Coronavirus Recession Essay Sample

Recent events have shed light on the Federal Reserve and how they have approached and dealt with hard economic situations. This has been an ongoing challenge even before the government founded the Federal Reserve back in 1913. There has even been evidence leading all the way back to the late eighteenth century indicating multiple economic issues surrounding ideas we still struggle with today. Even in today's mixed economy people debate whether the Federal government went about these matters in a way that benefited the economy in the quickest most effective way possible. However, I personally believe that the Federal Government did do the right thing on some occasions by using protection programs and even creating Acts to save the economy from terrible recessions such as the Copper Panic of 1789 and The Great Depression. However, I do also believe the Federal Reserve did a worse job at keeping stimulus at a stable rate such as in the recent event of the Great Recession or even the Coronavirus recession.

To begin, the Coinage Act as a result of the Copper Panic of 1789 was the right choice to battle stagflation. During the late 1700's America was just getting on its feet and developing the first sense of a real government, the Founding Fathers. In spite of this great time, with no real economic guidance people quickly started creating counterfeit money which led to a loss of confidence in the country's newly found currency. To withstand this economic hardship the Founding Fathers put one major Act into play, the Coinage Act. This was the official transition into America's first, non-bimetallism, national currency. This financial condition differs vastly from what people are experiencing in present times. In today's world, the Federal Reserve has had time to expand their knowledge through the centuries on how a balanced, mixed economy should be run and therefore have more options on how to go about the Coronavirus recession. Back in the late seventeenth century, the Founding Fathers didn't have time to adapt and invent the well known economic systems and stimulus checks we all know and love deeply today. Unlike the Coronavirus recession I believe the Coinage Act was a good call on the part of the Founding Fathers because it helped increase Gross Domestic Product per capita which overall benefited the economy's growth. According to the National Bureau of Economic Research published by the University of Chicago in 1992, statistics have shown that Gross Domestic Product has indeed increased following the years of the Coinage Act. 

This specific economic policy did a quality job of increasing Gross Domestic Product at a slowly increasing rate to return the economy to stable levels again. If Gross Domestic Product increased too quickly, the economy would have had a high chance of hyperinflation which could lead to yet another recession. The choice of the Coinage act not only got rid of the counterfeit problem, but it gave the government more control over the money supply in the future years to come. If the government had continued using bimetallism or even the gold standard, they would have less control over putting more or less money into the economy and therefore we would not be able to use that to our advantage in today's recession. We as an economy would not want something like the gold standard to return because it was much harder to mine for these items in the United States back in the seventeenth century and was not very reliable. All in all, I do thoroughly agree how the newly-formed government went about this situation. The Coinage Act not only solved the lack of confidence found in consumers, but it was the start of the currency that everyone knows and loves today.

Additionally, the well-known Great Depression also had well-thought-out policies to help overthrow the reoccurring bank runs that flooded the country for those hard four years. The main policy that made the biggest difference was the ¨New Deal¨ by newly elected president, Franklin D. Roosevelt. This was the creation of a series of agencies and projects to help offset the financial damage, specifically the unemployment. This plan also promoted economic growth in the form of the growing size of the workforce. Roosevelt came up with hundreds of projects that the federal government fully paid for to get more people employed during the recession. I think this plan was a great idea on Roosevelts part because it focused more on the unemployment aspect of the recession instead of throwing out stimulus money like in the recent day Coronavirus recession. This situation is actually quite similar to the Coronavirus recession due to both recessions having extremely high unemployment. I also appreciated how the Federal government started new regulations such as The Securities Act of 1933 to make sure specific parts like the stock market crash of 1929 would not happen again. This includes a massive increase in federal insurances that better the lives of American citizens if a panic was to occur. In 2009, Christina Romers data showed that unemployment reached over twenty percent during the time of the Great Depression.

In addition, the amount of employment growth that occurred during the late 1930s is tremendous and ties directly with the New Deal which lasted until 1939. This proves that the series of employment plans helped greatly influence consumer behavior and not only get businesses up and running but increase demand for goods as well. Overall, the use of federal employment programs had a drastic positive effect on the unemployment rate and played a major role in recovery of the economy during the 1930s. 

Lastly, the Great Recession of 2008 use of stimulus checks shares major similarities with the Coronavirus recession in my opinion. The Great Recession started as the collapse of the housing market which then led to an almost three-year-long recession. In both scenarios, the Federal government has decided to fall into the hands of stimulus and relief packages. We have seen this in the past benefit the economy by increasing capital especially in investments such as loans and grants. I do not agree with this approach because it has led the economy into an overwhelming amount of inflation ever since the housing crisis. Yes, all in all stimulus acts during 2008 did benefit the economies capital in the short run, but do the benefits really run into the long run? Similarly to the Coronavirus recession, the Federal Reserve had turned to increasing the monetary supply to so call help the economy. On the report of the US Inflation Rates they explain, ¨The annual inflation rate for the United States is 7.0% for the 12 months ended December 2021 — the highest since June 1982..¨ (Coinnews Media Group). The average inflation rate is around two percent, for it to have more than tripled not only reflects how bad of a recession we are and have been currently experiencing but also how much of a deeper hole we are getting ourselves into. In the future I definitely foresee hyperinflation turning into a bigger economic issue. Generally speaking, I feel that the Great Recession and the Coronavirus recession are very comparable in the fact that they both focus on a Keynesian way of thinking to get the mixed economy out of economic hardships. 

In summary, I believe that the Coronavirus recession closely correlates to recessions we as a country have experienced in the past centuries. The use of legislating Acts and specific programs helps better the economy at a steady rate and prevents history from repeating itself. However, as previously stated, I believe that Keynesian thinking is not beneficial for the long-term economy in our nation; we should focus on other strategies to not only save the economy but the country as a whole.