[Deactivated user]
Global Financial Meltdown - the consequences... Everyday it becomes more and more evident that this old planet is heading full-speed to a Global Financial Meltdown. Lately, most governments of the developed nations agreed to 'inject' into the global banking system zillions of 'cash'. Does anybody wonder why this cash couldn't be invested in pension funds instead? Do you believe the finance professionals, whose bonus salaries in the last decade exceeded an annual 100 billion dollars, are worth those zillions of taxpayers money? Do you sense the imminent inflation tsunami following the unsuccessful 'bail out' attempt of the financial system? Can you picture the whole human society without the presence of money?
Oct 15, 2008 7:08 PM
Answers · 2
At one time money did not exist in society. Goods and services were exchanged by the barter system. For example, if I were a farmer and you were a cobbler, we would mutually determine how many bushels of my crops you wanted in exchange for a pair of shoes. This was not an effective system. To answer your question, though, the money needs to be invested in the banks because commerce depends upon credit, even for a period as short as 30 days. In the current crisis banks are very reluctant to extend even short term credit, so the economy as a whole is slowing and unemployment is rising. Both of these conditions are undesirable, and occurred during the Great Depression. Investment in the banks is one means of preventing a depression from occurring again. And when the economy regains its health the value of the pension funds should return to former levels. To answer another question - the salaries and bonuses paid to some executives are obscene. No, they are not worth the salaries they are paid. Lastly, I do not see, as you put it, a "tsunami of inflation" because of the bailout. The inflation we are seeing now can be traced back to a great extent to the rising prices of oil. Regardless of the outcome of the bailout measures, prices for many goods will continue to rise if oil prices rise.
October 15, 2008
No, I can't picture the whole human society without the presence of money, maybe capitalism has persuaded us but the fact is human society is in need of money to continue trading and living ( of course if you asked a person in the early centuries to suppose the world without the presence of oppressor governors he would say the same thing ! ) I don't think it's logical to invest this cash in pension funds, a healthy financial system should be like running water, I mean that pension plans paid after a person has stopped working, but we still need people working in factories, companies and ..., so if we increase pension funds the consequence is to decrease the money paid to employees and that doesn't sound logical i guess and the finance professionals you said aren't the only beneficiary of taxpayers' money, but i think most of them don't deserve this money ! :p
October 15, 2008
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