ABSTRACT
The contemporary global financial system, with its massive proliferation of financial derivatives, is significantly different from what prevailed for most of the twentieth century. The explosion of derivatives trading has fundamentally changed the global political economy. Traditional banking is declining. Economists often claim that derivatives increase the stability of financial markets by redistributing risk from those least willing to bear it to those more willing and able. The worldwide crisis of 2008 was arguably the worst financial crisis in world history. All economic crises originate in the short-term credit system, which is virtually ignored in most textbooks, which substitute instead discussions of money supply. So-called money supply is an epiphenomenon of the credit system. The crisis was only solved by piling on more debt in a world already more indebted than ever before. The era since World War II, the heyday of business internationalism, may be considered the third globalization.
