How to fix America Essay Example | Topics and Well Written Essays - 500 words

How to fix America - Essay Example This financial crisis and the recessionary time period have struck the United States and the rest of the world because of reduction in the investors’ confidence level. This reduction in investors’ confidence is primarily because of the Federal Reserve’s supporting behavior towards large institutional banks and brokerage houses. The Federal Reserve has allowed such large institutional banks and brokerage houses to perform normally when these institutions carried liabilities worth an estimated 10% of the entire annual economic output (GDP) of the nation. The FED has kept a discriminatory approach towards the other private sector organization, which go into receivership if they are found to have such liquidity issues. This approach of the FED lets the large institutional banks and brokerage houses to perform normally can lead the economy to shatter if any of these institutions are allowed to unwind. The major example is the Lehman Brothers bankruptcy issue. Such act ions of the FED have led to a reduction in the confidence level of investors. The approach that can be followed to address such issue is to cut down and reduce the size of each bank. This reduction in the size of each individual bank would reduce the impact on the entire system if any of these banks fail. This way each and every institution would be accountable for the amount of risk that it takes up. This way the lending policies would become more risk averse and cautious. Each and every bank would work upon their revenue and economic growth through a proper and reasonable interest rate. The other issue arises with the transparency of the FED. The FED should be fair and just in all its decisions and the excess printing of the dollar bill as compared to the inadequate backing of gold needs to be fixed. This would increase and restore the confidence in the value of each Dollar in circulation. This can be