Fiscal and Monetary Policies During the 2008 Recession in America

Topics: Monetary policy, Inflation, Recession Pages: 3 (980 words) Published: March 15, 2013
2008 Recession in America
“It is not about how hard you fall, but how you get up and keep going.” Economic recession may be a natural phenomenon in the world’s economies. Every market has its peaks and falls, definitely the United States of America has hers. In 2008, USA experienced another tragic downfall when her market went down and unemployment rate charged up. Millions of workers lost their jobs; from the young, the old, the whites, Asians, Latinos, both men and women. Distress filled every household as prices rose and income fell. The whole country was in turmoil back then. This event had placed the policymakers in nostalgia. The melancholic memory of the Great Depression had them thinking of ways to battle the present state of their economy. Back then, classical economists believed that downturns in the economy would eventually correct themselves with little or even no intervention from the government. The Invisible Hand would work its magic, still even today. However, the policymakers had to rethink this since they could not afford losing to recession once again. This in turn, led them to intervene by implementing fiscal and monetary policies.

In recessions, the economy lies in a period of poor industries and increasing unemployment rate. This scenario is very unhealthy for the country’s economy and people. Poor industries will lead to unemployment, low total output and in effect would cause inflation. It is not right to view the effects all in quantitative approach; we should also see where these events would lead us. With high prices of commodities and low income or no work, distress among citizens is likely to occur. Dysfunctional community is then expected. People would then resort to committing crimes, for instance theft, in order to live their lives. This is not ideal, and the government would not want that; the very reason why they make ways to ensure that they return the country’s economy back to stability: optimal employment rate and low...
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