Summary: The 2008 Financial Collap

The Financial Collapse of 2008

The market crash of 2008 has created a long-term economic hardship for many governments around the world. Moreover, it was the second worst economic disaster on record within the United States; and something that many analysts warn is still impacting on the way that the United States economy operates and continues to grow and develop. As a means of providing a way out of the crisis, the Federal government chose, from a bipartisan standpoint, to increase levels of spending and to quite literally “spend their way out” from this crisis. Understandably, scholars and economists have come to debate whether or not this particular Keynesian approach to the marketplace was logical, whether or not it helped or prolonged

From a basic economy point of view, this would inevitably create inflation. For the most part, the federal government has been able to absorb the inflation by using much of the money to buy government bonds and other securities. However, this approach is not any different than merely printing money; a tactic that many third world nations have realized quickly backfires and debases the entire economic potential that it might otherwise represent. By delaying the impact of the inflation that was brought about by the stimulus packages and what was known as quantitative easing, the only thing that the federal government has done is to kick the can down the road; rather than addressing the root cause of the economic collapse or the failed regulatory structure that allowed many businesses that were deemed as “too big to fail” to experience the types of hardships that they did (Page & Greenberg,

Essentially, within a free market economy, there should be no such definition of a business. However, in the world of crony capitalism and the type of structure that exists currently within the United States, the reigns of political power are controlled indirectly, and in some cases directly, by the major corporate interests that categorized themselves as “too big to fail”. With individuals like Henry Paulson directing the Federal Reserve during this period in time, it comes as no surprise that corporate interests and the disproportionate influence that they would have on bailouts, stimulus, and quantitative easing all moved in their favor. Even within a Keynesian view of how government intervention can be an active contributor to economic growth, regulation, and recovery, the events that combined to form the federal government’s response to the financial collapse were indicative of cronyism and did not reflect the broader interests of individual stakeholders in the economy. More precisely, from a free market school of Austrian economics, the policies of the federal government in response to the “too big to fail” ideology were inherently destructive to the ability of the economy to heal from this hardship. As failed business practices were rewarded and the course of nature in terms of failed businesses shutting down and reaping the