Compare and contrast the current U.S. financial crisis with past Research Proposal

Compare and contrast the current U.S. financial crisis with past economic crises - Research Proposal Example The last half of the twentieth century was highlighted by a series of economic crises that saw currencies devalued, credit over extended, and debt defaulted. The countries of Mexico, Brazil, Argentina, and Asia all became saddled with inflation, a low growth rate, and the inability to service their growing amounts of debt. Today, the world sits on the precipice of another growing financial crisis. The liquidity of banks is in question, currencies are in peril of devaluation, productivity is falling in some of the most highly industrialized nations, and public and private credit has reached record levels. Is the current crisis, and past crises, simply a matter of economic policies being out of step with our political goals as Kissinger contends? Or are there underlying economic issues that have been at the foundation of these crises that could have been avoided by altering the economic and monetary policy? The purpose of this paper is to trace the similarities and the differences of t he causes of these crises, as well as the national and international response to them. It will uncover the commonalities that characterize a financial collapse, the degree of political influence, and the most effective, or ineffective, response to a financial crisis. Many historians place the beginning of the Great Depression in 1929 and the stock market crash. The first half of 1929 had seen stock prices on Wall Street driven up by speculators and creating an asset bubble. After the crash, the Economist reported on November 2, 1929 that, "There is warrant for hoping that the deflation of the exaggerated balloon of American stock values will be for the good of the world" (qtd. in Bierman 2). This mirrors the effect that speculators have recently had on the real estate and oil markets, both of which have contributed to the current economic crisis.