Inequality Maximum -The battle between the real economy and the financial sector

The battle between the real economy and the financial sector

I want to start with the distinction between the real economy and the financial sector is clear. The real economy are products or services. The financial sector has financial products. The term financial products can I find a veiled term for this discussion. In this discussion financial products are not products of the real economy.

I want to discusse now about financial products. This may include the following financial products:
  • Share
  • Bond
  • Derivative
  • exchange
What a bank does is earning money by moving money, an extreme example of this is flash capital. However, if your logical reasoning there will come a question. You have an individual who can operate a limited time and must eat and drink. The computer takes power and the internet. Logical reasoning would be that money moving resources needed to do so and therefore costs money instead giving money. The banks seem to do magic and wealthy people like it very much. They can multiply money by moving it. About the same story as someone who says he has a money tree in his garden. Essentially, this story is not true.

Where does this money come from? In the case of a share the worker will have to work for the revenues . In short, it comes from the real economy. What banks' financial products do is withdraw money to the real economy and give it to themselves and people who are already rich. And so, the difference between rich and poor is bigger and you get the situation like in America that people now have two jobs to make ends meet.

The inequalitymaximum does not change this. To do this you need policy on Banking. However, it will have a beneficial effect. Rich people often spend a lot of money on financial products, people with less money to spend proportionately more money on products or services of the real economy. This means that poor people give money to the real economy is going probably increase.

You could even make it a formula. The formula would look like this:

var $growthfinancialsector = ??;
var $growthrealeconomy =??;

if ($growthfinancialsector > $$growthrealeconomy){
 // risk of financial crisis
 // healthy financial sector

What this is in essence is that there is to establish a relationship between the growth of the financial sector and the growth of the real economy and the likelihood of a crisis. The financial sector can not grow indefinitely. At one time, it comes at the expense of the real economy. This can predict the bubbles and the crisis. Banks are pussed to do so. They need to make a profit. This gain and most preferably as large as possible to create the situation that banks at the expense of the real economy will profit. The word share is created when a company needed money and it could be funded by a bank. This went as follows. You as a company had a plan to grow but for this you need money. Then it seemed your business growed and the share was worth more. This means that the share alone could be worth more if the company was worth more. The situation is such that the share increases by certain financial products are without something in return in the real economy. This creates a questionable increase in value of a product that can actually look more like a liability against the real economy. This can also lead to a crisis and bubbles.

end addition

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