Financial Crisis
“These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again.” John D. Rockefeller, the world’s richest man and the first billionaire, gave this statement shortly after the Wall Street crash in 1929. After the Great Depression, when the stock market dropped 40%, the government used Fiscal, Monetary, and Social Policies to help solve the US economic crisis, eventually leveling the country’s economy; John D. Rockefeller was right, prosperity did return. And so, I too believe in a more successful future in the face of a crisis. The depression started in the United States, and gradually spread throughout the world. In today’s economic crisis, the decline started unanimously in every country in the world with the exception of Norway and Canada, beginning in June of 2008. Using Fiscal policy to increase spending, and monetary policy to increase the supply of money and lower interest rates, the US Government, like others around the world, is trying desperately to stave off a second Great Depression. Under standard circumstances, the government should be allowed to increase and decrease taxes, to encourage increased spending or reduced spending through adjustments to Fiscal Policy, and to increase or decrease lending by adjusting interest rates through Monetary Policy. I believe that with proper government oversight, free markets and capitalism prove successful for the economy for generations. The success of the free markets is largely due to the involvement of government; Since the Depression, our economy had grown immensely from the regulation of financial institutions with evidence of the rise in the stock market.
However, within 10 years, the Gramm-Leach-Bliley Act of 1999 (which caused the sub-prime mortgage crisis) has reversed the effects of said regulations, and led to the freezing of borrowing and lending worldwide, rendering capitalism useless in this motionless state. I...
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