Ideas For A Better Financial System

Today's Financial System
Streaming the problems of today's financial system into a single channel helps identify several major causes of the present financial difficulties:
1. Overly reactive proactive business agendas
2. Inability to effect long-term goals
3. Unbridled venture capitalism that results in loss of long-term business enterprise

Overly Reactive Proactive Business Agendas
It may seem an oxymoron that a financial system can be overly reactive and proactive simultaneously. The reality is that promoting proactive business agendas from a reactive basis can't be a sustaining mode of operation. Financial institution leaders believed that while they could react to a prosperous trade market proactively, their agendas lacked long-range sustenance. What they failed to address is that growth is not limitless. The result is a financial system unable to cope with limits and inability to see limits as an advantage rather than an inhibitor of profit. What they also failed to address is the fluidity of money. Money isn't static. Money always requires movement to retain stability. Investments should never be the only manager of money because most investments need to be relatively static to effect profit and are affected by any number of outside influences and in particular, human error.

Inability To Effect Long-Term Goals
A financial system built solely upon the foundation of investments begs to fail. The idea that a financial system can totally rely on investments as a source of growth and profit potential misses completely the instability factor. Financial systems fare best when money sources are embedded in long-term goals. When the wave of financial activity takes on a short-term mentality, it generates a slippery slope of unpredictability. The process between establishment of a financial system and full functionality determines the success rate of strategies put into place. This is a type of financial seasoning that requires the element of aging. Fast cash methods do not allow for money to age productively in a natural financial process.

Unbridled Venture Capitalism
Venture capitalism that regresses to a simple format of buying assets and selling them at overvalued prices creates a huge loophole in the fabric of financial stability. The volume of businesses swallowed up by such measures of venture capitalism inevitably experience mass reductions in operations to a minimum productivity level or are over-merged to extinction by corporate buyers. If Company "A" purchases 10 small companies for the purpose of buying assets to increase corporate profits and then chooses to close all 10 companies after the purchase, Company A's foundation for assets becomes financially unstable as a result of outlays of cash or stock for these 10 purchases. In addition, the closure of those 10 companies reduces the long-term profit potential due to zero operations and production.

Ideas For A Better Financial System
A better financial system is one that is built upon security and a healthy sense of foresight. Financial institutions need to focus on small businesses to insure a continually growing, secure business community. With a strong baseline of small businesses, a financial system can take advantage of continuing trade growth. Banks and financial systems would benefit from this with increased financial activity from growing small businesses that would increase services. Small businesses become the life blood of local communities and bolster the local economy, while stabilizing the national economy. Encouraging small business co-ops also stabilizes employment by engaging a good mix of employers and employees in mutual business enterprises. This keeps a healthy flow of potential new businesses that are created from the pools of experienced co-op employees.

Globalization And A Better Financial System
One major factor that links global economies is trade. In order to achieve a balanced financial system, trade agreements also need balance. Attempting to trade goods with countries that are economically unstable infects stable economies. Imports priced far beyond a particular country's economic standards results in lopsided trading. The exporter sells goods far below the cost of the importing country which has the ripple effect of forcing the importing country to compete for cheaper labor costs. Once this type of competition infects a healthy economy, the end result is destabilizing. Rather, it may be a better idea to work together with other economically stable countries to provide workable trade assistance to countries that need support.