Debt Problem Essay

815 Words 4 Pages
. In your own words, why did the debt problem occur? Debt problem occurs when you do not save money for an emergency situation. The use of all monthly payments means that you will not have reserve funds of an emergency situation occurs. When these situations occur, the more susceptible the more you will likely to have a debt. Also, when you own too many credit cards and unable to manage while using it, and when you set up budgets that you do not follow, etc. All of that eventually you will owe and increasingly deep in debt only.
2. Is it better for our economy to allow free market forces to govern our financial services or should there be more regulation by the Federal government and the Federal Reserve? As the central bank of the
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If the bank helps, it reduces the risk of lending bank 's reputation and ability of the banking business. Whichever bank is more risky than the other will operating inefficiently. This impact on the reputation of the bank makes the customer 's trust in the bank is reduced. It will directly affect the amount of customers who send their money to the bank and use of banking services, so the scale of banking operations were affected, thus, financial will be losses. In addition, if the bank does face many risks in lending, the possibility of bankruptcy of the bank is very …show more content…
Fed uses the power to control the supply of credit to shape the economy. They were also helpful during the crisis, Fed help rescue the investment bank, insurance company. However, because they too much focus on the job market and take advantage of their authority that they forget the inflation. As this contributor said "The Federal Reserve has too much power, too little accountability, too little transparency and always acts too late to be effective in the role it’s supposed to play" and "Fed should relinquish its role in day-to-day supervision and regulation of financial institutions (approving mergers, enforcing and making various financial rules, and acting as a prudential

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