How brave and new is our world of finance today?

After four months of blogging on BraveNewFinance, it has now become time to look back. Can we already be able to conclude that sufficient actions have been taken? Actions that change the world of finance for a better and safer future for the markets, economies and us…the people?

One must admit that it is quite difficult to come up with a conclusion after four months. On the other hand, it does make sense when one is taking a look on all our posts that we shared with each other. It becomes apparent how many financial problems still occurred around the globe, ranging from currency wars over to quantitative easings and bubbles.
Bundling all these events, they give us the signal that the financial world does not seem to have become safer or more resistant against a crisis – primarily for the fact that new problems occur before other difficulties have been solved. Strategically, this seems to be due to the fact that our world has experienced a continuous rise of complexity and dynamics at the same time (so-called “time scissors” by Bleicher)

Having re-addressed the controversies that we blogged about, I feel tended to stress that our world of finance has not overcome its weaknesses and problems but is dealing with many more challenges than ever before. A financial system of complete new character seems at least highly impossible – let’s rather put this idea to be “utopian”.

This leads us to the embedded component of our blog: The vision of Aldous Huxley, the author of the well-known utopian novel “Brave New World”.

In his book, Aldous Huxley designed a world of universal happiness whereby its people were ruled by a group of leaders who took use of specific techniques in order to keep their control over the people: Providing them with drugs and extensively using propaganda.

Focusing on these two aspects, one can easily associate the term “money” with drugs and the term “inalienability with a means of propaganda.
Having connected these meanings, we can now figure out how one may perceive the “brave new world of finance” these days:

– In this world, the leaders are the big dinosaurs, the multinational investment banks.
Due to the case that they don’t want to fail and that they cannot fail for the sake of a functioning global economic system, their positions are maintained by political powers. In addition, these investment banks take propaganda-like actions in order to prove and legalize their power: Because of their influence they have on a global economic scale, they are indirectly threatening governments by stating that these institutions are indispensable today (i.e. they are inalienable).

–  “Money makes the world go round”: the leaders as well as the ruled people want to earn money, so both groups are taking the same drug. The problem is, that the leaders are ultimately the ones who are in charge of generating this drug for its population. Again, we have the suggestive picture of the investment banks being needed to make the clockwork function.

To conclude, this picture is not as nice as one would love to. That is why both, Huxley’s book as well as our “Brave New Finance” are not really utopian sceneries, but more of a dystopian type.

In this dystopian world of finance, the next crisis is just a matter of time:
When entering the word combination “next crises coming” into the google-search machine, you will find around 10.5 million results within 0.39 seconds and on the first few pages, the bottom line is as the following:
the next crisis will come sooner than you think“…

To sum it up, one could base this realistic view on financial models. The more return a person desires, the more risk he has to take. This leads to the conclusion that whenever we, as the people, are looking for better and higher returns, we also have to consider the risks of it – which might lead a crisis in the end. And one should not be so optimistic as to think that we will turn our minds to become truly abstinent of any attractive returns…money makes the world go round.

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This entry was posted in Financial crisis and various bubbles to be continued, Financial knickknacks, Monetary Policy. Bookmark the permalink.

3 Responses to How brave and new is our world of finance today?

  1. vivipre says:

    I agree that one will have to deal with a variety of new challenges as our future is uncertain and the world of business steadily changing.
    However an increasingly complex and globalized world also supports interactions, enhances ways to communicate and thus improves global knowledge transfer. And, not being as pessimistic as your 10.5 million results of Google, it could help to learn from past mistakes and a next disastrous economic collapse hopefully prevented or at least its impact diminished. This EU Commission, for example, already implemented several measures for crisis management in the banking sector as their web-site shows.

    By the way, nice linkage from theories learned in class to the business world, referring to Bleicher’s “time scissors” model. 😉

  2. stuerzele says:

    Thanks for the great summary and the link between our “Finance World” and the utopian world written about by Aldious Huxley.

    I agree with you somehow, at the first glance money really does make the world go round. At least we don’t really know anything different.
    The crisis – the lack of money – made the world stop (well, in our feeling), but then there were the governments who gave some more money to make the world go round again, just to wait for the next crisis.
    But that is exactly the problem we discussed (here): Those countries that do not depend as strongly on the financial system as the “engine” of their economy did not suffer as badly. See Germany, sure there were big losses and, say, the world turned slower as before, but the productivity which allows Germany to export is driving the economy, not Frankfurt with all those fancy banks.

    So, yes, money makes the world go round, but production creates this money.

  3. rudi2020 says:

    Well summed up, I agree practically with everything you outlined, Kizzel_Keller. Being optimistic as usual, I tend to see past events not as crisis but as challenges. Challenges that have been mastered pretty good. Well, jobs have been lost, companies went down, but one must admit: bottom line – the economy is back on its food again. In Europe, whole states were forced to restructure their way of spending money, on order to act more efficiently. Taking Greece for example here.

    Crisis? I don’t see any any crisis: I see challenges and opportunities. Expensive though, as the Guardian lines out. Btw: nothing new is learned from the latest report on the financial crisis except it was expensive – very.

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