A well-run financial market is of great value to families

Financial crises are an almost normal feature of our current economic system, and their own scholars (and advocates) have already admitted this feature since Russian economist Nikolai Kondratiev's studies of business cycles in 1925. Later, Austrian Joseph Schumpeter, who was diametrically opposed to Kondratiev on the political scale, would include part of his findings to develop his theory of “creative destruction”.

Therefore, economic instability is already inherent in the system and therefore requires that a margin of safety be always created through investments with little volatility on the part of families, so that such crises do not affect their way of life so deeply. Nonetheless, activities like investing in gold or in National Treasury bills, which are investments that are characterized by low volatility and a tendency to long-term gains, to obtain this security in times of financial stress, is something that not many people do – perhaps because they still do not have much knowledge about these practices. In this way, vulnerability to the business cycles of companies and the crises that arise from the system continue to leave us highly exposed to the worst problems in our economy, affecting our ability to maintain the obligations and benefits that such an economic scheme provides us.

Much of the problem with the lack of personal investments obviously comes from the lack of resources of a large part of the population, who simply cannot have the necessary surplus to start raising funds for future investment. However, this does not exclude another very important factor in the equation as a whole: the lack of information regarding the financial market and its purpose.

Source: Pixabay

In fact, rampant speculation is almost always harmful to the economy, as the studies of the American economist Hyman Minsky would say, as it always requires state intervention to save institutions that have become “too big to fail”. This process ends up becoming negative for families, who can end up losing their living resources – as happened during the 2008 crisis, in which millions of people in the United States lost their homes due to having to return millionaire mortgages that were generated on the basis of creation of real estate bubbles.

However, the ultimate mission of the financial market is not to generate complicated schemes whose ultimate intention is to harm society for the benefit of a few. On the contrary. The role of the market, when well conducted, is to finance initiatives by both entrepreneurs and families for the guarantee and realization of productive investments, cash flow guarantee, real estate purchases, among many other things that are part of our daily lives.

The “price” paid for the advances that banks provide from these transactions is interest, and the legitimacy of this charge has been debated since Mesopotamian times. One of the most relevant discussions of recent times was raised by the American anthropologist David Graeber in his book Debt: the first 5.000 years whose main theory revolves around how debts, including bank debt, are behind the creation of currency and so many other economic elements that survive to the present time.

Even the German economist and philosopher Karl Marx recognized the important role of the financial market in the economic system, helping the growth of industry and also the “laws of motion” revealed by his theory when it does not dive into its more speculative and volatile side. Therefore, it becomes difficult to “escape” the financial sphere of our economy.

Source: Pixabay

As many socialists and communists already recognize and always raise in their discussions with those who condemn their personal possessions on the opposite spectrum of politics, the philosophy of Marx and those who follow his line is not a vow of poverty. It can even be argued the opposite, since according to the labor theory of value of Marx and his "disciples", the goods produced in the current economic system have as a source of value the previous and present efforts of workers to develop intellectual capital and productive to produce cutting-edge technology parts, such as, for example, an iPhone - which includes in its project several technologies developed in government programs.

At the same time, living “off the grid” is something that is often only allowed to those who already have reasonable amounts of money. Although some prefer to follow this path, it is difficult to do so without a financial framework that allows us to bring or make our own comforts.

Therefore, however problematic the system may be, it is not enough to be isolated from it. The ideal course plan is to do the exact opposite: use your own tools, such as the financial market, to secure your resources in times of crisis. And, with such resources, reach new platforms and integrate, or even form movements that help to achieve the necessary changes for a fairer and less unequal economic plan.