From the beginning of the early 2000's some major causes that presume to have the major effects on the great recession was fundamental flaws that created growth and contraction. When the economy goes down , the federal reserve can set interest rates lower creating money cheaper for people to take out loans from banks at anytime in exchange to 20-30 year commitment mortgages. This allow Americans to buy households ,make business investments and others that meant more production and more available jobs. However, leading into years of long record profits at banks; They were not longer wanting to give away loans for people not able to paid their debts.This created about 6.1 % job loss , dropped family incomes and beginning of poverty where children
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it disproportionally affected the poor homeowners that were rushed to spend most of its debt to the belief that households could only go up in price later on if the purchase is not made immediately and for the desire to have financial assets such as stocks, bond and mutual funds as everybody else. They believed would not only be house owners but could resell their houses in future occasions for a higher price known as profit. while looking for ways to live in prosperity, they began to live in the most expensive areas like Wall streets in Washington where median household income for America at large covered around $30,000 ; they bought expensive cars, luxurious clothes that not only increase economy crisis but pollution that affected the environment were it meant more government investment on finding ways to solve the situation. Not to long their illusions were over. noticing people were beginning to be unemployed and bankers taking away homes; almost half of the buyers began to stop spending. The saw rich have almost not debt to pay and no need to cut their spending in other words they realized the rich were becoming richer and poor poorer. the poor experienced dramatic decline in dot-com; a popular website that was used since the 90's where many noticeable companies such as google, yahoo and amazon brought millions of investment dollars without having to bring the …show more content…
The key that brought the economy collapsed indeed lead on how the federal reserve uses and controls the monetary policy that involves our interest rates. If any changes from the federal are made would mean banks who borrow at lower rates would lend at lower rates also; like reduction of loans and home mortgages. Adam Smith believed it was often easier to increase profits by restricting competition than creating a better product when it comes to be competitive with other markets.He believed without having full rationality, economist would be unable to find important facts about individual behavior whereas financing was the biggest issue Americans had for miscalculated their marketing investments as their own benefit to produce more cash and not thinking the losses that often created. All they wanted was invest more to produce more. but moreover the irrational decisions the majority of people underestimated, was also the belief of Greenspan testimony where he stated market participants will be able to handle and understand the concept of finance creating between them more confidence towards self regulation. not noted that only those who know more about politics and could do high investments were able to understand the real truth when involved investment to
it disproportionally affected the poor homeowners that were rushed to spend most of its debt to the belief that households could only go up in price later on if the purchase is not made immediately and for the desire to have financial assets such as stocks, bond and mutual funds as everybody else. They believed would not only be house owners but could resell their houses in future occasions for a higher price known as profit. while looking for ways to live in prosperity, they began to live in the most expensive areas like Wall streets in Washington where median household income for America at large covered around $30,000 ; they bought expensive cars, luxurious clothes that not only increase economy crisis but pollution that affected the environment were it meant more government investment on finding ways to solve the situation. Not to long their illusions were over. noticing people were beginning to be unemployed and bankers taking away homes; almost half of the buyers began to stop spending. The saw rich have almost not debt to pay and no need to cut their spending in other words they realized the rich were becoming richer and poor poorer. the poor experienced dramatic decline in dot-com; a popular website that was used since the 90's where many noticeable companies such as google, yahoo and amazon brought millions of investment dollars without having to bring the …show more content…
The key that brought the economy collapsed indeed lead on how the federal reserve uses and controls the monetary policy that involves our interest rates. If any changes from the federal are made would mean banks who borrow at lower rates would lend at lower rates also; like reduction of loans and home mortgages. Adam Smith believed it was often easier to increase profits by restricting competition than creating a better product when it comes to be competitive with other markets.He believed without having full rationality, economist would be unable to find important facts about individual behavior whereas financing was the biggest issue Americans had for miscalculated their marketing investments as their own benefit to produce more cash and not thinking the losses that often created. All they wanted was invest more to produce more. but moreover the irrational decisions the majority of people underestimated, was also the belief of Greenspan testimony where he stated market participants will be able to handle and understand the concept of finance creating between them more confidence towards self regulation. not noted that only those who know more about politics and could do high investments were able to understand the real truth when involved investment to