Saturday, March 26, 2011

A faceless economic system

"With regard to the wider economy, debt finance is simple, cheap, and seemingly ‘efficient’ because it reduces the information that needs to flow between supplier and user of finance. The problem is that, as we have learned again to our cost since 2007, the debt-based system and its banks only survive by holding the economy hostage and so pass the costs of their failures onto ill-informed or powerless third parties.

By severing the relationship between lender and borrower, the debt-based system economises on costs in the short-term only to impose them on innocent third parties in the long run."
(Paul Mills, 'The great financial crisis: A biblical diagnosis', Cambridge Papers, vol. 20, no. 1, March 2011. Emphasis added.)

This senior economist at IMF's Monetary and Capital Markets Department has pointed out a serious problem in the current financial world. The condition of the market has created a gap between the agents involved, distancing each other from being immediately aware of their reciprocity. Therefore Christians, as well as most investors, do not immediately see financial investment related to ethics. This is what I have observed in a previous post, to which some who claimed themselves proficient in economics still too blinded to see.

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