There is a certain tension between the claims that finance improves allocation and that it
tightens discipline. After all, the economic benefits of finance come precisely from the way in
which it suspends the discipline of the market. Finance allows companies to grow despite having
no profits of their own to reinvest, as vividly illustrated along Sandhill Road and its equivalents
around the world. More generally, it breaks the link between current income and current ex-
penditure. The most disciplined government would be one that paid for all expenditure strictly
out of current receipts; such a government would have no need of finance. This contradiction
is visible in acute form in Europe. The crisis there is said to show that financial markets must
be freer and governments must submit more strictly to their discipline. Yet it is those same
markets' financing of large deficits and "mispricing" of government debt that is understood to
have created the crisis in the first place.