Today I would like to discuss with you such an important topic as world financial system. Many today criticize this system and say that it has lost its usefulness. Based on these statements, I want to find the very minuses that drive the system to a standstill and find the best possible replacement options. All the options given in the article are just a theory and my subjective opinion, and it will take time to check their reliability. This article, a continuation of the previous one, on the topic of the global financial crisis, I recommend it for reading.
Structure and operation of the financial system
All the work of any financial system consists of loans and debt. The top of the system begins with International Monetary Fund, which issues loans to other countries and receives them back with a percentage. Thus, capital is growing and continues to be distributed in the form of loans. The subsequent amount of loans increases, and together with the amount, the percentage also increases.
For the work of the financial system, the state is responsible for banks, which also issue loans and receive them with interest. The system receives huge sums that give the potential development of the entire economy of the state, but there is also a downside to the coin. Constant lending increases loan interest.
Using the services of the global financial system - states, organizations, banks and people are pounding themselves into debt and huge sums remain. It concerns not only poor people or underdeveloped countries, everyone is in debt. It's no secret that the United States has the largest external debt, yet America remains one of the most powerful countries in the world, and the dollar is the world's main currency. So this system is arranged and we are forced to live by these rules.
The main shortcomings of the world financial system
The financial system exists at the expense of capital and credit interest, and the top of this structure are the institutions that form this capital. It is these institutions and organizations that will always be in the best position, and those who will use this capital will depend on these institutions. Thus, a financial pyramid is formed, in which there are those who produce capital and those who use it. It is because of this that most of the problematic moments arise.
The main disadvantages of the financial system:
- Everyone who wants to use the services of the financial system is required to overpay the cost of such services several times. The cost increases due to credit interest, surcharge and taxes;
- as already mentioned, the financial system generates debts in which countries and institutions find themselves. Because of these debts, financial crises arise, and if the system continues to move in the same direction, then in the future we can expect a global financial crisis;
- The financial system has dulled people's feelings and put money on the first position. World production is aimed only at making money and destroying other values (nature, flora, ecology);
- the price increase. Due to the rapidly growing loan interest, borrowers do not have time to make the necessary amount for a refund. Because of this, they have to raise their own prices.
The irony is that 80% of the total capital is owned by 20% of people. This group owns a myriad of money and sets the basic rules of the world game. These people create capital, own it and force the rest of the population to use it. However, this process will not be eternal, it is possible that someday this system will simply exhaust itself and lead to something else.
It is possible to say with certainty that the world financial system is moving towards its tragic finale. If nothing is done, the world faces a financial crisis that will cause a series of horrific consequences. If you take measures and analyze all the existing experience, the system can be saved and turned into something more useful.
What measures should be taken to save the financial system?
If you fantasize, you can think of the following actions that can theoretically be implemented:
1. First of all, you need to reduce the value of money and send them to a constant production turnover. But to reduce the value is extremely difficult, it is necessary to remove the credit interest. But even removing the percentage, money will still remain in the hands of 20% of the population.
Now in the world there are kriptovalyuty, cash is converted into bank accounts, and electronic payments are used around. Perhaps in the future there will not be any cash, and we will only use e-currency. To remove loan interest, you can introduce a simple tax on bank accounts. Thus, a tax would be imposed on bank accounts that would encourage people to spend money and send them into circulation. The tax that is charged to the accounts would not be sent to the bank of banking institutions, but directly to the state treasury.
Such a scheme would reduce the value of credit and reduce loan interest. And the constant use of money would increase the turnover. Due to high commodity turnover, the purchasing power would increase, which in turn would stimulate all other branches of the state. After a while, the need for credits and interest would disappear altogether. Enterprises and people at the expense of cash prosperity would not need more loans.
2. The next stage should affect the taxation system. All taxes must be removed from the producers and imposed on consumers. Undoubtedly, such a policy will be adopted extremely negatively, but if you think from the other side - the system fully equates class inequality. People who are richer and more consumed will pay several times more taxes than the poorer population. Over time, inequality would have completely disappeared, the financial condition of poor people would have improved, and the wealthy had worsened.
3. Starting from the first two points, we can conclude that production in the world would increase significantly, which again will affect the problem of ecology. In this regard, it would be possible to create various tax collections in support of and restoration of the natural world. On organizations that destroy and harm nature, introduce a tax. Most institutions would adopt a safer production system that would not harm the environment.
Summing up, I would like to say that we need to live here and now, starting from the system that is now. You can start fighting with an imperfect financial system. This will undoubtedly affect the quality of your life, by reducing consumption, you will receive less benefits. And you can adapt to the existing system. If you do not have enough capital, try to change your life. Change work, master a new profession, open your business. Do everything possible to depend only on yourself and that external disasters affect your quality of life in the last place. Do not wait to change the world and change you, change yourself. Everything depends on us.