Value of money

While growing up there was a point in time where I was doing chores and the reason for it was to learn the value of a dollar. When I got older I realized there is no set value for the dollar and much of it's value is perspective. If you grew up on the streets the value of the dollar was either underhandedly get it illegally, a way to buy things to help deal with the pain or take on an exceptionally poor appearance and beg for money. If you had a home but were in lower class you saw the dollar as a way of not ending up on the street and getting by. Middle class views the value of a dollar as a way to get stuff you want and you save up for it. Then there is the upper class that holds the value of a dollar as being able to get you anything you want and a way of replacing anything as desired. 

With all these views of the value of a dollar it is not possible to create simply one truth of it. Now the foundational principle of economics is that money only holds value because it is widely accepted and our government makes sure it is. Now in a nation where even the president feels the need to continually remind us we are in an economic crisis there is much concern about the direction of the nation. I'm a junior in college studying economics and have been gathering whatever information I can. 

I have met liberal and conservative views and seen that most economists are neither. They apply both parties applications when needed and it appears that many factors are hitting us all at once to create this economic turmoil. When looking into the value of money many people differer in opinion and some may seem less moral but ultimately they all hold truth. 

Now to begin the economics of this we need to understand this is all macroeconomics based upon a free market, capitalistic, economy. The classical model is from the 1700s and it is the most conservative view possible. It mentions that supply creates its own demand and that minimum wage, salary caps, and other government interventions raise the unemployment level and create higher inflation. they hurt the long run and if the government doesn't restrict the economy in the long run it will reach equilibrium on it's own.

The opposing view came into play in the 1930s and is known as the Keynesian  Model. This states that Demand creates its own supply and it is all about the government stepping in to fix the money supply to help stimulate the economy. This Economist was around under the great depression administration and was after the establishment of the U.S. Treasury. 

In the 1970s under the energy crisis the inflation rate and unemployment rate sky rocketed and as a result a new theory called supply side economics came into play. It was a theory of the government manipulating the money supply while believing supply creates its own demand. This theory would become known as Trickle-down economics or Reaganomics. It set a president of the neo-conservative view that has split the conservatives.

Another popular belief for our economic problem is the housing boom, in the 1920s people could buy stocks fully on a loan from a bank and it spiked the price in stocks causing the spike to come to an end and decline rapidly into the great depression. The housing market approved loans without any proof of income. This has lead to the housing spike that just hit its peek in 2007. Now the government is trying to fix the problem and the traditional conservatives that follow the classical model were concerned.

 The government has actually not fixed much and spent over 2 trillion dollars since the beginning of 2008. This will cause high inflation and a high unemployment rate. supply side is the system that had the quick fix from the 70s to the 80s but now we are following a Keynesian model which is the opposite. Will it also work? Only time can truly tell and it will be obvious in history books as everything else is.

All of these views have been proven to work at times and now our nation is viewing our crisis as something their way can easily fix because it worked in the past. These might have worked in the past but just in the last 100 years our nation has been working on new methods to fix the economy in trying to keep up with technology. Now our technology is on a new level, the housing boom ended, and we are about to see what our economy will do under our new leader.