Money, interest rate and financial markets

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Please cite the paper as:
“Angelo Fusari, (2012), Money, interest rate and financial markets, World Economics Association (WEA) Conferences, No. 3 2012, Rethinking Financial Markets, 1st November to 31st December, 2012”

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This paper brings into focus some general – and indeed basic – aspects of financial markets and processes, the understanding of which is indispensible for the investigation of many penetrating questions that, notwithstanding their importance, are likely to be set aside by more specialist and sophisticated treatments of financial flows.

We shall start with the most typical and important of financial phenomena, money, thereby illuminating various crucial traits and characteristics relating to the subject matter of this conference. It will be shown that the changeable role and meaning of money over time has had a strong impact upon the overall financial landscape, primarily by way of the weakening of the working and interactions of various financial activities. This analysis makes evident both the difficulty but also the urgency of restoring the exogenous character of the money supply.

We further focus upon the interest rate, underlining the nonessential role of this variable that, nevertheless, stands at the root of so many exasperating and destabilizing speculations.

Finally, we face the problem of how to bring into being a financial market that does not strive for mastery over production but is rather content to work in the service of production; we face the problem, that is to say, of how we can foster simpler and more transparent financial markets that are able to reconcile efficiency with social justice.

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