Debt deflation, also known as worst deflation or collateral deflation is the theory of economic cycles, according to which, recession and depression in the economy are due to the overall shrinkage of debts. It cites credit bubbles as the key factor in economic crisis. The theory of Debt deflation was developed by the then leading Economist Irving Fisher. Although his theory of debt deflation as an explanation of the great depression was highly ignored during the time of Great depression. It got recovered later by the neo classical
In the book, Hamilton’s Blessing, Gordon’s premise is that the national debt of the United States has become so high that concerned individuals no longer think of it. Gordon uses economic history and theory to explore the start, rise and decline of the United States Debt. The first sentence in his book reads “The United States was born in debt.” The book traces the ‘curse’ of the national debt dating back from 1792 when Alexander Hamilton proposed the virtues of America’s debt. Gordon offers a ‘biography’ of the debt making the book a human drama as he explains the positive myriads ways that it has influenced and shaped the history of America economy. Gordon is attempting to provide the audience with a brief history of the American debt
Webb and Krasner (1989) mentioned that the hegemony takes the role of introducing trade liberalisation, maintaining an open market, and adjusting the changing interest rates when the global economy faces up to the urgent situation, especially when in crisis. The international system keeps a relatively secure and stable situation when that hegemonic power exists and functions. The hegemonic stability theory is appropriate and acceptable for the time after the Second World War. The appearance of world economic crisis a decade after the Second World War, was primarily caused by the unwillingness of the United States to take the hegemonic role, and the Britain’s incapability, which led to the unstable international relationship. However, the long-term dominance of one state attracts other competitors and weakens the stable international regime.
“To lay the foundation of an ever closer union among the peoples of Europe” ( Hancock et al, 663), within the treaty of Rome this is written, creating the European union. Unlike many other institutions the European union is both a supranational and intergovernmental institution. In order for the European Union to function and to thrive the member states must surrender sovereignty to the decision making institutions, however, there are more benefits than losses for the states. Defined in Bale, intergovernmental institutions are those states in cooperation in search of better outcomes but reserve the right to block decisions that they feel are contrary to their interests. In addition, a supranational institution is one body that transcends national boundaries and decision making for the common good of the group.
About the cause of the 2007-08 Global Financial Crisis and the measures Along with the development of economic globalization, the world economies have closely linked. Therefore, 2007-08 financial crises made economies have suffered varying degrees of influence. This was a from the USA subprime mortgage crisis and once in a century financial crisis by Arup Shah (2013). Famous American investor, entrepreneur and philanthropist Warren Buffett (2008) claimed that“ the US economy is in recession and degree would be more serious than most people expected”. I found some of the causes of the crisis, for example, investments and loans have distorted the economic development.
However, Reagan’s attempt in rolling back the state presented several drawbacks, some of them caused by the US political context. Let us now examine how the neoliberal revolution has affected the US government spending and how Reaganomics has responded to the newly shaped context. Tax cuts introduced by the Kemp-Roth inevitably led to trade and budget deficits (Blanchard, 1987). From 1981 to 1985, a decrease in inflation and an increase in deficits led the economy through a recession. In response to the political pressure on spending from the large deficits, in August 1985 the “Balanced Budget and Emergency Control Act” – better known as the Gramm Rudman-Hollings bill – was approved (ibid.).
The Keynesian Consensus is an economic theory which was created by economist John Maynard Keynes in the 1930’s to explain the Great Depression . The theory is based on the acceptance of spending in the economy and the effect that it has on inflation and output . The rise of the Keynesian Consensus is attributed to the vulnerable market economy during the time of the Great Depression and its collapse could be credited to the disintegration of the Bretton Woods system and the Keynes Theory bringing the golden age into crisis . Keynes is known to be the main influence on the world’s free economies mainly in America . Keynes main theme was that contemporary capitalist economies don’t always work at their top efficiency he also believed that federal deficits of the 1930s, which was just over $3.5 billion per year, were too small to support the United States economy .
The dollar index, which measures the value of the US dollar against its most significant trading partners, determined that this currency has increased its value in a 15 percent since June last year until January this year. This economic scenario is changing the way of interaction between the most powerful nations and will definitely have an impact in every single company or business around the world due to macroeconomic principles. The main cause of the dollar appreciation is that the United States economy is balanced and better than other developed countries, achieving a Gross Domestic Product Growth of the 5% in the third quarter.
Background: The European Monetary Union is the combination of European Union member states into a cohesive economic system, most notably represented with the adoption of the Euro as the national currency of participating members. The original idea behind the formation of EMU is the creation of the federalist political union of Europe, which could be favourable for other non-economic reasons. However, especially after the European crisis in 2008, literatures are concerned whether the EMU can outweigh the political or economical disadvantages of this federal structure. It is argued that an “artificial” monetary union will reduce the volume of trade among member countries and, above all, single countries will lose the legtimation to adjust exchange
And find out the deficiencies and solutions based on the economy problems. Key words: Economy, China, Problem, Achievement, Reform Introduction: There is no doubt that China has made the most outstanding achievement in developing countries since 1980s. Even if it does not incorporate Hong Kong, Macao and Taiwan into statistics, China has also become the world 's second economic power, the first manufacturing country and the largest exporter, with the largest foreign exchange reserve in the world and unprecedented in human history.It is widely regarded by the international community as the world biggest winner in economic globalization since 1990s. However, what is the final result of China 's rapid economic development over the past decades? Is there a lot of problems?