Social Failings from the Financialization of Fiduciary Money

Short-termism

An economy financed by markets (Exchanges & Funds) populated primarily with individuals speculating with our own money, for our own account, in pursuit of our own proper purposes, moves with the stately rhythm of bun-and-hold.

People aa market participants buy when we have some money set-aside, and sell when we need that money back, to spend on something else: a second home; college for the kids; a business opportunity; a dream vacation (or other “big ticket” dreams); living in retirement. ¬†Along the way there may be some selling and buying to rebalance our portfolios as the economy evolves with the times, but for the most part people buy shares and hold them, without paying too much attention to short term share price fluctuations.

As markets become financialized with the entry of Fiduciary Money, experts take over who are expert at timing the market to extract maximum profit from each trade: buy-and-hold becomes buy-low-to-sell-high, which is the boast of every market expert.

Short-term price fluctuations become profit-taking opportunities. As the pace of trading in the share price trading markets quickens with more money being moved more quickly by more experts whose expertise is in timing the markets, pressures mount on corporate executives to shorten the time horizons for their own business decision making, to answer the demand of market professionals for profit-taking trading opportunities in the short term.

As business decision-making shortens its horizons, the whole economy and all of society become increasingly short term.

Volatility is endemic to the logic of share price trading as a social structure for social decision making about where the money can, should and will be made to go to finance enterprise and shape the economy.

Financialization transforms volatility into short-termism, as experts take over the markets and buy-and-hold becomes buy-low-to-sell-high becomes hub-high-to-sell-higer.

Elitism

As Financialization of Fiduciary Money brings experts into the markets, individuals get pushed out.

Gigantism

Two things happen to corporations financed by securitization for share price trading when the market get Financialized by Fiduciary Money.

  1. pervasive and pernicious demand for short-term profit taking opportunities rewards strategies of corporate growth by acquisition for concentration through agglomeration.
  2. There is appetite from experts for exotic acquisition and market manipulation strategies to support ever-present share price trading opportunities that individual buy-and-hold markets would not buy.

Instability

Short-Termism + Elitism + Gigantism = loss of common sense = booms that go bust.

Unreliability

Fiduciary Money financing booms that go bust.

Unsustainability

Extraction and externalization for short-term profit taking = uncaring, reckless unnreckoning with the future impacts of present choices that only works if there actually are no consequences to be reckoned with.

Dark Money

Short-Termism + Elitism + Gigantism = loss of common sense = booms that go bust.

Divisiveness

Fiduciary Money financing booms that go bust.

Maladaption

Extraction and externalization for short-term profit taking = uncaring, reckless unnreckoning with the future impacts of present choices that only works if there actually are no consequences to be reckoned with.