What I was implying is that an economy with such a massive shadow banking system (i.e. a casino) that dwarfs the real, productive economy indicates not just the extent of the financial sector but the economy's amorality. It means we're rewarding folks for engaging in the wrong activities, morally speaking. So what I "made up" is that philosophical claim, which appeals to the best explanation of what's indeed an empirical fact.
As a UNCTAD press release said in 2009,
'As reforms to the financial system begin, an early task of regulators should be to weed out financial instruments which only increase risk without providing any true social return, the report recommends. For example, credit default swaps (CDS) can provide a useful hedging service, but the use this instrument has far outgrown that role. Current CDS investment is ten times larger than what is needed to provide a true hedging service--a difference of about US$13 trillion.
'Financial market instruments that do not contribute to long-term economic growth or reduce the volatility of household consumption do not provide any true social return. Several financial instruments that played a role in the current crisis generated high private returns--for a while--but had no social utility whatsoever, the study contends. In effect, they were little more than gambling instruments, a "casino" that was superimposed upon the real economy and whose only business was wagering on uncertain outcomes in the real economy.'
