Modes Of Developing The Economy When Facing Financial Crisis

Clearly, the principal impediments to the development of the US economy when confronted with the worst financial crisis are the twin deficits – trade and budget -, which are accountable for the increase in federal debt. Whereas the trade deficit may be coped with by limiting imports and increasing exports to the countries concerned, the budget deficit, which is really huge, is also more problematic to manage.

A rule of thumb would be, of course, less spending, especially, if accompanied by a judicious fiscal policy meant to increase the governmental revenues from taxes. Without money, neither the federal debt, nor the economy can be taken care of. And getting money by simply printing them is a harmful trick, because leads to more inflation, depreciation of the dollar and expensive products and services that people can’t afford.

It obviously can reduce its useless spending on bailing out banks or companies that don’t perform, given that it doesn’t make too much sense to reward the bankrupts. With this rescue money, it could rather help new and small companies that may be productive, pay taxes and create jobs for the unemployed. Further, the government could come with some regulations obliging people that work after the retirement age to leave their jobs for younger people.

Fiscally speaking, the government could also support start-ups and small companies through tax breaks, even if the government is known to lose one trillion dollars a year on this account. It could implement some differentiated fiscal policy, encouraging for instance companies operating only in the US. As a rule, people with low or average incomes tend to spend their money, whereas the rich would rush to put it in their bank accounts. Or economy needs money to circulate for developing. As such, maybe the government should consider increasing the taxes on the rich.

Another source of money, besides tax collection, could be the sale of a part of its significant gold bullion reserves, particularly these days, when gold prices are going up. The money may be insufficient for paying back the debt, but it can be nevertheless welcome for revitalizing the economy by creating more jobs. How could the government expect the unemployed to pay taxes or even to consume for that matter – with what money? Anyone would like to buy gold bullion if having money.

Request the opinion of professionals on how to Buy Gold Bullion in periods of economic crisis.

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