Does Freedom Have a Price Chinese versus U.S.A - Research Paper Example

Compared to other nations, American families in contrast are able to afford more products in a grand scale than most countries around the globe. However taking a flashback towards the rise of capitalism, one cannot refute the fact that the upper class in the 1900’s controlled the surplus of the products. In essence, the rich controlled the resources and used the working force of the upper and lower class. However, the upper class continued to reap the profits and used them for future investment.

The whole essence of that was to improve the process of production that can not only facilitate the work force but also enabled them to reach a higher a level of efficiency. Stock prices have dropped sharply and both the NASDAQ and Dow-Jones have suffered. Scholars have insisted that the NASDAQ has lost more than 63 percent of its value since March 2000. In addition, individuals have lost about $5 trillion in the value of stocks traded on major U.S. exchanges. More than 400,000 workers have been laid off, which has drastically been detrimental to the economy.

The current recession that occurred internationally has forced the American economy to hinder. When the economic collapsed occurred, majority of the banks failed to accumulated the loans they were obligated to receive from the customers. In midst of this chaos, the banks failed to make any revenue and tightened the parameters in which loans can be lender. However, the mid and small size businesses in this recessive environment have no build up capital to initiate their venture. Thus, this poses a problem for a capitalistic economy that is so driven by regional economies.

Since capitalism is so driven by the purchasing power of consumers, it is crippled when spending diminishes. The domino effect not only occurs at macro but also in a micro level. Since the recession, the US market has been under heavy scrutiny with the SEC and other commissions. The US public debt that is borrowed by the government at through the Treasury consists of two essential components. The first component is the debt held by public companies and the other debt is held by intragovernment agencies which consist of Treasury securities.

Throughout history, the public debt has continued to increase as government spending as surpassed its deficits by the amount of $500 billion. The United States needs to borrow nearly $10 trillion over the next decade, including about $1.6 trillion in this current year. The question remains- will China still give the United States this money? Currently, the foreign ownership in the market is possessed by China. The largest single holder of US government debt is held by China as it holds almost 36% of all stocks.

Throughout history, China has been extremely weary of foreign control as it has dramatically been exploited from other nations. Comprehensive research indicates that China’s economy has been spurted out of ashes and is one of the most developed nations that challenges the GDP production of America. Production and innovation has been a key component for China as it imports majority of its goods. In addition, products in China are cheap and durable, which can pose a risk for other organizations.

Undoubtedly, China wants to gain leverage not only in the political sphere but also in the economic sphere. Gaining leverage will be highly beneficial for China as it can inject its products in the