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Many economists claim that our economy cannot function without giant financial institutions. How can this be explained in terms of a simplified diagram of our economy, shown below?
A simple diagram of our economy
Components of production--land, natural resources, labor, knowledge, firms and hundreds of small banks in each state--are available. Households will always need to consume food and other things. We also have supermarkets, stores, a functioning infrastructure, etc. And we have a democratically-elected government. Why all this is not sufficient for the economy to function? Why should trillions of dollars be used to rebuild super-banks? Why should this be our first priority? I am not an economist; please answer in terms of what one learns in an introductory economics course. Thanks in advance.
P.S.
The above diagram is one of many, in an essay on economy which I am still composing. Feel free to use it in any way you wish.
