The most relevant question in present economy. Is it financial institutions or any other sources?
First of all we should know the function of financial institutions and their revenue earning sides. In general financial institutions’ main function is lending. The lend money to the borrowers according to their credit norms. And mostly the big borrowers are corporates, big businesses. Apart from these the financial institutions also lend money to the Medium and Small industries too as well as opening of retail financing to the middle class salaried or Self employed people.
The financial institutions simply sell money adding profit and administrative cost and get back the invested money after a stipulated period from the borrowers. This is a cyclic process thus created inflation.
Up to twentieth century the financial institutions were the key players in economic supremacy. But in twenty first century the picture is totally changed. The baton has transfered from financial institutions to the speculators. They are ruling the entire world.
Who they are? They are limited number of richest people in the world who speculate the all stock markets, play their speculating game among their own circuit and make massive profit. Sometimes we read news about ‘market crash’.
No real asset produces, no employment generates. And interestingly every year we see their net assets grow by leaps and bounds manner.
We the commoner do criticise the statesman but the real players use the statesman as their puppet, they play their game behind the screen.
In many cases it have seen that listed companies cannot make net profit or can make profit very low in consecutive quarters but their share prices go up and up without any scientific reason just of increasing their immovabale property’s valuation.
An economist of the World Bank nicely explains this syndrome. He has pointed the major ecommerce, his version was these ecommerces are redistributing goods, not producing any goods and carrying the Startup tag, raising money from.VCs. Though he has praised to Facebook. But my personal opinion differs, Facebook is not producing anything. They are selling advertisement in their network. So, I cannot make any difference of Amazon or Facebook. The total thing is a hallucination.
Every moment internet is making the people fool as the share market.
The speculators become the supreme of economic system.