Out of the loop, what is happening with our economy?

Question

Ok, so I haven't been paying attention much to whats been happening out there. I just found out that starbucks may be closing about 600 stores, my friends that are waiters or waitresses are getting much lower tips, my father is getting evicted out of his office apt in NYC because the landlord is bankrupt... What is exactly happening and why are we supposedly in a recession?? It would be nice to have a simple thuroughly explanation that I can understand (assuming I don't know anything) I'm just really confused in what is wrong with the economy and why this is happening and how it should be fixed. Thank you for your time!

Answer 1

Here's what happened...since you left, we couldnt find you and now it's all going down the drain..thank's heaps.

Answer 2

The massive national debt caused huge loans to pay for the

war effort,resulting in reduction of the dollar's value and a growing loss of public confidence. The recession has been going on for a while now-Bush calls it an "economic slowdown". I read in the paper the other day that the signs

in Wall Street indicate the worst is yet to come. There's no

good news here.

As for how it can be fixed-the first step would be to pull the troops out of Iraq so that the drain on U.S. financial resources

can be stopped. That's just the first step of climbing out of a deep hole eight years of mismanagement dropped America

into.

Answer 3

To sufficiently answer this question, I would need to write at least a chapter of a textbook.  But here goes:

I'll explain this next part further down, but for now go with me.  We are under a fiat money system.  In other words, our dollar has no "real" value other than the value of the paper and ink it is printed on.  As you may or may not know, most other countries run on this same system.  How do we know how much value to assign our dollar according to this system?

It all depends on the amount of dollars in circulation around the world.  Kind of like supply and demand, as more dollars are in circulation, the price falls.  Inversely, as fewer dollars are in circulation, the value rises.  Remember that these values are relative to the value of other currencies around the world.

It goes like this:  The Federal Reserve puts money into circulation by many different ways.  Use this as an example.  A postal worker for the government gets paid $1000, basically the Fed created this money from nothing.  He takes his money and puts it into a private bank.  Now the money created from nothing is in the private world out of the government sector.  The bank can now loan out 9 times that amount to other citizens.  Thus we have created $9000 dollars out of nothing.  Ultimately, we have lowerred the value of the dollar.

What does this mean?  Let's use oil as an example.  As the US imports, I believe, 5.5 million barrels per day.  At the market price of $135/barrel (which is about $10 low today) comes to $742 million per day that we import.  Say we import from UK.  We pay them in pounds.  A few years ago, the exchange rate was around 1.9.  Today it is about 2.  As our dollar falls, the exchange rate rises making us pay more and more on that exchange rate, continuing in a loop.  This is the main reason oil prices are so high.  It has NOTHING! to do with speculation.  The oil companies have been speculating since the industry started.

While at war, the FED issues money from nothing to finance the war.  We spend about 341 million dollars per day.  Our national decifit rises 1.74 billion dollars every day.  That is money that our FED has loaned.  In other words, our dollar is rolling down a hill.  Also, the government has to pay interest on these loans.  So to do that, we take out more loans.  It's a very bad system.

If you want to learn more, check out this site.  It explains the material so a 4 year old would understand but still makes it very applicable.

http://www.consciousamerican.wordpress.c...

Answer 4

It's not only US economy, it's the world.