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March 23, 2009 at 12:23:23     Permalink Without Super-Banks? Diary Entry by Ludwik Kowalski (about the author)

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Why should trillions of dollars be used to rebuild super-banks? Why should this be our first priority? Please answer in terms of what one learns in an introductory economics course.

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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.

 

Ludwik Kowalski is a retired physics teacher (Professor emeritus, Montclair State University, New Jersey, USA). He and his wife, Linda, live in Fort Lee, close to New York City. Born in 1931, Ludwik is still able to enjoy downhill skiing, walking (more...)
 

 

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