ECONOMIC RECESSION

Economic Recession

[Name of the Institute]

Table of Content

Introduction1

Summary1

Critical Analysis2

Critical question3

References4

Appendix5

Economic Recession

Introduction

I have taken the article “Do not raise the debt without setting spending under control” as a source from The Heritage Foundation. This article highlights that the economic condition of United States of America is not good due to the low control over their debt which leads to economic recession. United States of America is currently moving towards economic shock down and is under the heavy load of around $14 trillion of debt, and the number is still on the increasing trend. In year 1942, the debt was $125 billion which is comparatively just a small chunk of year 2011 debt. Recent data shows that the most severe recession was witnessed two years back (Mutikani, 2011).

Summary

According to the author of the article there are three broad areas in which United States of America is lacking the control; those three areas are current spending, future spending and no limits of the budget allocated on the quarterly basis. Due to lack of control on spending and budget allocation drop arise in the employment ratio, investments, house hold businesses, GDP and most importantly Circular debt.

Main cause of the recession is that United States of America is a victim of circular debt, the whole business of United States of America revolves around the circular debt, there are many justifications made that the burden of such a heavy debt was alarming since years but United States of America keep on running its economy backed by debt. Reason behind this debt is costly future aims, excessive current spending and no proper budget distribution.

Another reason which comes under the politics umbrella is that, United States of America spends a lot of its earning and debt on the war against terror. The governments bills are piling up, still congress men are asking to extend the limit of debt.

Critical Analysis

All the mentioned areas by the author in the article which need to be focused lies under the roof of 'Things which are possible' but still surprisingly the United States of America system is not at all interested in taking any sort of measures to cut down its spending even after knowing the fact that many countries are dependent upon the solidarity of United States of America, any measure which they take acts adversely. Congress is still asking for more debt, but there are some key financial persons of United States of America are against it, as the burden of debt is getting out of control as well as national spending is increasing consistently (Knudsen, 2011).

The US congress took some step to get over it and have waved huge amount of loans borrowed by the farmers to make room for them to start again, so that they can contribute again in the GDP but did not work so far, American firms are firing employees day by day. According to some critics United States of America will soon be under by hyper inflation.

The United States of America ...