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How can countries with failed economies quickly recover?

  1. Craan profile image69
    Craanposted 5 years ago

    How can countries with failed economies quickly recover?

  2. LandmarkWealth profile image81
    LandmarkWealthposted 5 years ago

    Your question is a complicated answer with many views among economist.  I am somewhere between the Monaterist and the Austrian School view.   As such the best way to let an economy recover is to allow the business cycle to take place with limited intervention.  Economic contractions are inevitable in any free market.  Unfortunately we have too often used contractions as an exuse for the political class to sieze control of entire industries, create massive market dislocations and distort prices.  All in the name of saving society, while all they really do is wreak economic havoc.  The larger the intervention the slower and less vibrant the recoveries are.
    In order to have a "quick" recovery, I believe we have to have a "quick" decline.  Often this means a more severe contraction over a shorter time frame to work off economic excess.   However, over the last century in the US the policy has been very intervention based both from fiscal and monetary policy.  And the recoveries are often less vibrant depending on the size of the intervention.    Unfortunately it is not optically positive for a political leader to tell the public that sometimes they shouldn't do anything.  So they often do too much and cause more damage and prolong economic contractions or slow the recovery.

    Peter Schiff recently wrote a great article on the actions of the Federal Reserve.  He is just about spot on...http://capitalismmagazine.com/2012/12/no-way-out/

    1. Craan profile image69
      Craanposted 5 years agoin reply to this

      This is how I felt when the US economy plummeted in 2008! We should have let nature take its course! Our government shouldn't have further devalued the $ by fueling the economy with more of it to patch things. We'll need a new money system soon!

    2. LandmarkWealth profile image81
      LandmarkWealthposted 5 years agoin reply to this

      i don't know that we'll be changing currencies anytime soon.  But i am fairly confident the Fed will continue to devalue along with other central banks to pass on the hidden tax increase to the poor through inflation, since there aren't enough rich.

  3. Wesman Todd Shaw profile image96
    Wesman Todd Shawposted 5 years ago

    Simple.  They can dump the international Rothschild/Rockefeller banks stealing the production and wealth of their country, and produce a government FOR the people, enabling it to print debt free currency backed by something of actual value.

  4. CHRIS57 profile image60
    CHRIS57posted 5 years ago

    They can´t. Simple as it is.
    Most economies that are in real trouble didn´t get there over night. But all failures have a background. In the case of the US, this is continuous overestimation of own abilities due to its sheer size. When economic problems started in the 70ties, almost half of world GDP was American made.
    But at that time the US economy was already sick. The cancer of loosing the competitive edge already started to grow, only very few people noticed because the patient, the US economy looked too big and too healthy. One victorious war (cold war) and a couple of desolate wars later, a dot.com and a housing bubble later the relative size of the US economy has shrunk to less than 25% of world GDP. But what is worse, by now the American patient is no more able to feed himself.  The patient is in sick bay and even to keep the bed he lying on from falling apart, the friendly world nurse is bringing in own supplies to keep well admired and formerly proud and healthy patient alive. All the patient can do is hand out some fake money (bonds) to the friendly world nurse. While the world nurse is building her own new and successful economy, the sick patient US can´t even contribute and participate in this success story. The patient produces too little of what the successful nurse needs. Patient US can´t keep the own bed in sick bay in order, how can patient US provide new beds for the nurses economies?
    Sad story, i hope you could follow. There are two ways to recover, to cut out the cancer of loss of competitive edge: Devalue the own currency through inflation, by printing money out of thin air (the American way) or reduce the size of the economy so it harmonizes with productivity (internal devaluation, the Greek way). Neither way holds quick recovery, but the latter, the Greek way is more honest, even though more painful.

  5. conradofontanilla profile image82
    conradofontanillaposted 5 years ago

    I have a Hub on extra oxygen policy for development. It is as follows, in broad outline: Make a loan on your own country by making an entry in the book of accounts. This can be done because we are in the floating rate system, not in the gold standard that required a gold deposit for every entry in the books. Then put up a counterpart (from income or current budget). Finally, make it a point to repay the loan. This loan plus interest are actually an expansion in the economy.
    There should be a political will because the IMF will come after you. The IMF wants that you apply a loan from the World Bank  that programs where the loan will be spent. Of course, you will pay interest to the World Bank that is actually a drain in your economy. There are several cases of countries that got a loan from the World Bank had their economies turned worse.