International Trade ECO 372 University of Phoenix There are many contributing factors to the stabilization and prosperity of our global market. We, the United States, are living in a time of severe trade deficit, meaning that we are importing many more goods than we are exporting. While it is nice to be able to buy foreign products at a lower price, there is risk in doing so. When we purchase foreign goods over domestic at lower prices it forces our domestic companies to sell their goods at lower prices to remain competitive. These lower prices may lend to making enough profit to sustain the current workforce.
Short lived economic policies were another factor to the Great Depression. Overall the economy of America was not stable. Overproduction occurred in the US which meant that manufacturers made more than the people were willing to purchase. Therefore, the factories started to make less of their products. They fired workers because not as many were needed to make the products.
Economic issues arose after the war, Italy had occurred massive debts throughout the war-time as they had spent 148 billlion Lire which meant they had spent twice as much during the war as they had spent during the previous fifty years. They also owed 85 billion Lire to their allies. This left the government struggling to find ways to make these repayments, which enabled them crippled and unable to build and sustain their own economy. During the war effort the government spent 148 billion Lire whereas between 1861 and 1913 the government only spent 74 billion Lire. This gave Italy a short time benefit as it meant there was more money available for industry such as the car industry, Fiat created and established more vehicles which prove to be a short-term benefit for the industry, increasing production which would in effect increase sales.
He also wanted to deregulate state and federal government requirements and liberate business and allow capitalism to flourish making people more prosperous and enabling them to pay more taxes, decreasing federal deficit. He also wanted to strengthen the nation’s defences. It can be argues that reaganomics was not successful in the years 1981 – 89 but it depends on who you ask, the democrats would say it didn’t work where republicans would say it did work. After the Great Depression the consensus was that the government’s main target should be to maintain a low level of unemployment. But the reaganites said that the low unemployment obsession had pushed up public expenditure and led to budget deficits and stagflation and they believed in supply side economics which emphasised growth.
In 1913 the value of American trade was about $2 billion, but by 1916 it had risen to $6 billion. Due to the war new markets developed. The British navy blocked German food exports leaving America to experience a 300% rise in food exports. With the introduction of new markets came; reduced unemployment, new foreign investments and an increased reliance from Great Britain on US loans which were raised in New York. This meant the US became the world’s Creditor nation and the financial capital moved from London to New York.
The bull market was when prices were rising due to automobiles; steel was selling at a record high but was going down very fast. If the bull market ended when they weren’t prepared for it, then it would of left many of those investors in debt. Because other investors, which were just mostly your day-to-day average person, saw the wealthy investors selling, they decided to do the same which caused a big fall in the stocks. No matter how hard President Herbert Hoover tried to say the economy was fine, everybody continued to sell. Then finally on October 29,1929th the stock market crashed, because no one was buying and this directly led to the Great Depression.
Due to this debt the government then resulted in printing money and this resulted in inflation. Inflation destroyed savings of the middle class and especially effected land owners as they relied on rent. State employees and factory workers purchasing power fell by 25% because of the value of the Iire. The state also spent 148 billion lire on the war effort and inflation increased with the price index quadrupling, and rising from 100 in 1914 to 413 in 1918. Conscription soaked up rural unemployment and some peasants grew prosperous.
With hard economic times all over the world there are always people flocking to America for the chance at starting over and making something of themselves. The problem is the way that many of the immigrants choose to cross the borders. With an estimated 12 million illegal immigrants there is always going to be the debate on how to deal with the problem and if they are doing the economy good or destroying it. Illegal immigration affects all parts of the economy negativly. The three main parts of the economy that illegal immigration affect negatively are the education system, the healthcare system, and the justice system.
Now that the economy is in a downfall, that money should go towards creating more jobs, infrastructure repair, education spending and health care expansion. instead, this money is going towards a very unsuccessful war and the tax payer is having to pay more money in taxes. The most important problem is the fact that the troops and their families are the most affected by the war. In then ten years we have been involved more than 1,700 troops have been killed and over 13,000 have been wounded. From being deployed for a long time and seeing violence troops are extremely prone to developing PTSD (Post Traumatic Stress Symptom).
Secondly, the economy of Russia was awfully damaged. By Christmas 1916, 15,3 million men had experienced military. The cost of fighting the war and of maintaining such large army support crippled the economy. In order to pay for the war, government printed more money, leading to prices rising over 200% between 1914 and 1917. Which meant that Russian people can’t afford essential goods while their increase in wage can’t compare to the increase in prices.