Ramifications of 9-11

The attacks of September the 11^th 2001 have ramifications that are only now just being felt by the world. In the days following the attacks the world economy was faced with a daunting task. How to ensure that markets all across the world remain open and that the investors remained confident in the markets. In the United States of America the response was quick and efficient. The Federal Reserve announced shortly after the attacks that, “it stood ready to furnish any financial institution in short-term difficulties with enough cash at hand to carry on trading.” The reserves actions lead to the distribution of billions of dollars to companies and organizations, thus ensuring that the economy kept running. When the US markets opened six days after the attacks the Federal Reserve continued its proactive stance slashing interest rates on money loaned. These actions and those of the Bush administration and their international counterparts saved the world from a market collapse in the days following the attacks.

Now five days from the five-year marker, the United States of America is on once again on a perilous road towards economic hardship. The United States of America while being perhaps one of the strongest economic powers is facing a serious crisis. As a result of the structure of our economy and the war on terror the United States of America is facing two increasing large deficits. The first deficit is a result of our economy’s structure with nearly a 700 billion dollars being spent on the import of goods and services. This trade deficit is what some economist believe will lead to a sharp and sever drop in the value of the US dollar in the world economy. The second deficit facing America is that in the realm of leased money, the US Government currently poses a large amount of debt or cash it owes to another party. According to the LA Times writer Richard Simon, “The Congressional Budget Office revised its estimates of the federal deficit Thursday, predicting that it would shrink to $260 billion in the current fiscal year — lower than previously projected — but rise to $286 billion in the 2007 fiscal year, which starts Oct. 1.” According to the CIA World Factbook the current population is “298,444,215 (July 2006 est.)”. This means that in order to play the debt off every citizen would have to pay nearly 1000 dollars if the government ordered the debt paid. In the coming years with increasing expenditures in defense and security the debit is sure to only soar.

Should Americans worry about the prospects of the collapse of the dollars value? Do we as a nation need to plan to restructure the economy of America so the trade deficit is more balanced? Is the mounting debt something that we should fear in the coming years? Is the world once again faced with problems that provide no clear solution?