Financialization

Financialization is the phenomenon of a country’s financial sector taking up an increasingly large slice of that country’s economic pie. In the U.S., the financial sector has been growing as a proportion of the entire U.S. economy since the 1950s, nearly tripling. Plus, the financial sector is much more profitable than it used to be for workers in the financial industry.

As globalization picked up steam, factories and other goods-related companies moved to lower-income nations. Meanwhile, higher-income nations increased their services and knowledge-sector products, including the financial market.

The financial market is largely debts and bets. For debts, we’ve got mortgages, student loans, credit cards, business loans, and more. For bets, you can bet on commodities markets, or even on mortgages. Plus, even insurance is really just a type of bet. Debts and bets are both repackaged and sold, creating even more financial market products. Investors in the space (bankers, individual investors, businesses, and venture capitalists) all stand to make a buck in the financial market.