Finance Industry Research Paper

Open, View, and/or
Download this Document

Total Length: 2475 words ( 8 double-spaced pages)

Total Sources: 10

Page 1 of 8

Financial Industry

There appears to be a disjointed understanding concerning the functioning of a capitalistic economy and its use of money. Financializaition is a mostly new model of the use of money as a valuable resource in and of itself. Money is essentially fetishized as the most prominent capitalists strive to gain more and more money. Money makes the world go around in many ways, but there lies a question in to how humanity uses the precious inventions of trade and commerce in more reasonable and just manner that excludes the negative aspects that financial institutions and their machinations attempt to dominate the economic progress of a people.

The purpose of this essay is to argue that financializaition and its offspring intermediaries have set the capitalistic world balance off a productive trajectory. The greed of those who seek value in material wealth without any real or substantial backing is at the heart of this issue as this essay will argue that without a better understanding of how money works or is created, the trends towards to financializaition will also be marginalized at perhaps a great price.

This essay will discuss the process of the creation of money using the American Dollar as an example of how financializaition is ultimately based on no real tangible backing or asset. Using this argument as a premise this essay will continue to argue that the offspring of the banking systems that have been created has provided the root cause to the problematic effects that financializaition appears to have on the world's economy and the state of the human race as it seeks to peacefully coexist and conduct commercial activity without the unnecessary conflicts that are often residual from financial institutions that supposedly have a lock hold on the way the world operates and conducts business.

Background

There is less secrecy regarding the power structures of the world, and it appears that financial institutions certainly play a very large role in the powering of this planet and has its hands in many human endeavors. Pike and Pollard (2009) explicitly agreed with this idea when they wrote "financializaition -- shorthand for the growing influence of capital markets, their intermediaries, and processes in contemporary economic and political life -- generates an analytical opportunity and political economic imperative to move finance into the heart of economic geographic analysis. Drawing upon long-standing concerns about the relatively marginal location of finance in economic geography, we emphasize the integral role of finance in connecting the entangled geographies of the economic to the social, the cultural, and the political."

Denning (2014) also commented on the nature of the economy when he wrote "throughout history, periods of excessive financializaition have often coincided with periods of national economic setbacks, such as Spain in the 14th century, the Netherlands in the late 18th century, and Britain in the late 19th and early 20th centuries. The focus by elites on "making money out of money" rather than making real goods and services has led to wealth for the few, and overall national economic decline. In a financialized economy, the financial tail is wagging the economic dog." This idea of how money became such a popular item to have despite having any real value presents unique problems that depicts an economic world that is based on many false illusions.

Creating the U.S. Dollar

The U.S. Dollar, despite recent disasters and turbulent times remains a powerful currency on the global market. This means that those who own U.S. Dollars have significant buying power of goods and services in markets that accept such currencies. This is not a problem until it is revealed the nature of money and how this money comes into materialization. The manipulation of this system by financial institutions have spread their influence in the form of financializaition throughout the global economy much like a harmful virus out to destroy the very organism it chooses to feed off of in its state of peril and weakness.

The U.S. Dollar is created out of thin air in a seemingly act of magic and illusion. To complete this transaction, the U.S. Congress asks a privately owned bank known as the Federal Reserve, to create money for them. The Federal Reserve is an internationally owned private bank. This small institution creates U.S. Dollars and loans them to the U.S. Government with a rate of interest. Unlike the past, the U.S. Dollar is not based on any precious metal standard or have any real financial banking. It is play money. The gold standard was replaced many decades ago and the paper that people use to carry on their lives is essentially worthless if not for the collective pledge to make this system work for all.

The question that immediately arises is that if this is play money than how or why does it work? The U.S.

Stuck Writing Your "Finance Industry" Research Paper?

View All Our Example Finance Industry Research Paper

Have A Custom Example Essay Written

Dollar works because there is confidence in its ability to purchase items and services. This confidence is not real or actually measurable in any real tangible way. Financial institutions create models such as confidence indices that reflect a spurious notion of equity and balance while simultaneously promoting this conglomerate's own self-worth and value.

Financializaition As Usury

The concept of usury transcends politics, ethics, philosophy and economics. The concept of usury has troubled mankind throughout the ages. The story of Jesus rebuking the money lenders suggests that financializaition of the holy temple was too much for him to take. " the concept of usury has a long historical life, throughout most of which it has been understood to refer to the practice of charging financial interest in excess of the principle amount of a loan, although in some instances and more especially in more recent times, it has been interpreted as interest above the legal or socially acceptable rate," ( Visser & Mcintosh, 1998, p.175.) Financializaition is not new it has plagued mankind for many years.

Many great economists and philosophers also critiqued the practice of financializaition or usury. These great thinkers understood money not to be the root cause of doing an action, rather that money is nothing more than a tool or model to help develop more important aspects of human living. The idea of making money off money by using interest rates is the very core essence of the finance industry, always betting on the outcomes of the future, while ignoring the precious here and now. The religious antimony towards usury and its practice throughout the world resonates with the great power that financial institutions wield in the face of the poor and oppressed. IT makes sense that the religious leaders of almost all of the world's religions would be staunch opponents of the practice of usury and its present day form of its excessive use and abuse known as financializaition.

Financial Intermediaries

The advantages of making money out of loaning money out for interest in the future has spawned an entire industry, known as the financial industry. The trend that money has brought in human development has created the circumstances for this current landscape. The true value or practical worth of any item is more or less replaced by these people who seek to maximize money and not necessary value or true practical worth.

Financial intermediaries are well placed and active within many realms of today's society, as they seek to gain a monetary advantage using the leverage of interest and the time value of money. " The group includes corporate lawyers, hedge fund managers, private equity fund partners and investment bankers, who provide services to giant firms and initiate some corporate activity such as merger and acquisition, as well as operating and innovating within the capital market," (Folkman et al., 2007).

The money is the focus with these types of agents who work, not necessarily to improve any particular sector of business, but rather, maximize the accumulation of paper money, which as discussed before is created out of thin air. The workforce and labor pool throughout the Western world has become slightly disillusioned and the results of this social problem can be linked to financial operations that seek to build equity out of nothing really at all except the hard work and toil of others working to create something real and tangible that holds real value beyond the basic concept of currency. Bacon et al. (2010) agreed with this idea when they wrote "the most comprehensive study to date, commissioned by the World Economic Forum (WEF 2008), provides rather strong evidence that LBO (leveraged buyout) activity results in larger employment losses than in control groups that adjust for factors such as enterprise size and sector. It notes that 'the net impact on [employment in] existing establishments is negative and substantial."

The structural changes that have occurred due to this transformation are large and widespread as the entire global economy has been made over to reflect a position where money is key and the value of items and labor have been reduced to offshoots of financial transactions. It appears to be….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


Related Essays

sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Finance Industry" (2015, February 20) Retrieved May 23, 2024, from
https://www.aceyourpaper.com/essays/finance-industry-2148747

Latest MLA Format (8th edition)

Copy Reference
"Finance Industry" 20 February 2015. Web.23 May. 2024. <
https://www.aceyourpaper.com/essays/finance-industry-2148747>

Latest Chicago Format (16th edition)

Copy Reference
"Finance Industry", 20 February 2015, Accessed.23 May. 2024,
https://www.aceyourpaper.com/essays/finance-industry-2148747
   

Open, View, and/or
Download this Document

Related Essays

order custom essay example