What causes an economic downturn/a recession? The cause is usually the result from poor money managing from the people managing the money. "The FED deals with these situations by dumping huge amounts of money supply into the money market. This helps to keep interest rates low even as inflation rises. Inflation is the rise in the prices of goods and services over a period of time." (Recession 1) FED stands for Federal Reserve System, or office. The stimulus package was very poor managed. "The stimulus package was not as big as some people say the reason why it was so bad as because it was not targeted very well. If they would have targeted it more on long-term marginal tax reductions and replacing the equipment at civilian defense sectors then it would have maybe worked."(Binder 1)
Experts say we got here because of congressional spending; they were spending even when they were cutting taxes. Two thirds of the budget is for social security, Medicare, and interest on national debt. (Siegal 1) These grow as prices automatically. We as People should stand up against this. (Madrick 1) Another reason why we are in a slum of debt is because no one is looking at the entire economic system; Its like watching one child but not the other you never know what the other one is going to do. There are major unintended consequences when dealing with the United States economy. (Hall 1) Say that someone gets hurt in a car wreck, If that persons/their parents don't have a good job, health insurance or even car insurance then they will most likely go into a big hole of debt. Then depending on the person they could take years to pay off that one bill out of the other 20 that they have. So what I am saying here is that if many people do this then, the economy will inflate, causing the value of money to go down prices to go up and so on and so forth.
One of the hardest and most difficult economic recessions in history was accomplished using Keynesian economics by John Fredrick Kennedy. "Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years" (Binder 1) there is six principal systems or beliefs that are what a Keynesian believes. (Binder 1)" A Keynesian believes that total demand is inclined by a swarm of financial decisions public and private. The public decisions include, financial and economic policies. Nearly all Keynesians and monetarists believe that both financial and economic policies affect total demand. Secondly changes in total demand have their affect on output and on employment not on prices. (Binder 1) Keynesians believe that it must get worse for it to get better. Also they believe that we live in the short run of things not in the long run. "Keynes's famous statement, In the long run, we are all dead." (Binder 1) "Thirdly Keynesians believe that prices, and more than ever wages, respond gradually to changes in supply and demand, resulting in broken up shortages and surpluses, particularly labor."(Binder 2) "No policy prescriptions follow from these three beliefs alone. And economists who do not call themselves Keynesian would on the other hand accept the entire list." (Binder 1) "Fourthly Keynesians do not think that the usual level of unemployment is ideal partly because unemployment is subject to the notion of total demand, and partly because they think that prices bend only gradually. Keynesians usually see unemployment as both high on average and variable, although they know that precise theoretical justification for these positions is hard to come by." (Binder 2) Keynesians feel that downturn/depression is bad for economic growth. "In real business cycle theory, efficient market responses to unattractive opportunities. Many, Keynesians support policy to decrease the amplitude of the business cycle, which they order among the most vital of all economic problems. Here, however, even some conservative Keynesians join company by either the efficacy or stabilization policy or the wisdom of attempting it. This does not mean that Keynesians believe in adjusting government spending, taxes, and the money supply each few months to keep the financial system at complete employment. Almost all economists, including most Keynesians, believe that the government will never know enough soon enough to fine-tune successfully." (Binder 3) There are certain flaws that make it not likely that fine- tuning will work. "First, there is a flaw connecting the time that a transform in policy is necessary and the time that the government notices this." That means that there is a gap between the time that transform is needed and the time that the government realizes it. "Second, there is a flaw between when the government notices that a change in policy is required and when it takes action. In the United States, this flaw can be very long for economic policy because Congress and the administration must agree on most changes in spending and taxes before anything else." (Binder 3) This is the only way that we can go about this in a fair way. "The third flaw comes among the moment that policy is changed and when the changes influence the economy. This can be many months." (Binder 3) "An economist need not have detailed quantitative knowledge of lags to prescribe a dose of expansionary monetary policy when the unemployment rate is very high."(Binder 4) "Lastly, some Keynesians are more concerned about fighting unemployment than about winning inflation. They have completed from the evidence that the expenses of low inflation are little. However, there are lots of anti-inflation Keynesians. Many of the world's present and past central bankers, merit this title whether they like it or not."(Binder 4) "Pointless to say, views on the comparative importance of unemployment and inflation deeply influence the policy suggestions that economists give and that policymakers accept. Keynesians typically advocate more forcefully expansionist policies than non-Keynesians." (Binder 4) Keynesian economics are very effective when it comes to battling a recession, it is what John f. Kennedy did and similar to what Reagan did.
President Obama does not have enough money managing skills to accomplish the task of being president. Being president means a lot the President of the United States has many everyday jobs. The President acts as the top of his political party, the chief spokesperson of the government, and the country's accepted leader. The president also has to manage national affairs; such as meeting with other countries to form peace treaties and give advice. Another task that the president has to accomplish is trying to have bills passed to further more our economy and country. This can be a good thing for you and you're family or not such a good thing. Some might say that a president is the one who starts the decisions that have to be fixed. Others might say that the president is only doing what was left behind for him to fix, a president can be very good and very bad at the same time it just depends on your world views. Being a president can lead a country to victory or to a depression. What the President needs to do is back off and let the economy run its course.
The government so far has shown it cannot do a better job than the economy itself. If the government backs off then that would increase the dollar value which would in return increase the value of homes, cars, anything that has value would be increased if the government lets the economy take its path. Right now we are lower than the low when it comes to the value of the dollar. The dollar is about .6 to the euro. In 2008 the dollar was $21.57 top what used to equal $1. That means that in 1913 you could buy something that was a dollar, and today that same item would have cost $21.57. That just goes to show how much the value of the dollar has decreased in less than 100 years.(Investment Tools 1) Another way that we can boost the economy is by limiting government spending, if they have money to cycle and we don't it is pointless. Also we need make an anti-inflation policy that stops inflation. Inflation is very terrible. Inflation is the continuous rise in prices of goods and services over a period of time. If the economy doesn't have money to spend then how is making goods and services more expensive going to help? Obama is a very good man with what I believe to be good intentions. But his money managing skills could use a lot of work. I do not see what does not make sense to him if the United States is in debt then does he continually spend money on things that we do not need such as, visiting other countries, flying first class on Air Force One. Instead of trying to make peace treaties with other countries we need to increase education in schools and supply them with the money and resources that they need to educate children and make them able to run a country. Children are our future and if we don't do a good job at making the future the best it can be then will end up in the same spot we are in today. This should turn this country's finances around and soon enough we will be living in prosperity.
