Economic Collapse

Topics: Unemployment, Great Depression, United States Pages: 7 (2975 words) Published: January 16, 2012
Is America headed for an economic collapse?
By: John Shepherd

America’s collapse

Is America headed for an economic collapse?
Research indicates the possibility of an economic collapse because of the exorbitant national debt, loss of jobs, and the falling stock market. History can tell a story that many people overlook. People tend to repeat their mistakes and if we take a look at what is in the past we can predict what the future may hold. In the 1930’s the United States faced an economic emergency that had never been seen prior to that time. It was called the great depression. It wasn’t known as the great depression until after it had occuirredoccurred and was beginning to pick up again. During the great depression the employment rate had hit double digits, banks were closing and the stock market crashed. Those unfolding events are certainly a cause for concern, especially given the similarities between today’s headlines and the 1930s. ( Shoen, 2009). Bank foreclosures and stock market instability can be seen on the evening news and have made the newspapers. The economic state we are in is still being called a recession. Some would argue we are already in the early stages of a depression. The recession officially started in 2007. The nation's 11th recession of the postwar era began in December 2007 and could easily could become the longest since the Great Depression. (Shoen, 2009). The government refrains from using certain terminology in order to keep the citizens from being in a panic and possibly causing a more severe eeffect on the economy. If the majority of people knew just how bad the economy really is they would stop shopping and sell off stocks which could in turn cause the markets to crash and stop the flow of money into the system. When people stop spending then businesses in turn stop hiring and could close which would devastate the economy more than it already is. The president has tried to offset the economic state by implementing stimulus packages and by reassuring Americans that we are now coming out of the recession. The effects of these policies have shown some signs of a positive influence but we are warned about the consequences of government interference. In the 30’s the government intervened and the outcome brought us deeper into the depression. In the 30’s Americasns unemployment rate was around 22 %. The government rationed out food and implemented what we now know as the welfare system. People begged for jobs and had to barter to get food and other needed items. Speak to anyone that grew up during that time and they can tell you just how tough it was to make it through. We can see the signs in our time by looking at the stock exchange, the loss of jobs, high unemployment, and the decline of the dollar. Our country now faces the highest debt than ever in our history. According to the CBO, growing levels of debt relative to output increases the probability of a "sudden fiscal crisis." (Costello, 2010). All of this points to an economic collapse and a depression that has never been seen before. Banks are closing at an alarming rate and the stock market is so unstable that no one can predict the future of the financial district. Bank failures, unemployment, and other economic problems took their toll across the entire industrial world. (Scalinger, 2009). Stocks continue to decline drastically and then try to bounce back showing instability and causing having a negative influence on potential investors to invest in other less volatile areas. Equally rare are drops of 48% in the DJIA and S&P 500. ( Kasun, 2008). The price of gold and silver have increased tremendously over the past few years showing the how the dollar has been devalued. The U.S. stock market is now in the midst of a post-FOMC broad-based stock decline that some investors fear may lead to an even more pronounced decline in stock prices as equity valuations are adjusted to reflect new economic realities. (Sears, 2010), Making...
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