Financial Repression in the United States
In times of economic hardships and massive amounts of accumulated debt, governments must look at ways in which they can resolve such indebtedness and put their respective economies back on track towards periods of healthy growth and hopeful prosperity. The United States currently finds itself in such a situation- and with few viable options for remediation, many economists believe that “financial repression” is the answer. The term was created in 1973 via the works of two economists at Stanford University named Edward Shaw and Ronald McKinnon (Reinhart), and refers to the process of reducing debt by “repressing” the wealth within a country. When implemented, the basic goal of financial repression is to liquidate the value of government issued debt by creating an environment of negative interest rates-that is, interest rates that are lower than what would normally exist in a free market. Over time, this process (along with a steady dose of inflation) is intended to reduce the national debt-to-GDP ratio by literally de-valuing government debt. But such a policy cannot be pursued or executed without raising certain questions and creating certain controversy. The following paragraphs will attempt to explain this concept in more detail, and discuss the pros and cons of its implementation by the United States.
Past situations in which governments have found themselves under such indebted circumstances have taught us that there are usually the same handful of solutions that can be used to rectify a struggling economy. The first is economic growth, to where the GDP grows at a fast enough rate that the economy is literally able to grow their way out of their debt. This would be
the most ide...
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...ucate themselves on possible options in order to decide what they believe is the right side to take.
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Instead of the current administration making a swift and decisive action to deal with these insolvent institutions, there were many bureaucratic attempts to delay action so that the problems would not become a polit...
Sovereign lending, throughout history, has been marked by occurrences of partial default and repudiation by governments of all kind; from medieval princes to dictators to democratic regimes. In the 1970s lending to lesser-developed countries led to the rescheduling and partial defaults in the 1980s. Even the sustainability of the debt of nations such as Belgium, Canada, Italy and even the United States is not free from suspect.
In Karen Hos’ Liquidated, she aims to study the relationships between corporate America and the worlds greatest financial center. . . Wall Street. She puts all her three years of research in her ethnography and thus the very first page of chapter one, we can already understand Hos’ determination to understand what Wall Street is all about. The first main theme explained is the relations in Wall Street that are based on a culture of domination of staff members, their irresponsibility dealing with corporate America, and constant changes that occur during this process. Another major theme we see in her ethnography is that Wall Street, first used for the communities wellbeing, is now profit oriented.
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“Hitherto, every form of society has been based on the antagonism of oppressing and oppressed classes.” Karl Marx. The irony around the term “free market” is blatant but constantly overlooked. As inflation grows to dangerous sizes, our currency system is inevitably bound to devalue the dollar steadily until its abolishment and replacement. “Modern Money Mechanics” is an eventually failing process of loans, debt and intrest that will never balance, only worsen and decay. The most recent turning point into this economic slavery, the real estate bubble, bursted due too numerous small variables that are simply fragments of a larger equation. The monopolizing of our monetary system by the FED has thrown us uncontrollably into a downward debt spiral, a maelstrom of worthless paper.
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Since 2008 there has been an ongoing financial debt crisis that has affected the majority of the world states. However, the most disastrous economic decreases have been witnessed in the European continent. Therefore, this crisis is widely known as the European Sovereign Debt - Crisis. The aim of this document, however, is to analyze and discern possible policies focusing on providing a set of solutions that may help the Greek government in regards to their financial debt within the larger European crisis. As such the prime focus of the forthcoming analyses and policies will focus on the handling of the Greek government debt and recommended policies. Additionally, the paper will provide the summary of the economic crisis and the implications of the international community (mainly, the European Union and the International Monetary Fund).
In a nutshell, debt crisis should be treated immediately with actions such as providing sufficient training and courses, improving individual’s personal finance skill, and filtering the recruiting of employees’ process in order to prevent it from extent. The upcoming generations should have given more awareness towards this issue. If no immediate actions are taken, I believe in future the debt crisis will get worse.