Choosing Unhampered Market Process

Topics: Economics, Western culture, Western world Pages: 3 (779 words) Published: May 6, 2013
Analyse of what would happen if the steering (injection of money) would be abandoned and a return to the unhampered market process was chosen instead.

Systems exist to maintain the society and bring prosperity, the monetary system is one and have gone through different stages and uses in its development. Due to different needs, societies develop at different pace so, the advantages and disadvantages of monetary system varies from one society to another. Today, money is no more backed by commodity, not equal to gold reserves; it has only a promissory standard. Thus no standard can effectively determine true money value as it is constantly redefined by consumers with relative understanding of other products true values in the market.

Western societies like Finland and most EU states have different needs when compared to third world countries in Asia and Africa. Something common in both societies is that they have consumers in their respective societies who are in a phase of killing and consuming as well as people who do not require so much to consume, the society elites. Western societies have more percentage of elites, people who do not need to kill to consume so they are able to save. In other words, they have lower interest rates that are possible because of the low time preference, whereas for those who need to spend right now, their time preference goes up which pushes their interest rate up too. The point here is that even in these western societies, some people are poor and will remain poor. And the reasons for this will be explained in the following paragraphs.

There are two economic growths and steering system, the unhampered market where the government exists only for the protection of property rights, security and does not interfere with the market process and the hampered market in which the government is a producer and controls production by injecting money into the business cycle. The governments interferes because they believed that by...
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