By acting as a channel through which savings can finance investment, the financial system helps to spur growth.
The fear is that this might lead to higher inflation, and that the government's demand for funds will push up interest rates, crowd out private investment, weaken the financial system and leave the economy vulnerable if hit by a big macroeconomic shock.
ECONOMIST: Too little investment; too big a deficit; too few jobs
Or will the financial system get better at channelling investment funds to growing firms?
Japanese companies concentrated on investment not profits because the financial system and the tax regime encouraged them to do just that.
During the past five years, we have had a range of shocks to the financial system: from fiscal cliffs to investment banks going out of business to unusually low interest rates.
Analysts worry that some of the money going into these products has been used to make high-interest loans to risky private businesses shunned by the banks themselves, a phenomenon critics say could exaggerate loan and investment losses in China's financial system if an economic slowdown led to widespread defaults.
Investment banks are not the only parts of the financial system showing the strain.
In their testimony Thursday, regulators defended their actions, saying the collapse of the investment bank would have caused an unraveling of the financial system.
One under-reported but highly significant aspect of the whole extraordinary incident is that Mr Dimon announced that he was abandoning a new financial system for monitoring the risks run by the Chief Investment Office and reverting to the old one - because the new model was chronically understating the potential losses the bank could have generated on any given day.
Public education is a major investment of financial and human resources and no country can afford to have a system which is not accountable.
The intervention of the British and Swedish authorities underscores the effect that a full-blown collapse of Iceland's financial system would have on the rest of Europe, given the heavy investment by Icelandic banks and companies across the continent.
The investment banker Felix Rohatyn has been thinking about what happens to the international financial system after the dust settles from the current credit crisis.
If anything, after the dot com, technology, and housing bubbles and financial system meltdown, the nation seems to be craving exactly the type of investment that Social Security represents.
Alltold, we have to fear that the damage to our markets and financial system will be so great that another generation of investors will be alienated from using investment as part of t heir survival, juyst as happened between 1929 and 1953, when the stock averages finally made up all their lost ground.
"Every financial system that we have ever seen in history has had a tendency to speculative over-investment, to overreach itself, and then to contract in the form of a crisis, " Mr Pettis says.
Three years ago Diann Shipione asked a question she figured was pretty innocuous coming from a public pension fund director: What financial incentives were behind the advice her San Diego City Employees' Retirement System was getting from its investment consultant, Callan Associates?
By ditching its longstanding rule about lending only to commercial banks and extending this facility to investment banks, the Fed is in effect admitting that it faces a different sort of financial system one in which dealers pose as much of a threat to stability as lenders.
Banking scholars also argue that Islamic law blocked indigenous financial modernization in Muslim countries because of an inheritance system that restrained capital accumulation, inhibitions on pooling resources that discouraged investment diversification, and a traditional aversion to the concept of legal personhood for corporations, which hampered the development of financial entities.
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