Mckenzie Holmes Holmes 1 Mrs. Chase Economics Honors/set 7 4th, November 2017 The Budget Deficit of 2008 There is also a term of “national debt” is used when talking abou the government and nations spending as a whole.The most recent recession was in 2008. During this time there were almost 14 million Americans were out of work, representing 9.1% of the labor force. The economy fell drastically and things needed to be done in order to fix the problematic economy. Every time a bank would give a loan to someone, new money is created to be put back into the economy. In the beginning of the …show more content…
This lending led to large sums of money being put into the property market and in turn pushed the prices of houses up along with the level of personal debt. Interests have to be paid on all the loans that banks made, and with the debt rising quicker than incomes, eventually some people become unable to keep up with payments. Eventually people give up trying to repay their loans, and the banks found themselves in danger of going bankrupt. The former chairman of the UK’s Financial Services Authority, Lord Turner, said in early 2013: “The financial crisis of 2007 to 2008 occurred because we failed to constrain the financial system’s creation of private credit and money.” (pg. 1 Forbes). Unemployment followed, rising very rapidly from 4.4% (6.8 million) in May 2007 to 10.1% by October 2009 (15.6 million). “The unemployment rate rose from 5% in 2008 pre-crisis to 10% by late 2009, then steadily declined to 7.3% by March 2013.The number of unemployed rose from approximately 7 million in 2008 pre-crisis to 15 million by 2009, then declined to 12 million by early 2013.” ( Federal Reserve attempted to help fix the economic activity by lowering interest