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How To Lose $7.2B With Just a Few Basic Skills
Cityslacker recommends a Register piece speculating on how a lowly trader at the French bank SocGen was able to lose billions using only Excel VB. The author freely admits that his story is not based on hard sources, but his experience in the banking industry lends plausibility.
Generally, the economy works better when money circulates...When it has "velocity", which is another one of those words like "multiplier" which I'm going to assume you understand. By dumping surplus money into commodities rather than banks, you're effectively hiding your money under your bed, and dampening the flow of money through the economy. People did this for a long time until a smart guy named Adam Smith pointed out that hoarding gold didn't make anyone especially wealthy; it was trade that built wealth, and that meant the movement of money and goods.
So that's why banks exist, and why we allow things like the multiplier effect to run our economy. The granddaddy of all multipliers (the Fed) has been active for the past few weeks, trying to pump some money into the economy. Bush is hedging his bets, and backing Keynes at the same time with a stimulus package. Historically, these actions have added velocity to currency, and fast currency tends to stimulate the economy.
The reason for the FDIC, and SEC, and Social Security and Welfare, and every other similar system is to basically keep the money in people's pockets. This is important for the reasons above; cash circulating through the economy creates jobs and stimulates the economy. A bunch of people losing all their money (for example, when a bank fails) means you have a bunch of people who suddenly can't buy groceries. Grocery stores start laying people off, because they have to cut costs, which means MORE people can't afford groceries, and so forth. People like you pull their money in and convert it to commodities, instead of putting it into banks, which means banks can't make loans to support people who are trying to start businesses or buy houses, which, again, slows the economy and costs people their jobs.
Basically your thoughts on this stuff fly in the face of all mainstream economic thought for the last several hundred years. I'm assuming you're a Ron Paul guy, because echoing his "economic" beliefs, and Gosh, we'd sure like to move back to the gold standard. I'd almost like to see him get elected, just out of academic interest in the economic chaos that would ensue.
Anyway.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
I hate to say it, but the Reg might be right. Assuming the linked CV is the real thing, he only claims to have experience with Excel macros and a smattering of VB.
The real part of his hack is probably social engineering and stumbling upon oversights in the trading system. How many IT folks, even the dumb ones, can say "I could take this whole system down if I wanted!" - this guy actually did.
Goes to show that there's a difference between checking off boxes for auditors and actual security. Auditors can make sure the proper safeguards are in place; auditors can't tell if everyone in the department uses the same password.
Well, can't argue with a zealot, so I won't try.
I suggest however, that increases in our relative standard of living and the fact that our purchasing power has remained reasonably constant over the past three decades would suggest that we're not actually all secretly bankrupt, or, if we are, then the whole world is secretly bankrupt with us.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.