2013 US Economic Stability BY Avtgnau2014 The legacy of this country for the past 8-10 years has been our constant plummeting into fiscal “crisis. “To say the least, for the United States, fiscal policy is a struggle, possibly the bane of every president’s existence-except for Bill Clinton, the money game seemed to work out really well for him on a national level. But now we shake our heads at the headlines in the newspapers and at the television news stories.
Because you will hear the debate all the way from Washington about the government shutdown, the US debt, the debt ceiling, and our lack of budget for the past 6 years. Wall Street Journal, did a piece, “U. S. Won’t Just Bump Head on Ceiling,” describing the estimated financial impact of the government shutdown on the United States. First of all he says, it doesn’t help things that Americans in general are not exactly eager to find out how this could hurt the economy overall.
Using the 1995-96 shutdown as a guideline, economists figure the shutdown will shave 0. 1 -0. 2% of GDP off the fourth quarter. Now take the debt ceiling; it is essentially impossible to predict by how much the economy will be effected-but the assessment is unanimous-it would be bad, very bad. The only semblance of a clue ave is the buckled markets in 2011 in terms of more government borrowing and raising the debt ceiling. And the more Congress flirts with default, the more dangerous capital participants are not taking chances.
Each day of the government shutdown is naturally dragging down the economy further and growth is tepid at best. Now economists are estimating only a 2% annual growth rate, with inflations readings so low that the slightest trip up in the economy would trigger massive deflation. And if the Treasury defaults on its debts? Well, the US holds the most liquid assets in the world-the US Treasury-and turn it nto cash. The US dollar would be doubted and a repeat of the 2008 crisis would make a haunting return.
The article reads very highly thought with complex estimations and massive fiscal scenarios from the past, however the basic principles of economics remain. 1) Government Policies Can Change Spending. The government has not passed a budget so they do not have a concrete idea of where funds should be distributed and therefore insist on borrowing extreme amounts of money to compensate for their lack of fiscal responsibility, hence our current predicament of raising the debt ceiling. 2) Overall Spending Sometimes Gets Out of Line with the Economy’s Productive Capacity.
This is reason for our debt-we are spending more than we are taking in; and by increasing government spending to Jump start the economy, mounting debt makes investors nervous and unwilling to invest. 3)9. When Markets Don’t Achieve Efficiency, Gov’t Intervention Can Improve Societys Welfare. Because of our debt and poor currency programs to take care of the gaps; but this responsibility entrusted to the creates an uncertain market economy because so much of it is now controlled by one entity, the government. )Resources should be used as Efficiently as Possible to Achieve Societys Goals.
The US currency, our liquid assets must be used efficiently to achieve a stable market economy. By defaulting our currency and threatening to default on our debt, it is only weakening the resources’ values the we have. In this case I happen to agree. I am no economist,’ am not even an economics major at a university. But the scenario he is describing here is common sense people. Of course a government shutdown is bad for the economy! The government is both a consumer and a supplier in the US economy-a HUGE one. iminating one of the largest, if not the largest producer and seller of goods and services, not to mention the supreme law and order of the land is going to freak out people and people invest in the market-and when people are too scared to invest hole only gets deeper. As for the arguments on the debt ceiling increase, I dont know whether to laugh or cry; only the US government would sit down and question whether or not it was in the people’s best interest to pay off 17 trillion dollars in debt, or borrow more.
I may not be that great at math, but even I know the math conomy no matter how big or small, is to make a profit,one would think the US government would act in accordance to that principle. So my predictions are they are going to end up raising the debt ceiling, we will pay off our debts with borrowed money, and until the President drafts a budget and sends it to the senate, this economy is going to be shaky for quite awhile. I addition to looming student loans to pay off, my fellow classmates and I will be writing checks to start to dig us out of the hole. you sir are right. I so did not want to knowhow badly this would hurt the economy.