world of economic austerity and you can see a whole swath of cultural, political and economic shifts that result from a deepening of the divide between the haves and the have-nots. What becomes apparent is that the stock exchange itself is the prime indicator of how the market of the present is operating and how it may operate in the future. It's impossible to say just how much effect high-speed transactions have on market austerity but you can be certain that the system as a whole can be easily optimised with modern technology to profit from its current austere situation.
Where the Hell did you find a payphone?
They're actually EVERYWHERE in downtown Manhattan. We had our choice of at least a dozen within reasonable walking distance. They are all, also, very gross.
ALSO TRUE - it was weird how many empty phone banks there were.
Wasn't NYC working on a project to turn empty phone banks/booths into public WiFI AP cabinets? www.pbs.org/newshour/rundown/new-york-city-replace-phone-booths-wi-fi-kiosks/
Now that is genius
Patrick McFarland -- Yep! Several hundred in place. Several thousand to go 😎
NPR's Planet Money did a similar story about High Frequency Trading in 2012, Episode 396: "A Father Of High-Speed Trading Thinks We Should Slow Down".
I'd say the biggest effect virtual money has had on consumers has to be online shopping. The only limiting factors being income and wants, and barely any limits on availability or time to shop definitely seems much bigger then being able to transfer money quicker. We kind of replaced going to the store and counting money with shipping times anyway.
Can this idea reach back before electricity.
Coins have been round for more than 2k years.
Definitely! The portability of cash, and eventually all financial instruments, having larger effects on the world is not a Just Recently thing by any means.
The history of banking and the politics around it are fascinating.
_"I have transcended the need for material form. Go, now, my children, and live life at the pace you truly desire."_ -Money
Its really cool that the people who are affected most by the stock exchanges successes and failures aren't even allowed to film the building that they are held in.
Great video. Feels like an old school Discovery or History channel show.
An obvious point to make is that the pace of life seriously impacts what we want/expect from life, including money, so the process is autocatalytic (or, at the least, not stable). As the pace of life accelerates, people want transactions to go faster or be more convenient, which requires faster and more convenient money, and so on.
2:35 I love to see Koyaanisqatsi! Even if it's only a short clip like here
There's a little assumption smuggled in there: the idea that life consists of the set of transactions performed (presumably mediated by money). I think a link between the pace of life and the pace of money is only comprehensible with that assumption, but I think it suffers from the fact that money hasn't existed as long as people (implying some period when people existed but their lives didn't).
This is v fair - and we did discuss whether it was necessary to explicitly link the fact that "to live" means "to spend money", seemingly an increasing amount (at least as far as our perspective is concerned). With you that there's been "life" longer than there's been "money" but seems unlikely those things will be widely, naturally uncoupled any time soon. Maybe that's more controversial than we thought.
What about it not being about money back then but things like food or animals. The idea would keep as then money would move as fast as a cow or a corn.
Life moves at the pace of Trade I think.
Most likely Georg Simmel was trying to relate to how economics changes human living itself by how it changes a person living conditions not that it's fundamental to life. What you've discovered is PBSIDC's broad generalization on an important detail that strings the idea together.
Social life consists entirely of exchanges between people, even if those exchanges are just words, or if one side offers nothing but threats. Many exchanges, however, do require a medium of exchange (ie, money); this includes many which are generally considered important or which can easily become lengthy (such as buying a house). These affect their areas of life, those areas affect other areas, and so on.
matthew bowie it also indirectly implies that consumerism is life.
the extra history video set about the history of paper money is an interesting parallel to watch with this episode. it allowed me to mentally shut-up every person or kid that took HS econ and insists that we move back to the gold standard.
Wealth beyond measure, awarded to the brave and the foolhardy alike.
Just as there seems to be a debate surrounding A.I/Robots and their inclusion into manual labor jobs and how wages are being impacted, I wonder: Where does the value come from if A.I are making the trades? Doesn't the concept of value have a human element to it? If that is the case, what will the definition of value evolve into with the role of A.I in daily life continuing to grow?
Interesting question. If we measure value by labour, which would disappear with automation making everything (human) labourless, would we still be paying for anything?
I've recently started to approach this view, in that value results from labour agreements between people, and resources and production are ultimately valueless. Without human inclusion something has no monetary value.
Exactly! I'm not so sure. I know that there are many criticisms of looking at value in this way (Labor theory of value, both via Marx and Ricardo) but the responses to it (marginalism, etc.) don't quite make sense to me.
Agreed, the criticisms and alternatives have always seemed somewhat unconvincing.
lets take a step back: is there a value in trade? Buy low and sell hi without any transformation have add value more then betting?
I suppose it depends on who you ask? Maybe?
I got excited that you might be talking about Modern Monetary Theory for a moment there!
More on topic: Can anyone work out whether the high volume trading thing is *transferring* money between balance sheets, or *creating* money?
If the latter, it's a pretty good argument for strict regulation or even a ban!
I love the 2$ Hong Kong dollar, it is petal or flower shape. So does the 20 cents. The 20 cents is a silver coin too, but the metal shines a bit yellower.
Every time I get back from Hong Kong, my pockets are full of change.
The 10 cents is a tiny round shiny gold piece the size of my thumbnail.
The 5 dollar is a big thick coin with the tiniest inscription around his side. You would swear it's only embellishments but upon closer look it reads ''Hong Kong five dollars''.
The 10 dollar coins is really like the tiny 10 cents gold coin was cold, so he ate for 10 and wrapped himself in a trick silver blanket. He's now as thick and a 5 dollars, but with a heart of gold.
Sorry, to me coins makes a beautiful pirate treasure chest.
That sandwich ad guy photobombing the recording...
I'm glad money still moves slow enough that nobody seemed to have the need to hurry up and waste it on that Bud Light $17.95 Burger and Beer deal.
Oooohhh! This was a good Idea Channel episode. Do you have/will you make more episodes related to money/cashless economies? I think it's interesting.
I think that the transition from portable physical currency to virtual has helped us to buy stuff, which is both good and a bad thing. Because on one hand you no longer have to carry notes and coins to buy stuff (you only need a card, or your smartphone if Amazon's endeavours make it mainstream), but on the other hand making it easier to spend also means it gets difficult to the average user to save. There are means to save, of course, but when the option to buy is just a click away, can you overcome the impulse faster than when you go to the convenience store to buy a drink?
The UK's new pound coin has 12 sides. lol
This episode reminds me a lot of the PBS show Biz Kids.
The way i see it is that life shapes money not the other way around or to be more specific convenience and so it is more convenient(abusable?) to have servers exchanging at the speeds of light ,but the digitization of money comes from our need to send money over the internet in a simple and secure way...
One could even dare say that both money and life are results of our needs and aspirations and will continue to change accordingly.
Love your Sportacus hat
I love your channel, but this is really the best episode I've seen. I wish everyone would watch this. People make so many political decisions based on a lack of information about how the world really works, and I think this is a big chunk of the missing information people need.
Love that you went out of the office!
I see settlement of transactions as verifying the promise's (money's) authenticity.
Without such settlement, exchange cannot take place. But people can live without these, albeit limited to their little social circle, which are basically places where settlements happen faster as everyone knows everyone.
So I don't think faster settlements make life of individuals faster. It makes the life of society faster.. or in a way makes the society bigger.
Do settlements happen faster in smaller circles? I would be more inclined to say that they occur more slowly, but through a kind of slowly developed -- but also longer lasting -- general agreement between people. With meaningful relationships settlement happens faster, but those relationships take time to develop.
Whereas with bigger societies, there is no time for relationships to develop and too many individuals to maintain relationships with. So with money one allows for faster settlement, even in the absence of a meaningful relationship.
It's as you say. It takes time to establish relationships. In smaller circles, this time isn't as prohibitively big as it is in larger ones (because, more people, more time to establish honest power relationships)
Transactions are ultimately based upon power, the more powerful you are, the more things you get. But you don't have time to check the power of each stranger, so you request the most powerful entity you know, the government, to issue verification certificates, which is what money is.
Without money, you'll have to get to know the people you're dealing with first or risk deceit. That's why illegal businesses (and I'm basing this solely on mafia movies and novels) have so many issues of trust and ethics, and 'family' and 'friends'; without a clear authority, they're forced to play real life poker, which is a very time consuming inefficient way of transacting and bad for all parties overall.
just wanted to say, I would pay good money for Mike to give a video tour around New York
1. We created money as a benefit to society to facilitate a representation of value. Just because stealing his high tech does not make it not stealing. High frequency trading has no benefit to society. It just gives money to particular people in large qualities who don't contribute back.
At no point is benefiting society required to earn money.
Alas
On the "speed of life": It's especially interesting to see the very close relationship between how fast a person can complete market transactions and their place in the larger political-economic order.
- The co-location competitions are a translation of political connections and access into physical connections and access.
- Debit cards and Venmo, with their constant instant connection to our accounts, are a symbol of the global middle class.
- ATM's, bypassing massive lines, are a hallmark of economic growth in middle-income and developing economies, but are largely absent from rural areas. When economists talk about the growing networks that let East Africans send and receive money with their cell phones, the most common word they use is "democratizing".
- The poor and excluded in developing economies are usually the ones who have to make due with the old, slow paper money. And even then, having access to credit via microfinance and emerging credit markets lets them make transactions that would otherwise require months of savings. And when asked what their first priority is in taking out a loan, their first question isn't usually about price or repayments, it's about how quickly the loan can be disbursed.
Being able to move money quickly is a kind of political power at basically every point on that spectrum, not just within the hubs of the global market system.
I'm a little disappointed that you didn't cover one of the more terrifying aspects of the microsecond trades that have become the standard, which is that we've experienced numerous stock market crashes since then, few of which lasted more than a few seconds.
I think that if we make the assumption that money is only a "placeholder" or a promise for a good or service in the future then to say that "money determines the pace of life" is to say that the market's demand of being able to collect on those goods and services (aka pay for things) determines the pace of life. What i mean to say is that the more money that someone has, the greater the "potential" (think like gravitational potential) they have to extract real products from the market. Therefore when they spend their money the productivity (aka the pace of work of people/companies collecting this money being spent) increases, and wealth is created, to be repeated again. I hope what I've said makes sense
When you look at how payments have evolved from cash money to virtual money you can see that we've been "incentivsed" to spend more and maybe therefore increase our speed of life. Credit cards encourage people to shop more, because they always have access to their savings. With integrating mobile pay you will have almost no physical boundaries to spending. Even though this speaks more about how accessible money is instead of how fast it is.
I think money controls the pace of life only as much as people do things for money. Which will vary a lot depending on your world view. I think this episode would pair up nicely with the Dan Brown comments on the CGP Grey video "Humans Need Not Apply".
I don't know if it's been suggested/done by this channel before but: I think it would be incredible if PBS Idea Channel did an episode about Nier: Automata/the work of Yoko Taro. Automata was very thought provoking, and one of the games that I feel really tried to push forward or utilize the medium of videogames in recent years, both in terms of its considerations of existentialism (and critiques of philosophers therein) and in just making you truly feel like you're playing as an android and offering such a weird variety of gameplay.
I know it's not related to the video at hand, but I think it would be a great topic!
Just like our coins, that video came _full circle_, am I right?
Milisecond trading aside, there comes a point where money can move so fast it may as well be instant. To our mortal minds, we cant tell the difference between 7ms and 14 ms. All we know is we go to the ATM, punch in our PIN and it spits out money. I think this line of thinking will continue into the future if left unregulated, getting faster and faster lines setup over shorter and shorter distances to do the trading. It's something we've come to demand. I go to the store and buy an icecream cone and swipe my card. That time interval between sending that signal and recieving the OK is keeping me from my icecream. If it took 10 minutes, that might have been great 100 years ago but that just wont fly here and now.
The production value of this episode was great, but if we have to choose between more locations and more/deeper content, I think your office is just fine for these discussions. (it may even be effective to have a single "place" for discussion).
What about the septagons (Apparently an anti-forge measure, but I'd like a more reliable source than the one I heard that from) of the British 20p and 50p pieces? I can't see those going away any time soon... Close enough to a circle to not upset that definition, or another exception in the same way those square coins still in circulation are?
I think it was philosopher Paul McCartney who said "I don't care too much for money. Money can't buy me love."
This was such a good episode
can we make money big and square so life can slow down so my anxiety can stop
velocity of money is the term this video needs
one could say the ease of movement of money may not up our pace of life, but reduce our time spent dealing with transactions giving us more time to do other things. Rather than frantically running to Blockbuster to find a movie, paying the cashier, running home, returning the movie, paying the late fees; electronic transactions let us have things like Netflix. less time moving money equals more leisure time to enjoy the results of that transaction. food followed a similar path. Once upon a time you needed to spend almost all year tending to your farm, but once farming becomes more specialized, more and more people spend less and less time having to acquire food. More time to do other things.
I need that music when he's talking about the stock exchange data centre. Starting ≈6:00
so, with more and more money being photons and the space of exchange increasingly shrinking, how long until we've made a kugelblitz?
SANIC SPEEEEEEEEEEEEEEP!!!!!
Thank you! I thought I was the only one thinking it!
Cian Browne
Please stop.
When you got back you should have switched to a sweater. Your pretty much the modern day Mr. Rogers already hahaha
It could be that the pace of life is determined by a variety of factors, and assuming that the speed of money used to be a choke point for the speed of life, there came a point in the increasing speed of money that it stopped being such a large determining factor. Take, for example, the difference between Mail order, TV shopping, and internet shopping. With mail order, after perusing the catalogue that arrived on your door, (I assume) physical money had to move to the supplier through the mail before the order would be processed and shipped back. TV shopping changed that so that you could just call in with your credit card number and they'd ship it to you. With internet shopping, there's no need for the phone call, but the time is still limited by how quickly they can deliver the goods to your house. So between mail order and TV shopping, the time of that transaction was probably halved solely by the change in the shape of money. Assuming they checked the validity of your credit card before processing your order, you could argue that the speed of money increased exponentially, but the duration of the transaction was not as significantly impacted.
And this is why the Blimflark has gone from being worth 1 of itself to being worth 0 of itself.
The most money money is the money that serves the purpose of money the most, right? Well there is more to money than the quantity of transactions. HFT perverts money by focusing almost exclusively on the "medium of exchange" to the detriment of the "store of value." The tricks that HFT relies on to turn profits cause feedback loops that inflate prices where there has been no increase in value. Another form of rent seeking by the investment class, simply perfected to its final form.
Finely said. A perfectly automated krach-machine and we should ask ourselves whether it's a good idea? Please...
Radiolab actually covered this principle pretty well in their Speed episode.
See: www.radiolab.org/story/267195-million-dollar-microsecond/
Super cool!
The primary purpose of money is to be a medium of exchange, but another purpose of money is to be a store of value. Savings, i.e. deferring present consumption for later consumption, is a necessary component for the economy to expand and increase productivity. I'm not sure how the increasing use of 'electronic' money works as either savings or a store of value, although maybe it does somehow.
I'm curious how the process of making physical currency influences its shape. I.e. paper comes in big flat rectangles. You can easily automate processes so that when that big piece is sliced into smaller pieces, you use up all of the big piece. If you're cutting circles out of a rectangle, there will be some bits of excess.
Not sure if that applies to coin production as well, but my point is that I think it's about people trying to design money that is as efficient as possible both in production and exchange, which has caused money to become faster and faster. So it's not necessarily about the pace of life getting faster and faster and people trying to make money match, but that over time people have been trying to make exchange more and more efficient and cost saving which has culminated in exchange happening at the speed of light provided they can still make money off said exchange.
TIL the reason Australia is so chillaxed is because of our 50c coin.
I can now understand better why sometimes I feels that life is too fast, in a way that everybody seem to be in a hurry, and nobody takes its time. I can find that pretty tiresome at times. Maybe it's time to decrease the pace of money, because if money travels at light speed, matter can't follow through.
Love the format change.
It may be a bit off the main questions posed. Still I want people to consider: What added value is being contributed to earn all the money that is being extracted?
if people are so confident running bank transactions, the whole stock exchange, and all different parts of the world on the internet, what is the problem with online voting?
The UK has 3 angular coins. The newest, the £1 coin has only just come into circulation.
It's necessary to explain that HFT resembles arbitrage, but is not technically the same. Arbitrage takes advantage of the non-instantaneous nature of commerce to buy assets in a market where the price is low and sell where it's high. In a basic sense, it serves to equalize supply and demand between two markets when a lot of people do it. The trouble is that HFT takes advantage of the time between price updates, it is not the mechanism of price updates. Traders compete aggressively to take advantage of the updates, leading to a large number of latecomers, who create increased demand, thus price spikes, and compete to take advantage of their own spikes, amplifying the issue. This is a loser's game, as is most speculation, but the world will never be wanting for people who think they can make something off of nothing and don't know when to quit. In aggregate, it can lead to major price changes that don't reflect actual confidence, and cascade outwards to hurt actual confidence as a result - this is a part of a larger problem with speculation in the financial industry. The housing market and predatory lending schemes come to mind as other examples of places where speculation drives instability.
A little speculation is fine, what's important is that trade of material goods and services should not live and die by it. Markets need to be limited to the extent that prices by and large reflect the actual value of what's being traded. Slowing down transactions and taking other measures to limit the potential impact of HFT is a step in the right direction.
I hope that ballast point was a sculpin.
Corners could also poke you when you have loose change in your pocket...
I was born in Secaucus and my father works in Mahwah.
HFC is effectively an electronic version of front-running, which is illegal. It should be highly regulated, if not banned. Same with the "dark pools" run by the merchant banks (even though those big old school banks and their customers are the victims of HFC traders).
a crazy discussion
Mike, if the next idea channel video isn't on r/place, I will be very disappointed. This channel is the first thing I thought of when I heard about it.
Did the circular shape of the coin arise out of a need for expedient transactions, or did the speed of transactions over time slowly erode the coin into a circular one?
At some point, the physical limitations of digital trading at near light speed will be reached. Then the practically instantaneous trading will squeeze out the idea of time based trading. Right?
no one tell Mike that the UK just replaced a round coin the £1 coin, with a 12 sided coin, to say nothing of our 50p and 20p coins showing no signs of being rounded off at any point.
You gotta go fast. There is no alternative.
gotta make that that john green reference
Dang, that is a really cool hat.
Hi, interesting video.
It'd be cool if, in the response video, you could discuss the idea of arbitrage a bit, and why it comes up in markets in the first place - I feel like it'd add a bit more depth to the discussion. From this video it seemed like you described the high frequency trading as "traders being naughty" in some way, or exploiting some loophole - when in reality normal trading activity will cause opportunities for arbitrage to crop up on their own, which only go away when someone exercises them.
I'm not sure you've entirely grasped why HFT makes money. In particular, the kind of arbitrage you described (with a trader observing market conditions before others do, and acting to make risk free profit based on that info) has been around for a long time, before electronic trading was used.
Merchants used to pay lookouts to watch for incoming ships from nearby hills, and hurry back to town with the news that particular ships had in fact survived the journey and were going to arrive soon. The advantage comes from information asymmetry between one trader and the others, not speed per se.
Will do! I think overall, the point remains though - while at one point it was possible for most people to, say, watch out for incoming ships, the skill and technology required to do that watching NOW is outside the grasp of many folks. It's beyond that kind of simple ingenuity. But yeah, I don't mean to suggest theres like, front running going on or something.
A good example of arbitrage occurring naturally is in currency markets - sometimes, it's possible to convert money between currencies in a way that means you can end up with more than you started with.
docs.google.com/spreadsheets/d/1qnOuQo6WjcBnRSdjen158mic66kpf-uu8ghqx0YFv8c/edit?usp=sharing
Here's a little example with three currencies - dollars, yen and pounds. Moving a dollar into pounds, then into yen, then into dollars again, leaves you with $1.03 using these exchange rates.
This happens when currencies are valued incorrectly - and in fact, it's these arbitrage opportunities that make sure the currencies are all valued fairly against one another on the global stock exchange.
These opportunities crop up in the first place when large market movements happen - maybe Apple Inc. needs a lot of pounds sterling to pay it's taxes in the UK, so it buys them with $USD.
This makes the price of Pounds (in US dollars) rise - and raises the value of Pounds, since there's more demand for them - but it doesn't directly change how many Yen it takes to buy one pound. So things get out of sync for a bit, and until someone buys Yen with pounds, the imbalance remains there too be exploited.
Again, this isn't caused by speed - these imbalances just take longer to correct when communications are slower. Arbitrage has been a thing since stock markets existed.
Yea, absolutely - though it wasn't exactly fair before either, not everyone could afford to hire a runner with a spyglass. I replied to my comment with a different example of arbitrage, this one with currencies, and a bit of an explanation of how they come about - I'd appreciate it if you took a look. Cheers for your reply =)
What's with the Pizza badge?
I find a lot this interesting as a person who is currently living in China and uses both Alipay (支付宝) and WeChat (微信) Wallet. And I find that interesting at the end that you mention it's being turned into non-solid forms to not allow it to be tracked, which I'm almost certain is happening with both of those digital forms. (But I'd still rather use them over cash.)
Still thinking, though. Especially about how it functions on a more individual/community/locale level.
I love how people are walking past a guy talking to a camera and just don't give a shit.
M-C-M' at the speed of light; super collapsed together :o
OMG Phone booth!
is it dead or the last of its kind?
you make some solid points, that I personally feel only proves that we are coming to a head in capitolism as we know it in general.
when wealth looses physical form then you will eventually get to a point of dilution where wealth as we currently know it holds very little value because it can be replicated at little to no cost, yes we can spend it at the speed of light but when you need enough virtual bits to make up a real weinerdog just to buy a book then would it be better to just start useing weinerdogs as curency?
(Yes bits and electrons have some mass, almost impreceptable but mass, so you can make a weinerdog out of bits)
I think that the pace of life would be determined not by the rate of exchange of money, but by the rate of exchange of ideas. No single person can think of every good idea, so in order to access the best of humanity’s thoughts, one must exchange ideas with others, and from this exchange society can build from the best ideas of its individuals.
That said, often the exchange of ideas is correlated with the exchange of money. If one has ever bought a book, a movie, or any other piece of culture, they are directly exchanging their money for access to various ideas. The same could probably be said for many services; if you buy a newspaper or access to the internet, you gain access to a myriad of ideas that otherwise you would have no access to. In these two cases, one is directly spending their money in exchange for ideas, but it can also happen indirectly; if you buy a cup of coffee to drink with your friend at a coffee shop, the two of you will probably exchange a few ideas while there.
But with the stock market, money is exchanged for ownership of a company, which is usually interpreted as a monetary value, thus making the transaction an exchange of money for money. Sure, in a few cases people might buy some stock in a company because they want to fiscally support that company, but that’s not what the computers are doing. The computers are simply exchanging money for money in a way that produces maximum profit; there’s no exchange of ideas in those transactions and I’d argue no increase in pace of life. After all, a computer algorithm making bank isn’t going to invent the technology that lets us teleport.
Money definitely controls the pace of modern life. I kinda see some link to DeBord's Society of the Spectacle with the Spectacle (autocratic reign of the market economy) permeating and shaping all areas of life. Interesting that in advanced capitalism, most money, which was once directly experienced, has become an image on a screen.
I guess you have a point. If our money were giant lead plates it would take longer for each transaction, so yeah I guess the shape of money can effect the pace of life