The recession in 2008 caused a big impact on the usa which the government had to stop. A recession is when the economy is in a economic decline because people aren’t spending or investing and the stock market is crashing. In order to stop the recession 1 would spend more money by buying stocks and creatingjobs for the unemployed. My inspirations are Franklin D. Roosevelt and Adam Smith. While Roosevelt had presidency, he intervened in the economy and founded the new deal. Smith was an economist whose ideas were to have a free market for traders to be free in making monean 2008 the economy had went into a steep decline Investors found out they can make more money by buying mortgage-backed securities.
This means large investors buy individual mortgages and sell them as a bundle The banks were telling investors it was a good idea to invest in mortgage—backed securities, giving them AAA ratings. Investors knew if the buyer couldn’t pay off the mortgage they would get the house and resell it for more money. They then started giving people that had bad credit loans. Which made low-interest rates and high prices for houses made mortgagebacked securities sound like an even better idea for investors. When buyers couldn’t afford to keep paying off their mortgage, the house goes to who owns the mortgage. This created a large supply of houses, which made them less valuable, but By 2007, the investors went into bankrupt.
Also the banks were selling insurance without actually having the money which forced the banks to declaring bankruptcy leading to the stock market crashing. Banks and investors thought the outcome would be in their favor but the opposite happened, which could be called the cobra effect. Then the banks were forced to seek help from the government because the banks knew the government would bail them out, so they were willing to take more risks. Franklin D. Roosevelt also known as (FDR) was the president during the Great Depression. The Great Depression was where the stock market crashed and 14 million Americans lost their jobs and 9 million lost their life savings.
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FDR created programs to fix the economy. These programs are called the New Deal which were these programs were the Works Progress Administration (WPA) and the Social Security Act. The WPA, which was created in 1935 was the largest New Deal Agency.The WPA affected millions of Americans by providing the unemployed with jobsThe Social Security Act (SSA) was created to help elderly people who were poor and retired workers, which gave money to the poor and retired workers. FDR also created minimum wage and abolished child labor. FDR helped tens of thousands of unemployed Americans find work, He also pledged billions to help people save their farms and houses. FDR restored confidence in banks and guaranteed the savings of millions of people, Adam Smith was an economist who promoted the laissez-faire view of the economy.
His theory was, to let the people sell and buy things amongst themselves which would lead for markets to have a positive outcome, Adam believed that when the economy is in a hole, nobody can get cash unless you leave traders to be better than one another if one sells something for one price the other will lower just to get the customer. He thought the way to get the economy jumping up again was with to let people get supplied by a market when they need it which could cause that market to get a high income which will cause more money.Using the ideas of FDR and Adam will help me stop the recession of 2008. I would create jobs for the Americans who are unemployed, the same way FDR created WPA. I would leave traders to be free in doing what they must to be a high income. With my ideas along with FDR and Adams, I can stop the recession of 2008.
