Are the Country’s Economic Problems too Big?
The current administration has made it very clear that it is committed to helping the economy as much as possible. The trillion dollar bailouts have had a measurable effect, and most people think that the recession is over. Although the short term effects of the stimulus have been realized, many people are wondering about what happens after the effects have worn off.
More Failed Banks
This article from Reuters describes nine bank failures that occurred in just one day. The government has successfully increased spending and prevented a depression in the short term, but what about the real health of the economy? As bank failures reach record highs, do we need to be concerned about whether the entire system will collapse?
Economists have been debating for nearly 100 years about how a government should manage its economy. Many economists even believe that the government cannot effectively manage an economy, and its meddling causes problems and side effects and offers few solutions. One thing is pretty clear: As the government prints more and more money to pay for unprecedented deficit levels, inflation is definitely something we need to be concerned about.
If the country’s economic problems are too big for the government to solve, then we are in for some tough times ahead. Besides that, if inflation takes off as a result of the spending, then we will have other massive changes in the economy. Who knows what will happen? Although nearly everyone seems perfectly happy to tell us what the future holds, I don’t think anyone can predict it with certainty.
Instead of trying to predict the future, I think it’s better to consider the possibilities. What if inflation takes off? What if government spending increases for the next few years? What if the dollar collapses? These are all viable possible futures that we can prepare for. In that way, whatever happens, we can be ready and make it work for us.
Although it is painfully obvious to many of us that the economy is undergoing massive changes, many people are totally unaware of the changes and never bother to think about it. Many people are taking the first time home buyer’s tax credit and thinking that it is free money. This seems a bit naive to me.
Whatever happens, it is pretty likely to have major effects on the economy and the financial lives of most people in this country. While we cannot predict the future with much accuracy, we can prepare for it. Many people are afraid of depressions and financial upheaval, but it is possible to turn these financial crisis into opportunities.
is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
