Question

What have been the major sources of disruption over the past several years? What policies do you recommend to address the sources of disruption you identified?

Answer 1

Over the past several years the major sources of disruption was the financial crisis and recession of 2008. As per the reports of Department of Labor, roughly 8.7 million jobs were shed from the period between February 2008 to February 2010, and GDP declined by 5.1%, making the Great Recession the worst since the Great Depression. Unemployment increased in November 2007 from 4.7% to peak at 10% in October 2009. The Federal Reserve after the financial crisis of 2008 has tripled the monetary base since 2008 without inflation surging. With interest rates at historically reduced to the bottom levels and the economy still struggling for survival, the process of normal money multiplier has broken down and pressure of inflation remain subdued. With a systematic combination of tighter monetary and fiscal policies through an approach of mixed economic policy, tighter financial regulation, and robust controls over the credit rating institutions and the shadow banking system, United States can avoid the disruption.

The United States are engaged in a trade war with China because both nations continue to dispute placed on goods traded among them. United States claimed that laws in China undermine intellectual property rights by forcing global firms to engage in joint ventures with Chinese companies, thus providing Chinese companies permission and access and permission to use, copy, improve, or steal technologies of global firms. In this trade war, there are no real winners. Both should stop imposing new tariffs, including the United States, to increase their real exports as well as GDP.