American Muscle, quantitative easing
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The United States has become one of the, if not the economic leader in the world, we will let others debate that point. In less then 60 years the united states went from a nation on par with other European powers to the world power in military and economic force. When the United States walked onto the world stage with all the other powers 100 years ago the US wasn’t at all expected to surpass them all within only a few decades. The US was able to get to this high ground for a few reasons and on of the major ones is the market economy that the US tries to employ. The US government has interfered with the market for some time now more closely resembling something closer to those economies in Europe.
The immediate causes for the recession in 2008 was due to the housing bubble bursting and the loan market crashing thus also brining down banks. The stock market was being inflated by banks selling mortgages at alarming rates that were simply never going to be paid off. These mortgage backed stocks in the market just wouldn’t survive a complete collapse. This is when the public realized that the entire market was held up by these bad assets. This was all made worse by media overreaction to some banks closing up shop. The media’s response drove hysteria into the market and into the common household. Purchasing and production nearly all stopped out of complete fear of not knowing what tomorrow would bring. This was what happened in short to the US economy and what caused the world downturn.
The correction that the government tried to implement was, as should be expected now, the wrong one. Quantitative Easing is , simply, when more money is printed and dumped into the stock market in an attempt to inflate asset prices. (economist, 2015) The government also added more regulation, as if regulation wasn’t a contributing factor in what lead to the collapse before. With this regulation the government also forced the banks to take a bailout to try and keep them solvent. (Collins, 2015) In addition the US government’s regulation, printing of money and reckless spending are the “solutions” that have made the situation worse than it was before.
All of the fixes the US government implemented, only pushed the issue further down the road and stacked the house of cards even higher. More regulation made it more difficult for the economy to recover and still limits banks so they cannot compete in a free market. These fixes made the issues worse. You don’t fix a problem in the market by supporting businesses that are failing. You don’t grow the economy by regulating it. You don’t create a stable platform by inflating the money, the price it costs to borrow money and by inflating the price off assets. The house of cards is now higher and just waiting for the next bubble to burst. Those that thought 2008 was bad are going to be in for a real wake up call here. The more the gov wants to implement quantitative easing the higher this house gets.
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LWS
Collins, M. (2015, July 14). The Big Bank Bailout. Retrieved September 19, 2017, from https://www.forbes.com/sites/mikecollins/2015/07/14/the-big-bank-bailout/
What is quantitative easing? (2015, March 09). Retrieved September 19, 2017, from https://www.economist.com/blogs/economist-explains/2015/03/economist-explains-5
