Once President Obama took office in 2009, we were faced with the Great Recession. The burst of the housing and banking bubbles decimated the American and global economies. It was the worst economic period in American history since the Great Depression, but are we again on the verge of another economic crisis?
The main point of interest pushing the economy to this point is the Federal Reserve. For many years now, the Fed has kept interest rates down to avoid a possible recession or any economic setback. The fact of the matter is though, by keeping interest rates down, you are only kicking the can down the road. This metaphorical can, can only get kicked so far down the road until problems arise. These low rates have not only pushed the problem aside but masked the real problems facing our economy because of the only dropping interest rates.
To avoid a crisis like in 2008, or an even worse scenario of the 1930s, the Federal Reserve thankfully ripped the band aide off and raised the rates. Although the raising of rates could possibly lead to a state somewhat economic fallout, it would lessen the eventual inevitability of postponing rate hikes.
Now with the rates being hiked, the American economy and financial center can finally deal with stagnant and dropping GDP, Labor Force Productivity, and Labor force participation rates. For the past ten years the same failed economic policies have taken place both by Presidents Bush and Obama, especially those compromising America’s capitalist values- such as economic bailouts. Both presidents relied on phony recoveries that were created by the Federal Reserve. Unlike Bush’s bubble that popped during his presidency, Barack Obama’s bubble unless fixed by cutting reckless spending and inflation could end up popping during Donald Trump’s presidency.
In saying that, if the Fed does not continue to hike rates, the bubble created by Pres. Obama will only grow creating more financial issues down the road. While the stock market is in its current state surging after the election of Donald Trump, it is a perfect time to continue the rate hikes. Although creating some inevitable economic problems, it will allow the new Congress and the 45th President to curb this crisis before it takes a bigger hold on not only American but global markets.
The views expressed in the above article do not necessarily reflect that of Hypeline News or Turning Point USA.
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