The Impact of Bad Economic Policies: The 2009 American Recession

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The Impact of Bad Economic Policies: The 2009 American Recession

Economic policies have consistently been the subject of focus in relation to the consistent fluctuations that the American economy has faced over the years. Since the emergence of the Great Depression, government policies have always been perceived as lasting solutions bent on salvaging the economy from recessions such as the 1929 stock market crash. However, the establishment of such procedures has influenced arguments of interest due to the way they are used as explanations or justifications for the government’s actions. The 2009 recession elicited an overhaul of these systems among economists and people overall due to the series of alternatives that the government had provided while attempting to minimize America’s latest economic slump. Even though a large part of the policies that the government employs are pragmatic, they fail to induce expectations that are equal to their caliber, further prompting reaction against them.

In contrary to the expositions of renowned economist, Friedrich A. Hayek, the American governments, similar to all other ones, has consistently engaged in market regulation. With the establishment of common policies such as monetary and fiscal alternatives, much of the incidence that is occurring not only in America is a clear indication of the market’s freedom in light of consistent governance mechanisms. Even though government policy has overtly been the source of the American economic crisis, it has become virtually impossible to assert such premise without facing disregard or contempt. According to Taylor (1), government stakeholders, especially policy makers, have always provided a series of alternative elucidations in light of the failure of government policies without considering other opportunities or suggestions that can at least impose a positive impact within the current financial predicament.

However, for many civilians, the institution of policies aimed at various aspects of the economy such as spending or loan acquisitions seems right despite the government’s inability to control the recessed economy. Nonetheless, what most people do not know is that reliance on government-based policies, in the end, will only disrupt the movement of the market and further plunge the economy into economic uncertainty and financial distress. In relation to the 2009 recession, until now, the American government has been incapable of maintaining a sturdy recovery. After five years, none of the policy makers possesses a rational idea of the reasons for this, despite the usual issues involving financial disruptions and credit crunch, which were resolved already (Taylor 4). The unfortunate facet regarding this issue, however, concerns the growing number of invalid explanations conjured by policy makers in order to rationalize this predicament.

Recently, policy makers engineered the premise of secular stagnation in order to elucidate the United States’ slow economic recovery. This hypothesis suggests that slow recovery in America is largely due to excesses within saving followed by the scarcity of platforms of investment within the economy. While supporting secular stagnation, Alvin Hansen alleged that the increases and innovation in population and technology respectively had depressed investment. As such, the government’s deficit was the only factor that could sustain employment (Taylor 7). Connecting to the five years after the American Recession, the premise claimed that slack economic situations and increased unemployment rates within the mentioned period slowed recovery, regardless of diminished interest rates. Contrary to this assertion, from 2009, America has experienced a boom in real estate due to amplified housing demand, a decrease in the unemployment rate due to the opportunities partly provided by technological development, and a decrease in personal savings.

Such economic incidences demystify the latest theory utilized in explaining America’s slow economic recovery over the past five years. Even though the secular stagnation conjecture is based on valid economic occurrences, it does not explain the slump that the economy since the 2009 Recession and supposed recovery. To this end, it is unsurprising to see policy makers facilitate a theory such as secular stagnation regardless of the invalidity it poses. As long as there is consistency in the development of dire government policies for resolving America’s economic problems, there will always be different theories established for the sole objective of explaining their downfalls and shortcomings whenever necessary.

Work Cited

Taylor, John B. “The Economic Hokum of ‘Secular Stagnation’.” The Wall Street Journal. 1 Jan. 2014. Web. 26 Jun. 2014. <http://online.wsj.com/news/articles/SB10001424052702304858104579263953449606842/>