The Current Recession

The Current Recession

[Date of Submission]

Introduction3

Discussion3

Higher Interest Rates3

The Increasing Debts4

Printing of Money by Banks5

The Stock Market7

Role of Government in Striving through Inflation8

Role of Banks in Striving through Inflation9

Role of Stock Markets in Striving through Inflation10

Conclusion11

The Current Recession

Introduction

The emergence of current financial issues is a significant question for many people. To keep the economies moving forwards, the hidden inflation brought about by the need of western governments and inflation is the real underlying cause. As long as there have been currencies, inflation has been around. Inflation was also faced by ancient China and Babylon in history (Gomulka, 1991, p. 71). Occasional deflation and terrible inflation was suffered by the Roman Empire. When massive quantities of gold were found by Spanish in the new world, in the sixteenth and seventeenth centuries, serious inflation was faced by Europe.

In the age of computers, the inflation data was able to be falsified by the governments of the world that led to the emergence of current issues. The uniform striking of inflation and growth rates across the western world depicted the falsification of data years ago. As all the governments of the western nations were facing the same problem that lead the playing of same games, in order to cope up with others (Wilson, 2011, pp. 12). This becomes the principal reason behind the current problems. Namely, the number of dependent and elderly people is increasing, and their populations are becoming increasingly less productive.

Discussion

Higher Interest Rates

Increasing house prices and a rapid increase in the value of the stock market are a typical of an inflationary bubble and all the features of the United Kingdom's economy in the last 10 years. There was no place for the huge amount of money in circulation. In response to this trend, normally interest rates must have risen up, but the most astonishing act of financial mismanagement was committed by the government of the United States and the United Kingdom (Glikman, 1993, p. 4). They took all the controls off borrowing, rather than raising interest rates to control inflation.

To show the rise in gross domestic product, money was spent on consumer services and goods. Including buildings and lands, some of the surplus cash was placing in property. The wealth of the nation was the buildings and land that fall outside gross domestic profit. In the process of executing the many deals that took place, part of this national wealth was then transferred back into gross domestic profit. The money was soaked up by using all sorts of paper property, like, savings accounts, mortgages, bonds and stocks. From unregulated inflation, various taxes were yet again benefited by the state.

For the purpose of driving an unproductive economy forwards, the government of British thought the Holy Grail was found by it. By putting the surplus cash into the property and stock market, people and stoke inflation were used (Shomali & Giblin, 2010, pp. 15). Now, there is a significant recession, although the policy worked well for 10 years, but then the falsehoods ...