Essay: Analysis of the Great Financial Crisis

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Essay: Analysis of the Great Financial Crisis

Sample Essay

Foster and Magdoff notes that, the tendency is worsening and that this is a normal economic condition. There exists a counter tendency for every tendency. Stagnation can be controlled by a number of actions that may include military and capital export among others. The consequence of the countertendencies has been on the decline since 1960s to the 1990s when their effect declined to the least hence debt expansion remaining the option for the capitalistic economies. Besides debt expansion, the financial bubbles play a critical role in the absorption of the excess capital. It is imperative to note that, the authors of this book acknowledge that the relationship that links between the debt and economic growth (GDP) has been reducing for the past 30 years.

This correlation is used as a tool to evaluate the degree of stagnation. A decline on the relationship means that, the increased debt has been resulting to decreased economic growth measured in reference to the gross domestic product. This has had adverse effects on the household notable by the decline in real wages even though the consumption has increased and the outcome unmanageable household debt. The extended long term stagnation coupled with economic bubbles brings about economic crisis.

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