Why is the economy so bad and what do you see happening in the future?What should we do to protect ourselves?

Question

Will the dollar eventually become worthless? Should people be buying silver or gold and stocking up on food? Any suggestions on what people should do?

Answer 1

The congress removed all regulations from the banking industry . This allowed for all types of illegal scams to crop up in the finical markets . Now there is 65 trillion in worthless paper debt in hiding in the banking system all ready to be dropped on the public .

Answer 2

I'd like to believe Cookie , however this time around I feel that the economical storm that is over us at present will take a lashing to the US as none other ever before.

The problem began for the US as far back as 1943 when a 'Victory Tax'  was established here in the US by our government to businesses in the US. This tax helped to drive out industry as far back as then up til present.

The next big blunder that out government made was to get rid of the gold standard in the 70's.

They thought that they were in total control of the oil throughout the world due to the strength and being that we as a nation were the only ones in the world with BIG oil needs...but..nope- it slithered through our hands of control.

The other BIG mistake that Wasington pulled was to start pumping out paper dollars that they could NOT back with real value.

On top of that the government started to back up the banking industry every bit of the way whenever they got themselves (banks)into a fiscal mess- virtually ignoring the industrial sector of our country.

We are in a real fix- make no mistake about it.

I  liken it to a hurricane - we have basically weathered the storm for the first half and are now in the eye.  The back end (which is the most fierce) will be next to hit us. The final blow will be when other world nations turn in there US dollars for other currancies such as the Yen & Euro which will cause liquidity regarding our dollar.

At that point you will probably be able to take about twenty ones to help you start a fire to keep warm by and mabey read a book- because that's what those dollars will be worth.

Oh and that loaf of bread...probably about 50 bucks and going up!

THANK YOU US GOVERNMENT FOR SELLING us DOWN STREAM !!!!

Buy silver with both fists     NOW!!!

Answer 3

Number 1 thing to do is pay of debt. Especially credit card debt. Next, learn to budget and live within your means.  

Holding precious metals?  Seems like a bad stragegy, unless it is to supplement your savings and investments. Precious metals have had a pretty good run up in the last five years.  Those are just like other investment tools: they can crash!

If possible look for a supplemental job, something part time or irregular or a skill you peddle.

The dollar will not become worthless. Atleast, not anytime soon. So you need to build a savings. It would take something much more horrendous than what has occurred and is occurring right now.   America still does export goods, and a lowered dollar will help that. Further, the USA is a hot bed for tourism and cheap property up and down both coasts will become attractive to foreigners looking for vacation homes.

But, stick to these three things and you will be fine. I did all of these within the last five years, and I am hardly feeling this economic downturn (granted I stayed out of the ridiculous housing market when it ran up up up from 2003-2006).

1) pay down debt - its cancer to economic freedom

2) create a budget and live within your means -- CUT BACK

3) find supplemental income to offset rising transportation, food and medical costs

4) Build a savings

Answer 4

The economy will get better.  Usually economies, like the one in US, go through booms/busts.  Currently we are in a bust.  We'll get out of it.  Our nation has been through worse economic times- the Great Depression.  Yet we got through it and I'm sure we'll get through this one.

Will dollar become worthless? No, I doubt it.  Though its worth has decreased, I doubt the FED and govt would let it become OVERLY worthless.  Things can get better and I think our next President can help with this problem (esp if we find a way to cut down spending, which has led to debt, and devaluation of dollar).

What do I see happening in the future? I see that the economy will still be weak for now, but no worry.  It will be okay.  I heard that some expect it to get better by the end of this year.  Yes its a long time. ANd yeah many will feel hardships and I'm not happy about that.  But our economy can rebound and projections (at least what I hear) show us rebounding starting end of this year.  I also heard some promising news before (Sacramento's home sales have gone up somewhat and other small, yet good news).

Why is our economy so bad? Well, Cynthia...its a complicated issue.  I'm not totally familiar as to why it is so horrible, but I do know a good amount of things as to why it is.

Check out this article by the BBC which explains the mortgage problems perfectly-- (nice article on the American housing problem)

news.bbc.co.uk/2/hi/business/7073131.s...  

To sum it up though, mortgages were given out to many people, a large number of whom weren't able to afford it.  The housing market, throughout the last ten, fifteen years, has been pretty strong.  So that is why a lot of mortgages were given out, there was high demand.  Unfortunately, a lot of people weren't able to pay these mortgages back.  To make things worse, some of them were adjustible rate mortgages so rates were high.  Also, interest rates rose during this time, so they became more expensive.  In the end, a lot of people were unable to pay them back.  That was a huge problem.  Banks weren't getting the money needed to help pay down houses (big problem).  Thus, they themselves were stuck with less money on hand and many homes became foreclosed.

Things were even worse with other problems too.  There was a huge credit crisis.  For a long time, many people were spending a lot (overly) on credit.  They built up a LOT of debt.  That just made people go into debt too.  As a result, people were stuck with loss homes and very high debt from credit.

Another big problem was there were a lot of fradulent mortgage lenders too.  They committed fraud and fooled people about how much the rates of the mortgages would be.  As a result, a lot of people became scammed and this only added to the high prices of mortgages.

So home ownership has gone far down.  The housing market is AWFUL.  Its a very sad problem...and there are so many cases of fraud and debt. (Foreclosures +).

Unfortunately, that's not the only problem.  Gas prices have gone up in recent years.  The problem was partially caused by huge demand.  China and India have very high demand for gas.  So, gas prices went up.  Oil supply was also low.  Bush's wars in Iraq and Afghanistan added to tension and fighting in the Middle East.  As a result, oil producers wanted to produce less (due to tension).  Also, speculators, seeing this situation, caused the prices to be high too (they based their investing and selling on the situation of gas).

As a result, food prices went up.  Why?  Well many companies transport food and other supplies to different nations.  With high prices of fuel, prices went up for these companies.  They were force to put high prices upon food producers as well.  Unfortunately, that led to high prices of food.  Farmers have had a rough year too.  Ethanol could be blamed as well.  Some say that because less ethanol is used with food, there is less of it (ethanol is being used more for production of cleaner oil instead of making food).  So that is possibly why corn prices shot up as well.  Lastly, bad weather has hit different farms and areas in Asia and all across the world.  That includes the storms and floods recently.  So, food prices have gone way up.

Lastly, beside food and gas prices, there is the problem of the dollar losing value.  This comes from high national debt (made by huge national deficits).  Thanks to Bush's tax cuts to the rich (which, unlike cuts in taxation to middle class and poor), the economy wasn't really helped and the deficit grew.  Furthermore, Bush also spent a lot of money, especially on the two wars going on (which we would spend less on if we had a good plan for both countries.  Even  anumber of conservatives agree that we haven't had good plan for Iraq and Afghanistan until lately for the former...the surge worked, but yeah things are still kinda messy).  But yes, the high spending and poor fiscal policy has hurt our economy.  Its made the debt grow.  That's a bad thing...with debt growing, there needs to be a way for it.  So, more dollars were printed.  More dollars printed means that its supply has increased.  With an increased number of dollars, their value went down.  So things became pretty expensive and as a result, inflation went up.

The FED, noticing that we were possibly in a recession (some disagree so I'll call it slow growth/slowdown, which nearly everyone agrees with), have tried to combat this problem.  They had their best intentions in mind and in my mind, they did what they could.  They lowered interest rates to help improve and encourage economic growth.  Lower interest rates usually do that.  They did their best.  Unfortunately, there was a side effect.  Lower interest rates caused more inflation.  That is a problem with low interest rates- higher prices.  As a result, we have high prices and inflation.

Unfortunately, the FED can't raise rates without causing problems.  See, with the housing crisis, and mortgages already having trouble being paid, they can't raise intrest rates.  Doing so would, as I mentioned before cause problems.  It would make mortgages cost more (since some of them do depend on interest rates).  It also would reduce economic growth, which is needed in this pretty slow economy.

I'm not sure what people can do about this...

But they can-

1. Cut down on their vehicle usage and use alternative energy/less usage of cars.

2. Buy cars with less MPG.

3. Be careful when buying mortgages and using credit.  The govt needs to fight mortgage fraud and educate homeowners.  They also need more programs to help people with such issues (to help them prepare, etc).

My brain's tired...so I can't go into solutions for the govt sorry..I hope I helped nonetheless! And no people shouldn't be buying silver and stocking up on food. Things will get better, and it would not be good to be scared and start stocking up.