Seshata Sensi

JOURNALIST, CONSULTANT & PHOTOGRAPHER

How the Global Economy Depends on Illegal Drug Money: Part I: Free Markets, Financial Regulations & Money Laundering

Source: Sensi Seeds

According to some economists, the global trade in illegal drugs is a fundamental, essential part of the prevailing economic model – and the war on drugs is a means to maintain the trade, rather than to eradicate it.

Markets & the Movement of Capital

In general, capitalist economies depend on the movement of capital (money) as a means of maintaining growth and generating profits. In a free-market or laissez-faire capitalist model, there would be no restrictions on the movement of money – no taxes, trade tariffs, or financial regulations at all – and prices for goods and services would be entirely determined by market forces.

Instead, thousands of different regulations, taxes and tariffs influence and control the movement of money. These financial instruments play various roles – they may control interest rates on loans, redistribute wealth in the form of benefits and healthcare to poorer sections of society, allow governments to control prices so that the cost of basic necessities remains affordable, or introduce trade tariffs to protect valuable industries.

Thus, a truly free market does not exist in the world today. Individual countries and regions vary in the extent to which they regulate business, but all nations today impose taxation and regulations to some extent.

Due to financial red tape, conducting business transactions can be complex, slow, and subject to scrutiny from various financial authorities. But within this complexity, there are almost endless opportunities to bend or break certain rules, or just make up new ones entirely – as essentially occurred with the subprime mortgage scandal and the system of credit default swaps.

Then, if the rules get broken or bent too far, it can cause instability that can ripple out and wreak incredible economic devastation, culminating in recessions or even depressions. This has…

Please click here to read this article: How the Global Economy Depends on Illegal Drug Money: Part I: Free Markets, Financial Regulations & Money Laundering

 

 

Next Post

Previous Post

© 2019 Seshata Sensi

Theme by Anders Norén