Secular Stagnation And The 2008 Financial Crisis

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Introduction: The collapse of the financial market in the United States created an accelerated momentum that pushed the global economy towards a detrimental downward spiral during 2008. In response to the crisis, the world’s top economies created the G20 leaders’ forum in order to manage the financial downturn. Although the crisis was somewhat managed by the G20, the Great Recession left the world with a weak and stagnate global economy. The rise of secular stagnation was a viable threat following the Great Recession that entrench the whole world and is still a pressing issue today. Secular stagnation is defined by low economic growth and high unemployment rate. In this paper I will discuss the origin of the 2008 financial crisis and the G20 efforts in order to establish foundation to face the rise of secular stagnation. Following the brief history of today’s urgent problem, I will further discuss secular stagnation and argue that in order to solve the high unemployment caused by secular stagnation fiscal policies must be applied as well as a pursue to an improvement in educational system must be made.
2008 Financial Crisis and the G20 The financial crisis began in 2006 when the US housing marking began to decline due to irresponsible mortgage lending in subprime areas. Many borrowers were unable to pay back these loans, thus increasing the toxic debt held by many banks. In addition, Fogarty and Park state that there was an imbalance between countries with excessive

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