EconomicCrisis.US

Is the U.S. economy in the early stages of a rare illness that last hit 80 years ago?

Because most of us have lived in an era of ever-rising prices, a full-blown bout of deflation would be a shock.

The United States has fought off deflation three times: in the Panic of 1837, after the Civil War in what’s called the Great Deflation and during the Great Depression in the 1930s.

Generally, a reduction in the money supply sparks deflation. Governments cut — actually cut — spending. Or central banks raise interest rates and drain banking reserves.
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The fiscal crisis in Europe has awoken Americans to the enormous challenge we face from entitlements. The promises our country has made over the past few decades, combined with changing demographics and rising costs, have put us on a path to national insolvency. Unless we control our deficits we will face stifled economic growth and impaired standards of living, perhaps even as soon as a few years from now. Most economists agree that raising taxes cannot pay for these commitments; entitlements must be cut. Before we can embrace any reform proposals, however, we must understand the influence our culture has on our decision making.
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Global HIV/AIDS prevention and treatment programs are already feeling the effects of the global economic crisis, according to a report released by UNAIDS and the World Bank. The report
found “in 34 countries, respondents said there is already an impact on prevention programmes.

The global fight against HIV/AIDS is threatened by stagnating economies around the world, which
have caused governments to shrink their budgets and, with them, grants to fight the illness.
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Many of us expected the U.S. economy in the second half of 2010 to surpass its performance in the first half of this year. We even expected 2011 to be an expansion period. But the economy made a bad turn in the second half. Instead of expecting an economic growth of between 3 and 3.25 percent in the second half, now we will be lucky if the economy achieves a 2 percent growth. What caused the bad turn? The sovereign debt crisis has created uncertainty and impaired investment, led to appreciation of the dollar against the euro and affected U.S. exports. The housing sector is now suffering from a double dip recession. All this happened while the job market did not take any strides forward. But the inherent reason for the bad turn is the nature of global financial crises which become well entrenched after happening, and can last for a decade. Japan’s Lost Decade is still a living proof.
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