Charles Hugh Smith: A World Without Finance

We will enter a world without finance, and it will be a better world, for the economy will no longer be in thrall to the derangement and inequality of parasitic, predatory finance.

A world without finance is currently unimaginable, because finance is now synonymous with financialization. In this context, finance no longer refers to longstanding mechanisms that grease commerce such as short-term commercial debt (purchase orders, etc.) or long-term debt to finance the construction of new assets (mortgages, etc.)

A world without finance is unimaginable because the economy’s “growth” and soaring inequality are now totally dependent on financialization. Finance is no longer about greasing commerce and the construction of assets, roles it played for thousands of years; finance is now a vast skimming machine for the few to enrich themselves at the expense oof the many, a set of swindles that skims from what remains of the productive economy to benefit financiers, corporations and speculators.

In other words, finance is nothing more than a parasitic system that has wormed its way into every nook and cranny of the economy. Where finance represented a few percent of the entire economy in previous decades, it now accounts for roughly 20% of the economy: nothing but churn.

Finance sells its “services” as hedges, but this is merely PR cover for predation. Finance creates no real-world goods or services; it is a structure of exploitation that is more like a criminal syndicate than a sector of the economy.

Given its parasitic, predatory nature, it’s not surprising that finance is the primary engine of extreme wealth-income inequality. The fortunes of the few assembled over the past two decades largely trace back to the expansion of debt and leverage (i.e. financialization) which emphasizes marketing as consumption expands not from earnings but from the expansion of debt and leverage.

The problem is parasitic, predatory finance is inherently unstable, as it destabilizes the real economy by distorting every level of regulation and governance and deranges incentives to reward the least civic-minded, the least ethical and the sleaziest self-absorbed gamblers, those who demand a bailout when their private gains turn into private losses.

We’re too big to fail, they whine, and the naive public bought that fraud in 2008-09.

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