US ECONOMY

Globalization and the US Economy

Globalization and the US Economy

Outline

Introduction

Research Question

Method

Findings

The benefits of a Globalized finances for the U.S.

The Downsides of the international financial System on the U.S.

Cross-Border Trading

A Traditional Cycle

The Mortgage Boom

Victims of Their Own Success

Conclusion

Introduction

Globalization in the 21st century has changed the American economy. Markets and persons, that were a years before inaccessible, are now adept to purchase American products and trade goods their own. The intermingling of cultures has conceived new and exciting products and technology and has made the world a “smaller” place.

Increased financial interdependence with the rest of the world has numerous dimensions. It will focus today mainly on financial interdependence, although as we shall see that also has important implications for trade. World trade items of items and services now allowance to around $8 trillion a year. The foreign exchange markets clear round $1.2 trillion per day. Hence most transactions over currency markets are solely economic, and these transactions determine the worth of floating exchange rates in the short and even intermediate run.

Research Question

There are downsides to the globalization of the American economy, however, but what are they, and do they outweigh the affirmative effects?

Method

The research will be based on secondary data collection. The data will be extracted from various journals, articles and books. In secondary research data will be extracted from various journals, books and articles. For this study we gather data from 5 articles, 2 books.

Findings

The wealthy world - especially Europe and Japan - is ageing, both because of expanded longevity and because of declining birth rates. The last mentioned suggest finally falling work forces, except counteract by immigration, and declines in new house formation. The demand for housing, a large user of capital in all finances, will stay reduced in these aged societies, especially in Japan and Germany, the second and third biggest national economies after the joined States. Adecline in the work force also suggests less need for capital investment to equip new employees; some capital for labor substitution will occur, but that will push comes back to capital even smaller than they are now. The excess of savings over buying into in these nations helps to interpret the reduced genuine long-term interest rates around the world. Some of the surplus savings is absorbed in government deficits, which are somewhat high in both Japan and Germany, but much of it goes into investment overseas, producing in the large current account surpluses of these two nations, which together amounted to almost $300 billion in 2004. This is in fact a sensible disposition of savings if people want to save for their retirement when returns to domestic investment are low (Barzilai, 2008).

Much of this excess keeping in the rest of the world comes to the joined States; it exceeds buying into abroad by Americans, and accounts for the large present account deficit of the joined States, now running at over five percent of GDP. Why does this keeping arrive to the joined States rather than going to appearing markets, where ...