On the stock exchange, shares, loans (bonds) and other securities are traded. These securities are legal rights – not products or services. Trading rights, however, is a peculiar thing by its own nature, because why did we arrange things in such a way that rights can be traded? In the stock exchange, this is daily practice.
There’s an abundance of capital in the world: money that isn’t used to buy things, but that is used by financial institutions such as banks, retirement funds and Insurance companies.
That money could productively be used to help (starting) entrepreneurs anywhere in the world, to get their ‘entrepreneurial tool’: capital. That could, for instance, happen in the form of a loan (credit) or a holding interest.
If attempts to make money productive through investment do not succeed, then the money is in fact ‘left over’. In that case, it can be used in another way, namely to donate it to people or organizations who don’t aim for an economic yield, but rather for a social, cultural or development yield. In other words, this money must be donated to cultural life.
To a certain extent, money is currently donated in this way, but not enough yet. That’s why financial institutions and individuals look for other destinations for the existing abundance of money. They often invest the abundance of money in real estate or in the financial markets: by trading securities.
The stock market trade, isn’t called speculation for nothing. Expectations for the future (for example about the weather, the yield of harvests, mergers and split-offs, resigning CEOs, or the introduction of new products), of which nobody knows whether they will happen or not, play a huge role. Just like ‘moods’: the mood in the stock market which often depends on factors outside the economy.
Financial markets are quite irrational. The more curious is the fact that the mood in the financial markets has a large effect on the world economy and, ultimately also on social and political circumstances world-wide. When we would arrange ownership differently, we would give society a more stable foundation. A foundation free of speculation and moods.