Column: America Brings World Down As Economy Keeps Failing
This story was written by Aaron Gadbury, The Daily Gamecock
It seems everywhere you turn there is a message making our economic fears more concrete. American unemployment has risen to its highest peak in 16 years. More than 540,000 Americans were unemployed as of Thursday, according to the Labor Department.
Even with bailouts and big company buyouts, things still seem as if they are not improving. President-elect Barack Obama warns, "There are no quick fixes to the crisis, which has been many years in the making, and it's likely to get worse before it gets better."
Not only is the world going broke, but it's getting sick, too. Dr. Andrea Pennington, president of the International Association of Eating Disorder Professionals, is predicting a health crisis due to the financial meltdown. In an article published in August, she directly correlates economic hardships to people's physical and emotional health. Preventable diseases such as heart disease will remain a health concern as people are unable to pay for their medications.
The thought of another depression is terrifying. And before trying to come up with plans to solve the crisis, we must ask why . America is to blame for the failing economy. In 1944, countries in the United Nations gathered in attempts to create monetary relations among independent nations. Each country adopted a monetary policy that maintained exchange rates for itself. After the system's collapse in 1971, the Smithsonian Agreement was passed to make America's dollar the international exchange currency.
Being the largest user of the dollar, Americans became greedy, buying houses and cars that they could not really afford. The failed policies of allowing loans to unqualified people led to the gradual slip of Wall Street, which led to the dollar suffering. Consequently, if the dollar drops, the world's economy begins to fail. Thus, trading becomes increasingly distorted on account of the inflations.
You may also thank inflation for America's policy of fiat money. Fiat money is not backed by gold but instead is created out of nowhere. The government has no restraint on how much money can be created, which leads to unlimited credit. A rapid growth of available credit is often confused with economic growth. With all the available credit that was never really there, spending became excessive. When people were asked to repay this unlimited credit, the cold truth began to set in. People were unable to pay their creditors back. In turn, creditors lost their imaginary money. So creditors were unable to support their stocks, which caused the fall of Wall Street.
So what is a real possible solution? There really isn't one with the current economic system.