Economy, Banks, and Goverment

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Tania Ibarra September 10th 2013 Phil 305 Over the past years, banks have played a major role in the economy. A role big enough that made Americans feel an obligation to own a home. The American dream of home ownership has been greatly affected over the past years because of the financial crisis in regards to the housing market. In 2009, President Obama reopened the issue about the crisis in the housing market aiming specifically for companies that took advantage of the financial crisis. Those companies, better known as Fannie Mae and Freddie Mac made huge profits because it was easy enough for them to risk bets by buying mortgages. When people bought houses they could not afford, banks took those individuals’ situation and gave…show more content…
This goes to show that the economy in the US is not a free market no matter how it is defined. The Federal Reserve makes it easy for banks to borrow money from them at a low discount rate leading banks to borrow quite often. The Federal Reserve knows that if the discount rates were to go up or be high banks would not borrow and therefore the economy would not grow because people would not be able to get their money from the bank. There has been a huge shift in where the money is. The economy shifted from manufacturing to finance. Finance does not create wealth for everyone. It only creates wealth for those who are already in that section. Meaning for the high class who are involved in that section. Money is not being spread around. Off course if the bank were to keep money, it would not get invested and would not help the economy. The US is slowly shutting down economically because of the decrease in the standard of living, job markets no longer having the best quality and start to lag, and money is not being used. If the government is to be involved in the marketplace, it should no longer have the ability to control what individuals do with their money. The government’s involvement with the market place should be kept to a minimal because it focuses on one part of the economy rather than the economy as a whole, starting from mortgages and ending with living standards. Meaning it focuses on the wealthy and not the
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