Financial and economic crisis in the us

This happened when inflation was replaced by sustainability despite the efforts of regulators and central banks to reestablish. Early 2009, the financial and global economic systems started to show a descending order which shifted the policy focus of the country causing the Great Depression (Chen, Filardo, & Zhu, 2016). The origins of the economic and financial crisis in the U. S has for some time now been focused on raising questions on the impacts they have caused. It is believed that the crisis is the cause of the current market failures encountered today. This led to a surprise in the financial system when the prices began to go down, and loans began to go bad. Another reason that caused the crisis was global imbalances where financial flows were characterized by unsustainable patterns where some countries such as Japan and Germany run huge surpluses every year whereas countries like U.

S run deficits, these deficits were caused by the internal deficits of the government and the household within. This led to borrowing which caused huge financial disruptions. Lack of risk management systems was also a cause for the crisis where instead of joining together during analysis of risks, firms chose to analyze them separately and due to the division where collective common sense was disrupted (Obstfeld, & Rogoff, 2009). These are referred to as global imbalances which causes structural changes and shocks to the world's economy. A fast-growing country like America when faced with a financial crisis, then it becomes unable to create enough financial tools that are required by the country, and thus they become dependent on loans and saving which is very dangerous for the financial state of the country.

How did the global economy recover? What kind of fiscal and monetary policies were implemented? In a research conducted by Rudd, (2009), Americans tend to spend more than what they save, and due to this, they have been market among the countries where there is the highest combination of debts and low saving rates. This is one reason why people need to realize why savings culture is important while the government on the other side should encourage people to save more. Additionally, the government should urgently address the issues of the benefits that are associated with savings and pensions, and this will help in restoring the economic and financial systems in the U. These changes affect investments and saving decisions. During the crisis, for instance, monetary policy is usually expansionary where rates are lowered, and firms are given incentives to hire more workers and expand while on the other side customers are given incentives and are able to spend more.

The Congress and the White House are usually responsible for Fiscal policy which is enacted by government spending and taxes. During the crisis, the government reduces taxes and increases expenditures to increase the total money spent by the country (Rudd, 2009). By doing so, they encourage firms to increase their production which in turns calls for more workers to be employed. Policymakers are obliged with the burden of facing new challenges that come through using fiscal and monetary policies. Sectors such as pensions, savings, healthcare systems, and populations are very crucial in every economy and to have the economy in place these sectors need to focus on. To be in a position of facing another crisis, the country needs to have policies that are working out for the betterment of the country.