Global Financial Crisis Essay Example

Global Financial Crisis Essay Example Global Financial Crisis Essay Global Financial Crisis Essay Global Financial Crisis Name: Course: Date: : Global Financial Crisis The recent global financial crisis affected the growth of major economies around the world. The United States, for example, had to grapple with a growing deficit, negative growth rates and rising unemployment levels. Recently, some great economic minds together with the IMF gathered to address the effects of the global financial crisis. They identified several crucial lessons that we can derive from the crisis and brainstormed on how to avoid such crises in the future. According to some economists who attended the conference, there were many lessons to learn from during that period on the effectiveness of economic policy. Robert Solow cited one such lesson; he said that the use of monetary policy in the regulation of financial policy had reached it limits. Monetary policy had failed and was no longer a reliable measure for fixing major financial crises. He added that the education system was not producing enough skilled workers necessary for the maintenance of a buoyant economy. Another economist, Joseph Stiglitz mentioned the inability of economic models to predict or provide solutions for the economic crisis. There is a need to review the models used in analyzing economic situations since the existing ones had failed. He also referred to the use of deficit policies. The global crisis enlightened policy makers on the importance of deficit spending in addressing financial problems. Michael Spencer, another participant, also chided the government fo r enacting policies that focused solely on inflation. During the conference, they proposed several ways and policy issues through which we can get the global economy to accelerate growth and withstand such crises. Robert Solow proposed the adoption of fiscal policy in addressing financial crises. The credit mechanism should be enforced. The financial system should be induced to extend money to investors in order to boost economic growth. He also called for a review of the education system so that it focuses on providing skilled training and the incorporation of employers’ ideas while designing the education system. Stiglitz, on the other hand, called for a replacement of the dollar system with a global currency system. This, he said, will stimulate global growth. He also called for a regulation of the banking system to limit bank sizes and eliminate policy that guarantee the rescuing of banks in crisis. Spencer called on emerging markets to enact policy that will ensure equitable income distribution across vulnerable groups. Anot her participant, Otmar Issing called on banks to desist from providing excess liquidity as this causes an inflationary pressure on the economy. Participants in the conference were able to come up with practical economic ideas that can help revive the global economy after the financial crisis. They also provided intelligent ideas on how we can create economies that can withstand the adverse effects of a global financial crisis. References International monetary Fund. (2011). IMF Videos. New Ideas For a New World . ( Retrieved from http:// imf.org/external/mmedia/view.aspx?vid