Ways to Fix the Economy (APA)
Massive unemployment, stock failure, major inflation, and major drops in trade are all fears of Americans whenever the topic of the Great Depression is brought to their attention. All of these problems and symptoms were common and infamous during that most depressing time in the history of the United States of America. These problems and symptoms have recently been the upcoming fear of the common American. This is because the United States of America has hit the second greatest economic crisis in its history, and there has not yet been signs of the situation improving before getting worse. This is cause for major concern, and is cause for a search of ways to fix this problem and effectively set America back into the upper end of the business cycle. One such way is to "buy American". A major problem with America today is all of the outsourcing and overseas dependency for oil and energy and spreading businesses too thin. A solid solution is to bring much of the economy home and close in to get the money rolling through the U.S., and not China or India or some other foreign country. America also needs some government intervention to help the major industries and core banking systems back on their feet. One of the more famous causes of the current crisis was the banking downturn and fallout. For the economy to start a healing process, America must halt its outsourcing and its major industries must be helped back on their feet. One of America's major problems is spreading the dollar too thin with outsourcing and overseas dependence on oil and energy and imports. This has become quite apparent, especially to Alexia Cameron who says that outsourcing has ballooned in recent decades, leaving the United States uncompetitive, its citizens jobless and its future bleak. (Cameron, 2009) Making it clear that by using foreign countries for services and imports, America has aided to the problematic downward spiral plaguing the nation. Spreading the dollar too thin in the past has caused problems with the American economy today. Also according to Alexia Cameron, to renew America's economy, the U.S. must stop rewarding overseas manufacturing and investment. (Cameron, 2009) So along with outsourcing jobs overseas, America is also investing its money and manufacturing overseas. This creates the same problem as outsourcing does, and takes money out of the pure American economy. Along with America's foreign dependence comes dependence for oil, energy, and even money. Because of America's nature to spend far beyond its budget, America currently operates on foreign loans because the government constantly spends beyond its budget. (Harrington, 2008) Foreign dependence will be the downfall of the American economy, especially if the government constantly borrows from other countries and falls more and more deep into debt, and if this keeps up, then eventually capital flows and economic growth will be less concentrated in the West. (Cartwright, 2008, pp. 46-51) The United States has been in a state of oil dependence for an extremely long time, and it causes the economy to fluctuate out of accordance with the rest of the global economy. For example with oil, because of America's dependence, when the rest of the world recovers the American people will likely witness another rise in oil prices. (Harrington, 2009) To also show the fluctuations according to oil prices, when oil prices dropped sharply, the trade deficit decreased to its lowest point in five years. (Healy, 2009) The solution to all of these problems is to "buy American". If the government contracts oil dependency and outsourcing and foreign loans and American money flows mostly through the American government, the economy should jump-start into and upturn. America's outsourcing and foreign dependency has been a major cause of the economic problems.
To initiate major economic healing, America's internal major production industries and banks need a jump-start by government intervention. Self-sufficiency is a key to economic success. The problems seen today are with budget constraints and overspending our internal systems. Debt and currency crises are closely interlinked through the government's inter temporal budget constraint. (Herz, 2008, pp. 955-971) One major help would be if a mechanism to insure that core commodity (like steel and transportation) industries that form the basic platform for a self-sufficient industrial country could be maintained. (Heffner, 2009) This would mean less foreign dependence as talked about in the previous paragraph, and a turn for the better in the economy. Aside from the industry need for healing, the banking system also needs healing. What America needs is to aggressively promote a recapitalization of the banking system so that bank lending is not squeezed for years to come. (Sachs, 2009) This would help the individual American consumer, and also make sure the banks don't run into future trouble. Internal improvements would also help increase the value of the dollar, which has been seen to go down sharply recently, and has been said to continue to drop. (Paul, 2008) Revamping the banking system should prove to be an effective way of rebooting the system and increasing the value of the dollar. A raise in the value of the dollar and a move toward self-sufficiency is what the economy and the American government need at this point in time. What the economy needs to heal is two things, a halt in American outsourcing and a raise in internal improvements. America is spreading the dollar too thin and it is killing the value of the currency. Also overseas dependence is taking away from the circulation of money through the American system. What Americans need to do is "buy American" to help out of the crisis. Finally, the internal businesses and banking system need a major revamping lest the whole economy fall out beneath the government. With these things in mind, the United States should move toward a more productive and healing economy.
Reference List
Cameron, A. (2009, January 6th). Outsourcing America's future. Retrieved January 11, 2009 from: http://economyincrisis.org/articles/show/2290
Cameron, A. (2009, January 7th). The root of America's depletion. Retrieved January 11, 2009 from: http://economyincrisis.org/articles/show/2292
Cartwright, J. (2008). Deciphering the mega-trends. In M. Wallace (Ed), The way we will be 50 years from today: 60 of the world's greatest minds share their Harrington, C. (2008, November 19th). The coming of the second Great Depression? Retrieved January 11, 2009 from:
http://www.economyincrisis.org/articles/show/2094 Harrington, C. (2008, January 6th). Windy future for alternative energy. Retrieved January 11, 2009 from: http://economyincrisis.org/articles/show/2291 Healy, J. (2009, January 13). Sharp drop in oil price helps shrink trade deficit. New York Times. New York ed. Heffner, T. (2008, December 25th). How can America restore its self-sufficiency? Retrieved January 11, 2009 from:
http://www.economyincrisis.org/articles/show/73 Herz, B. (2008) Debt and currency crisis-complements or substitutes? Review of International Economics, 16, 5, 955-970.
Paul, R. Ron Paul on the Economic Collapse. youtube.com. 2008, goldsilver.com
Sachs, J. (2008, October). How to fix the U.S. financial crisis. Retrieved January 11, 2009 from: http://www.sciam.com/article.cfm?id=fixing-financial-crisis |