The Economic Situation of the United States of America
The U.S. is one of the nations across the world that is believed to have good image in its economic growth. Compared to five years ago when the country was experiencing depression, the country is at a better position today. However, some of the Americans continue to say that the country is not yet at its target position. For instance, five years ago, the percentage of the people that were not employed by then was 7.5%, which is very high. In 2012, according to statistics released by the United Nations, from The Messenger, concerning the economy, the rate had reduced to 4.1%, which is almost a half reduction of the initial rate. This is commendable because it shows that the number of those who do not have jobs in the country has reduced with a high percentage (United States, 2013). This has in return raised the standards in which people live.
On the other hand, inflation has fallen from 3.5% to 1.6%, which is a significant reduction. This implies that, five years ago, life was very expensive as the price of commodities was very high and therefore contributed to the downfall of the economy. Inflation pushed the general price of commodities high, implying that securities had high prices, and their rate of interest was low. This meant that people could not afford to buy these securities, and therefore would concentrate on other commodities like basic needs. John Keynes states that people will be interested to spend their money for speculative purposes when the prices of securities are low as the rate of interest would be high. Today, the rates are high and therefore many people find the heart to invest in various fields, as they are aware that they would get good returns (United Nations, 2009).
These changes in the rate of unemployment, inflation as well as interest rates could be explained in terms of the new policies that the country has adopted to manage its economy well. Unemployment has reduced because in every four years citizens in the country have to conduct elections to bring in place people they think will come up with strategies to create employment (International Monetary Fund, 2004). The government controls the economy by pitting in place policies that govern various sectors. For instance, to ensure that the cost of medication is not high, the government has come up with Medicaid health care policy where health insurance that is subsidized for citizens is offered.
Some strategies concern both the fiscal as well as monetary policies and are meant to encourage people to spend their money to create economic growth. Based on the monetary policy, the federal government sells its securities to the people at low prices through its corporations. This attracts people to but the incentives at offered at their disposal and thus this would be encouraging them to spend their money (International Monetary Fund, 2004). The government could give loans that attract low interest rates to people to buy the incentives, in case they do not have money at their disposal to buy them. Based on the fiscal policy, the government could also offer free education to students in colleges especially to those whose parents earn low incomes and those whose parents do not have jobs. This will be effective in the control of the expenditure of the people (United Nations, 2009). In addition to this, after attending school and are trained so that they could be offered jobs. This means that they will not spend to pay for their training but will benefit at the end, as they will have jobs and thus will be able to earn some income. This encourages them to spend in that it makes their mind ring that they will soon have jobs and thus they will spend the money they hold.
These strategies will reduce the above mentioned factors concerning the growth of the economy. This is because, when people have money to spend, they tend to invest in various fields and this will in return, make the prices of securities go up because of the high demand created, which makes the interest rates to go down. On the other hand, the rate of unemployment will go down after some time because they people will find new jobs once they complete school and can even start their own jobs using the credit the government offers at their disposal. The strategies mentioned above will help in controlling inflation in the country. This is because a neutralization effect is created by creating credit to the citizens and at the same time creating an incentive that will encourage them to spend. The neutralization effect comes in when the people spend their money out of the credit offered at the same rate the credits are offered. This makes sure that the circulation of money is controlled and thus no inflation comes about. This is because people are only able to have money that they need to spend thus avoiding inflation from arising.
International Monetary Fund. (2004). World Economic Outlook: September 2004. Washington, D.C: International Monetary Fund
United Nations. (2009). Preliminary overview of the economies of Latin America. Santiago, Chile: ECLAC.
United States. (2013). Congressional record: Proceedings and debates of the … Congress. Washington: G.P.O.