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Economic Journal Articles

Bergsten’s article, “The Globalization of the United States Economy: Beyond a Quick Fix" was posted on august 8th, 2010 on iie.com. The article explains current account deficit and national debt. According to the article, current account deficit is a situation whereby a country’s financial borrowings greatly exceed its debts. Therefore, the US current account deficit include financial borrowing by US citizens, people and businesses from foreign governments, people and financial institutions. In the year 2010, the US current account deficit stood at $470 billion compared $ 804 billion recorded in 2006 (Bergsten, 2011). The 2010 deficit constituted about 3% of the $ 14.7 trillion recorded the same year.

In relation to the current global economic situation, the current deficit run by the US is disadvantageous to the country. However, the situation is beneficial to the country in the long term. Currently, US citizens have to cope with high interest rates and high mortgage rates due to the country’s account deficit. The current situation indicates that the country’s rate of investment is exceeding its GDP. Investment is not a bad thing for the country although it might cause short-term financial strains on the citizens and unfavorable trade balance.

None of the current economic solutions can be applied to reverse the situation. In order to contain the situation, the government needs to encourage savings and reduce borrowings among its people. This will involve giving people the right education in order to sensitize them on the importance of saving within the country. Increasing tax rates will also reduce borrowing and increase savings. The government also needs to cut the countries imports while it promotes exports. Oil accounts for $140 billion of the total US imports. The government should promote energy conservation and use of alternative energy in order to cuts oil imports and to promote favorable trade balance.

Economic and Monetary Union Is Not an End in Itself

The article, “Economic and Monetary Union is not an end in itself. It is an instrument to further the objectives of the European Union and improve the lives of citizens in the Member States" by Herman Van was posted on July 8, 2011 on European commission website. The article explores the role of the central bank in international trade. According to the author, the central bank is instrumental in controlling a country’s economy. This is achieved through different monetary policies that the central bank implements through different commercial banks. The central bank buys domestic currency in order to control inflation thereby raising the value of local currency. This situation occurs when there is excess money in circulation. The central bank can also by foreign and domestic currency to reduce the current account deficit. This situation occurs when the country’s imports greatly exceed its imports. In this case, buying foreign currency balances international trade in favor of the country. During the 2007-2009, financial crisis, the central bank raised the interest rates that it charges on commercial bank’s borrowing. This reduced their lending capacity and amount of money in circulation. Reduction in the supply of money by raising interest rates helped to raise the value of the dollar.

In its effort to stabilize the economy following the 2007-2009 recession, the central bank borrowed from other international financial institutions such as central bank of England, bank of china, and the Federal Reserve. The central bank’s borrowing during the recession amounted to $ 3.69 billion, which is about 9% of the total GDP (Bonner & Wiggin, 2006). The foreign financial borrowings enabled the US to pay for its imports. The central bank has the role to determine the amount of money required circulation at each particular period. The central bank relies on the country’s GDP to establish the limits of monetary injection at each given period. The US central bank relies on the same criteria to establish its budget and government’s expenditure. Although the GDP is instrumental in determining monetary injections, I do not fully contend that is the only reliable factor.

The Affordable Housing Crisis

In the article, “The Affordable Housing Crisis,” the author explores the looming housing crisis. Chris Meyers posted the article on December 4, 2012 on New York Times’ editorial section. According to the author,   affordable housing is a fundamental development strategy for any government. The federal government is concerned with the need to avail affordable housing to its population. In previous years, the federal government has been committed to providing affordable rental houses for millions of its citizens. The government aims to construct about half a million houses and, offer them to the public at a subsidized price. The houses are meant for the vulnerable members of the society including the elderly and unemployed. The editorial maintains that the government is responsible for the welfare of its citizen. In addition, it highlights the role of the federal government in planning and distribution of national wealth.

The article has a liberal point of view. This is because the author believes in equality for all through equitable distribution of national wealth. In addition, the article considers the government responsible for alleviating poverty among its citizens. The editorial also addresses the role of the government in promoting individual and human rights through proper planning and national development.

Health Care Entitlements

In the article, “Health Care Entitlements,” the author explores economic significance of healthcare benefits. Mac Weber published the article in New York Times (online). According to the author, there are no sufficient economic reasons for Medicaid and Medicare cuts, in response to the hypothesized fiscal cliffs. An agreement with the general assembly does not provide a solution to the current social divide over Medicare and Medicaid. In fact, the Supreme Court should declare the ruling null and void since it does not serve the interests of the public. Social health welfare programs such as Medicaid and Medicare do not provide sufficient solution towards the problem. 

The article has a critical stand towards the proposal to cut down spending on public healthcare schemes. Indeed, the editorial promotes the idea of free health or affordable health for all citizens. Thus, the government should not reduce its expenditure on Medicare and Medicaid.

The editorial has a liberal stand on public healthcare and the role of the government in providing affordable healthcare services to its citizens. The author maintains that public health is a chief responsibility of the government. Therefore, the editorial has a liberal point of view since it does consider the role of the private sector in public health.

Recently president Obama shared a meal with a man who once accused him of obtaining $716 million through Medicare fraud. The president was trying to demonstrate the role of the public in promoting Medicare and Medicaid. Although the government has the responsibility of ensuring that state hospitals provide affordable health services to its citizens, members of the public have a duty to ensure continuity of national health insurance schemes. Medicare success has been a major campaign line for republican aspirants. The republicans are advocating for a cut down in the number of beneficiaries instead of budget allocation

Consumer price index

Christopher Rugaber’s article “Consumer prices rise by smallest in 6 months,” was published on January 2011 on krqe.com. The article explores the significances of financial ratio on the mainstream economy. According to the author, the consumer price index (CIP) is the most significant measure of inflation in a country. The ratio compares prices of basic goods across different periods. Different factors explain the sharp increase in prices of consumer’s goods in American markets. According to Rugaber (2011), Americans paid more for basic goods in May 2012 compared a similar period in the previous year.

Inflation is the main factor that caused the sharp increase in consumer prices. Inflation is the decline in currency value that results from increase of currency in circulation. The proposed inflation might have occurred due to decline in GDP. In this case, the value of currency in circulation surpassed the market value of American products. In addition, inflation may have occurred due to economic stimulus programs initiated by the government. The stimulus program compels people to spend, hence creating short-term inflation.

The CIP index could also have increased due to external forces or forces in the international market. Increase in prices of capital goods such as oil and automobiles could have resulted from competition in the international market. China is overtaking the US as the largest global importer of crude oil and iron ore. Aggressive measures taken by china are causing an increase in prices of consumer goods around the world. These strategies make imports expensive for the US and other developed countries. As the country continues to pay more for its import’s, the price of the dollar has fallen sharply causing an increase in prices of consumer goods.

Targeting the Unemployed

In the article, “Targeting the Unemployed,” the author explores the impacts of growing unemployment on governance issues. Ian Jonathan posted the article on New York Times in July 4, 2010. According to the author, the Republican leadership is proposing a bill that will oversee extended payroll and unemployment benefits. The bill would cut down on social spending and reduce the escalating unemployment figures. Republicans lawmakers believe that the country cannot afford to pay jobless benefits to millions of unemployed Americans. We need sensible job creation programs that are in accordance with the country’s economy. The country has few employment opportunities hence the looming unemployment.

The article maintains that unemployment benefits do not solve the current unemployment problem. In addition, the editorial maintains that the private sector should come up with initiatives to create employment opportunities. The editorial has a conservative point of view that advocate for public initiatives in job creation. In addition, the editorial disapproves collective measures such as unemployment benefits in reducing unemployment. The editorial is conservative since it does not promote the idea of shared responsibilities in reducing unemployment among Americans.

Failing to Extend Emergency Unemployment Benefits Would Be Unprecedented

In the article, “Failing to Extend Emergency Unemployment Benefits Would Be Unprecedented,” the author explores the economic impacts of unemployment benefits. The article was published americanprogress.org website by Sarah Ayres. The author notes that since the last recession, most states have been operating in an economic deficit economy. This year the state of North Carolina will have credit deficit because of unemployment. America is not suffering because of unemployment, but due to lack of government’s initiative on matters related to employment. While the legislators deal with the issue, the federal government must learn its lesson in budgetary allocations. As usual, businesses are not a solution to unemployment since not all of us can become business people.

The article maintains that the government has a major role to play in preventing unemployment. Therefore, the government should give unemployment benefits to its unemployed citizens. The article has a liberal point of view since it does not promote public initiatives in eliminating unemployment. In addition, the article considers the federal government responsible for the current unemployment menace. Therefore, the government should establish fundamental structures to deal with unemployment.

Politics & Economics: IMF Fuels Critics of Globalization; Report Finds Technology and Foreign Investment Boost Income Inequality

In the article “Politics & economics: IMF fuels critics of globalization; report finds technology and foreign investment boost income inequality” Davis, B. explores the role of international financial institution. The article was published in the wall street journal on July 2008. According to the article, the IMF (International Monetary Fund) and the World Bank have been on the spotlight for failure to meet their global obligations. Both organizations are expected to regulate financial exchange between countries however, there is a growing controversy concerning their conduct. Financial institutions are establishment that focuses on dealing with financial transactions, such as reserves, loans, and deposits. This essay explores the categories of complaints that affect global financial institutions and appropriate interventions measures or recommendations.

Global financial institutions have a fundamental structure that makes them to appear identical. The World Bank comprises of two major institutions namely the Development and the International Development Association (IDA) and International Bank for Reconstruction. Its operations are based on operations of other international financial organizations, which mobilizes funds for development projects. On the other hand, the IMF comprises of 2,300 staff members and it has no subsidiaries or affiliates. The IMF has its headquarters in Washington DC. The purpose of these institutions is to regulate global economy through currency control and equity development.

The first set of complaints arises from the control of wealthy nations such as the US on the institutions. It is expected that the World Bank and the IMF are global institutions that should conduct their business from a global perspective. However, the institutions seem to be under control of the US. The leadership structure of these institutions proves that they are inclined or controlled by wealthy nations. For instance, the World Bank has 185 member countries, and all its leaders come from the wealthy economies. It is high time that the institutions started to draw their leaders outside the league of wealth nation (Davis, 2007). A combination of leaders from both the developing and developed countries will give the institutions a nonpartisan face. In conclusion, operations of the IMF and the World Bank have continued to attract criticism. Critics argue that both institutions do not meet their financial obligations. In addition,

The Nightmare German Inflation: One day everything was fine. The next day hell was unleashed.

Michael’s article “The Nightmare German Inflation: One day everything was fine. The next day hell was unleashed” explores the impacts of inflation on developed economies. The article was posted on November 24 on usagold.com. According to the article, the economy of a country is a significant tool that the government uses to control its people. The state of a country’s economy indicates the governments control over the people. The country’s financial condition is an indicator of a country’s economy and hence the government’s control over its people. The great inflation of the early 1920 is used to describe the era when Germany experienced the worst inflation in the world economic history (Michael web). Inflation is the abnormal increase in the price of goods and services due to fall of currency value. In the initial stages of the great inflation, German citizens did not experience its effects partly due to the stability of German’s economy before World War I.  At the end of 1923, the effects of the great inflation started being felt by the German citizens. The great inflation reached its peak at the last half of 1923 when the prices of basic commodities had increased by more than five hundred times. The price continued to increase steadily putting German’s economy at the risk of collapse. Although the inflation resulted from economic factors, it was related to German’s governance. This essay will investigate the great inflation, and its impacts on Germany and the German people. The government has the responsibility of ensuring that its people lead comfortable and fulfilling lives. This requires the government to be the custodian of different vital information that affects the life of its citizens. The ability of the government to control such information replicate as the government’s control or authority. However, after a detailed observation I have realized that the government does not issue conclusive information on issues that concerns the public such as the country’s economy, health, and security. This essay explains what I do not like in reports issued by the government.

Money is like blood – it needs to circulate for local economies to survive

In the article “Money is like blood – it needs to circulate for local economies to survive,” Mathew khan explores the roles of money on a countries economy. The article was published on February 2013 on the Guardian. The main issues that is of significant concern is the country’s economy. Over the past years, the government has been issuing economic report based on statistical elements that describe different economic trends such as economic growth, rate of unemployment, GDP growth, and interest rates. Although the government considers such statistic as the only tools of relaying economics information, such information is unconvincing and inconclusive. This is because economic reports are based on statistics that can only be understood by people who have economic knowledge (Shaw 643). On the other hand, the government does not indicate the validity or the credibility of such information. It is evident that majority of the people lack economic understanding and, therefore such information does not make sense at all. In addition, the government fails to give information on how such economic indicators relate to the real world. Such economic indicators fail to connect the actual situation with the theoretical aspect or to explain how things happen in the real world (Shaw 632). I consider it hypocritical to have statistics stating that the country is experiencing an economic growth while the cost of living is increasing constantly. Authorities are prone to giving inconclusive information on issues that affects the public. Government reports are filled with generalizations that do not replicate to the actual situation in the ground. I am concerned about when the authorities will learn to give out credible information that captures and explain the real situation and real happenings. For instance, the weather department is charged with the responsibility of directing the public on matters related to weather patterns and changes. However, the department never issues any concrete information on the area of their responsibility. The public needs to have precise information about the weather. However, the responsible department issues information that has considerable amount of uncertainty.

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