U.S. government takes 10% stake in Intel (cnbc.com)
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What the interns have wrought, 2025
53 yminsky 67 8/29/2025, 10:15:58 AM blog.janestreet.com ↗
I can only imagine what good that brainpower could do for humanity if it weren’t occupied finding cleverer ways to manipulate electronic money.
How do we start to care about quality, building lasting things, fundamentals? What would happen if we taxed capital gains at 100% for the first, I don't know, 3 / 6 / 9 months of holding an asset? Maybe investors would have more incentive to care about fundamentals?
Anyway, I assume I'm wrong about all of this, just looking for someone to explain why. ;-)
All I'm saying is that I wish our economic system were set up such that people with the mental aptitude to work at a place like Jane Street could earn commensurate salaries for applying that aptitude towards problems with much greater positive externalities than proprietary trading. Alas, it is not so.
Maybe humanity can start paying them decent money first?
It's another level detached from real value
I think it would be good if our best minds went to work on directly creating better things instead of indirectly moving money around efficiently so that other people might eventually find success.
Capital has to get from savers to builders. Liquidity, tighter spreads, and efficient pricing lower the cost of capital for all projects, including the ones building better solar panels. If financing those projects is cheaper and faster because markets function well, more of them get done.
It’s easy to glorify the visible widget (solar panels) and discount the invisible infrastructure (capital markets), but the latter is what makes scaling the former possible. The system needs both.
In the first case, money is important (if you completely ignore it, you can’t deliver value sustainably), but in a perfect world it should be more like fuel and an indicator that you are doing something right.
Suppose you want to invest in S&p500 so you want to buy the ETF. Someone like Jane Street can create sell you this ETF, and take care of the risk that comes along with it. For example, the price they sell you this ETF should take into account the pricing of underlying stocks. While it sounds trivial, doing this profitably (and therefore sustainably) is a tough job. And doing it competitively to offer you a good price on it is an even tougher job.
Ultimately companies like Jane Street have no moral rudder and it is a waste of talent for smart young people to work for them, but we are so far beyond such considerations at this point that it sounds naive to even suggest that maybe talented people should work on things that make society better for everyone and care about the moral implications of their work. Instead everyone is looking for a way to contribute to the coming dystopia in whatever way they can because that's where the money is.
You may not like it but we function in a capitalist society and as such the efficiency of markets is part of that. To have that happen usually requires the market as a whole participating and that includes firms like Jane Street. In the India case I don’t know if what they were doing was illegal or not, India is complicated and the laws there in my opinion are influenced not as much by standards but how well you scratch the itch of others. It is clear the option markets in India was/is highly inefficient in that Jane Street was able to pull the rug over and over. I would be curious who the counter parties were and if this is more about pride of Indian financial institutions not being competent instead of this being illegal. Thinking more about Hindenburg and how India reacted. In the US it feels like a gray area because at the end of the day the options market was clearly clueless on how they should be pricing the options.
Speaking from a US perspective people get thorny on these topics but I think it’s great that folks are always pushing the boundaries. This type of law is tested and we figure out what is ok and what is not. It’s often not cut and dry. Maybe Jane Street was entirely in the wrong in India and they will pay a price. Maybe not. Hopefully their markets learn and benefit from it.
I don’t believe any of us are in a position to say how folks should be spending their time. If we went down that road we could probably argue it back to nobody should be working and should simply be farming for our own food.
Money is debt, you can’t make it without someone else owing it. Taking billions in profits from India’s stock market is pretty straightforward, millions of Indians lost their savings.
Edit: I don’t think my point was clear. If you are going to allow retail in the options market, you should also be ok with sophisticated actors participating in it.
But the idea that smart people should "push the boundaries" to find out "what is ok and what is not" is either naive or borderline sociopathic IMNSHO.
Before throwing around labels like “naive” or “sociopath,” it’s worth recognizing that a capitalist system relies on efficient markets, and efficient markets depend on laws being tested and clarified through the courts. That process benefits everyone.
I’m not making an ethical defense of any specific behavior. I’m saying that just because someone benefits from mispricing in a market doesn’t automatically make it unethical. The courts help define those boundaries. If you reject that premise and prefer a system without capitalism, then we’re simply talking past each other.
And for what it’s worth, tossing out loaded terms like “naive” or “sociopath” isn’t exactly an argument, it’s just lazy rhetoric. It’s ok for us to disagree but why use such a lazy argument?
I do however believe that gaming the system for personal profit is unethical. The intention of the law might have been to build a playground for people to enrich themselves, but from a Christian standpoint, I don 't think this always works out well for society. I'm not a Christian, but I do like some of its values.
I was a bit disappointed about the suggestion that capitalism requires certain things that make Jane Street a necessity. This is not a fact, nor does the current process benefit everyone equally. Rejecting that notion, and possibly reading a bit too much into that, is what caused me to use said terms.
I do agree that we are probably talking past each other though :)
We obviously can't tell people how to spend their time, but we can point out that there might be moral reasons to avoid working in industries and for companies with particularly strong negative impacts on society.
> If we went down that road we could probably argue it back to nobody should be working and should simply be farming for our own food.
This is a classic false dichotomy. There are an infinite number of middle grounds between farming for our own food and an ultracapitalist dystopia in which morality is replaced by profit.
You’re right that there are middle grounds between subsistence farming and some caricature of ultracapitalism, but deciding where to draw that line in practice is messy. Pretending it’s obvious which industries are “moral” and which aren’t usually says more about someone’s priors than it does about some universal ethical framework.
At the end of the day, efficient allocation of capital, imperfect as it is, is what makes the system work. It drives productivity gains, lowers costs, and ultimately raises living standards across the board.
I think what OP meant is that producing all this fancy advanced tech just to play the financial game isn't all that much benefit for society.
And when looking at societal development in the last couple of decades with the increasing gap in distribution of wealth, social mobility and overall life expectancy declining and other such metrics, I think it's a valid standpoint that maybe, the collective smarts of our society could be allocated a bit better than putting them into companies like Jane Street; as impressive as their work is.
All for-profit businesses can be viewed abstractly as “in the business of making money”, so this doesn’t really distinguish Jane Street in any way.
> … why/if what they do is useful to anyone?
The utility that Jane Street provides is to the be a persistent buyer and seller of equities. Basically you can call them at any time and buy shares or sell shares. Most shareholders do not trade very often so without a “market maker” like Jane Street it can be a lot of work finding a buyer/seller who is willing to trade on your schedule at the current market price. You’ll have to pay them extra to convince them to trade, which makes it harder to trade profitably. Jane Street significantly lowers the price and makes trading easier (“provides liquidity to the market”).
in my experience Jane Street make no attempt to defend the financial system; such societal benefits are obvious or implicit.
whether you (or they!) really buy that is irrelevant
In turn that leads to more efficient markets since prices converge to their "correct" value faster.
Of course the whole point for a firm like Jane Street is to make money. To make money means they are competing with someone and that someone could be a loser depending on the scenario.
My own opinion, most folks don’t like market makers or folks who work in financial markets are simply not well informed. The efficient allocation of capital is a valuable service to humans in a capitalist society. People often forget how wide spreads were in the past and that humans were swallowing that margin up with little competition. Now market making is highly competitive and because of it investors both small and large benefit from it.
Market makers like JS vastly increase market liquidity across all sectors, which is required for modern high-efficiency economies to work. McDonalds prices are possible because there's enough liquidity in corn futures.
More abstractly, high market liquidity corresponds to higher-confidence information about the future, which hedge funds generate (and distribute for a low fee via markets), allowing for more impressive planning ahead.
Also, you know how when you buy stocks it doesn't cost you anything and you often get better-than-public-book execution prices? That didn't happen prior to modern electronic market makers. Multiply that efficiency gain by umpteen trades every day.
In general, "being in the business of making money" inherently requires you to do something useful to get paid, to the extent you're not just abusing a principle agent problem or something. The most credible argument for hedge funds making money without doing something useful is that they're doing cantillon effect harvesting or something. I think that's pretty small overall.
Companies like JaneStreet, 2Sigma, etc employ some of the best software engineers, mathematicians, physicists and what not just so they can
all so that they can move money around [and do so quickly].Finance is not alone either. A non-trivial amount of big tech is on tracking users and serving ads better.
Do I blame the engineers? No.
I am just lamenting the state of society since this is how we have the brightest among us function and work.
The only "actually useful" tech jobs if we're going to consistently apply a bar that excludes finance would be stuff like aerospace R&D or ERM systems. Which, to be clear, I would love if society incentivized more strongly. But finance is hardly the worst offender here.
But plenty of people here do work on real products. Planes need software, browsers need security patches, hell even your accounting app is good value over the days of doing that all by hand.
That’s not a moral indictment, just a reminder that most of our jobs (mine included) exist to make capital move faster or stickier. Calling one sector “real products” and another “not benefiting society” is a bit of a convenient fiction.
It’s fine to take pride in craftsmanship, just maybe less fine to pretend it’s immune from the same critique applied elsewhere.
Once you start noticing things changing, try to identify how you could profit off of it. If it's a change, then there's profit to be made somehow.
Any anecdote is a potential lead.
Some amount of extremely competent engineers worked on the tech that made it possible to target beauty ads to insecure teen girls when they deleted a selfie.
Some amount of extremely competent engineers where complicit in building the tech that stoked the fire under the Rohingya genocide.
I could go on, but I think you get the point.
1. Watch Stand-Up Maths and Numberphile videos on YouTube and do not skip the sponsor advertisement readings, e.g. https://youtube.com/watch?v=eqyuQZHfNPQ .
1. Read https://news.ycombinator.com/item?id=44480916 .
Part of Jane Street's business is HFT, and software is the "product" of HFT firms, because without extremely low-latency software (and hardware) they cannot make money.
My preference was for both sides to learn at the end of the day.
https://www.cnbc.com/2025/07/04/indian-regulator-bars-us-tra...