Wave theory describes the cycle of events that the economy will go through during the stages of recession and depression.Based off this theory the U.S could be on a collision course with reaching a Depression . The current wave that we are in is only the first step to the global meltdown of the economy. With everyone sheltered in place right now the economy is crashing extremely fast due to the sudden stop. The bailout plan that was proposed may help ,but skeptics claim that it will be too little too late because the companies looking for the bailout will be closing in weeks and the plan won't see them receive money for months. If we continue on this spiral the economy is looking to get a lot worse than what it was at before. This could lead to a massive amount of jobs being lost which could be a very frightening sight because before the epidemic the employment rate was near 3% and now has been speeding up ever faster with more and more people losing their jobs. The FED chairman also says that “unemployment could reach 30 percent, and GDP could drop by 50 percent” which would massively hurt the economy. If people were worried about China overtaking the US economy in the next 10 years that thought is long gone because at that level of decline they could overtake us this year if not a little later. This has also been compared to the 2008 recession and the problem with that recession was a lack of spending. There are major differences between the 2008 and current bailout plan, the most striking one is the philosophy of the spending for this issue because in 2008 the goal was to get Americans back to work as quickly as possible to stop the decline ,but that is impossible with the pandemic and instead it proposes a duck and cover strategy to just weather out the storm and hope we come out on top. If we wait too long though the economy will never be the same as it was. The U.S government needs to stop this spiral before it cripples the economy for years to come and sends us into a major depression.
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Should the 16th Amendment be Repealed?
To decide whether or not the 16th amendment should be repealed one must first look at the history of taxation within this country and see what the amendment truly means. The amendment states “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration”. This means for now the congress can tax individuals incomes through direct taxes versus indirect taxes such as sales tax on goods and services. To determine whether or not the 16th amendment is still needed there are three categories for it to be based on and those are the social, economic, and philosophical ideals with this amendment. The social aspect of the 16th amendment revolves around the mass impact it has had on the society as a whole and what would happen to the society which takes it away. My beliefs are that since the amendment is so deeply ingrained in society it would be catastrophic to remove it. The whole society likes to work off the idea of the income tax and this influences how Americans act such as they can spend more after they get their tax returns and other things such as that. The social impact of the income tax is quite inumerable because wages would then also have to be drastically changed in order to match the lack of an income tax. Economically it would be drastically detrimental to the economy of the US. A lot of government spending is paid for by the income tax so it is needed to keep the government afloat. Other programs such as social security are reliant on the direct taxes from people in order for them to function. For example Social Security needs funds from the direct taxes placed in order for it to function and without the 16th amendment those funds would not be able to be gathered. The GDP would also tank as it coincides with the government spending because of the lack of available funds. The argument surrounding that only forty-five percent of the people in this country pay the income tax should not be the determining factor towards getting rid of the amendment. The other larger margin of people who do not pay the tax are for reasons that they cannot afford to pay it since they do not make enough money. This statistic also takes away from the people that get tax exemptions through other means such as charitable deductibles and other things. The philosophical argument is against the 16th amendment because it takes away from the people’s income. They no longer are working for themselves and to provide for their own families. Instead they are working for the government which means their time is no longer theirs ,but it is instead it belongs to the government. This makes the same philosophical grounds that the labor which they are doing is slave labor because part of their time they are working without pay and not for themselves ,but for the government. The other philosophical argument for the income tax is that it is a necessity to keep people in line. People will spend their money on other occasions if they do not have to pay their income tax and those purchases could be detrimental because they might purchase unnecessary things which could hurt their own life or their family. The grounds for the 16th amendment are necessary for maintaining the government, economy, and society. The initial question to start with this topic is to discuss what "pegging" is. Pegging is when a nation artificially fixes the exchange rate of its currency to another and does not allow it to change or "float". Numerous countries participate in pegging in order to promote their less stable economies by hitching on to more sound footing in order to maintain stability. 10 years ago China pegged its Yuan after the 2008 financial crisis out of fear and kept it at the same rate until 2010 which artificially strengthened it against the U.S dollar. Now in the depth of the Corona epidemic it appears China is attempting to renew their pegging ways. The People's Bank of China reported that it will be keeping the exchange rate around seven Yuan to every one U.S dollar after seeing it spike at the beginning of the crisis. What this does to the U.S economy is it gives China a lifeline during these times of hardship. Rather than using this time to strengthen the U.S dollar against the Yuan this pegging strategy has caused the Yuan to artificially gain value against the dollar which will allow them to compete with U.S trading at a much higher level. If the Yuan is pegged at a rate lower than which the market would naturally flow to then China will be able to purchase U.S goods at a better rate than normal and the U.S will have to pay more to get the same amount of Chinese goods. This pegging system hurt the Chinese economy in the long run after they tried it in 2008 after it was discovered they took on massive debts in order to peg the Yuan ,but Beijing could use this trick to stabilize their currency and gain an upper hand then unpeg before they take on the same level of debts. Overall this situation is allowing China to gain an advantage over the U.S currency system during this time of crisis and does not allow the U.S to retaliate. -Sammy Epstein |
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