Free

History of ECON - Book Report/Review Example

Comments (0) Cite this document
Summary
The act was adopted in 2010 in response to the financial crisis that hit the globe in the preceding couple of years. On paper, the…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.6% of users find it useful
History of ECON
Read TextPreview

Extract of sample "History of ECON"

Essay, History 17 June How Dodd-Frank Act impacts wealth accumulation and distribution What is Dodd-Frank Act? This is a piece of legislation that provides the Federal government with the power to control the financial sector including the large banks. The act was adopted in 2010 in response to the financial crisis that hit the globe in the preceding couple of years. On paper, the Dodd-Frank Act aims to push for consumer protection by enforcing accountability on the banks and financial institutions’ end. It also projects to minimize the overreliance of the economy on the large banks, thereby granting the Federal government the power to easily dissolve them when need be.
How Dodd-Frank Act impacts wealth accumulation
Before the Dodd-Frank Act was passed, major banks on the Wall Street remained self-regulated in terms of borrowing and credit supply. This meant that these banks could freely borrow too much from the existing customer deposits and the general financial system. By this, they operated on too much debt that could go to unsafe levels. On the other hand, the banks would use the borrowed money to fund their crediting exploits and thus creating unrealistic profits out of the loans. As a result, the banks would accumulate too much wealth and assets. This helped them pay their employees very high salaries while also remunerating their investors in the same measure.
All this was done at the expense of the rest of the economy whose money fuelled all these activities. Banks did not seem to worry much about plunging into bad debts while engaging in these high-risk deals. This is because they were aware of their indispensable nature and the knowledge that the economy will always need them. In fact, before the Dodd-Frank Act was adopted, the government had the responsibility to bail out banks which were unable to strike a balance in their financial intermediation role. However, the Act stipulated various new guidelines which now regulates the financial freedom that these banks enjoyed earlier on. Besides, it also provided more power to the Federal government in matters of dissolving the institutions that do not comply with these new regulations.
How Dodd-Frank impacts wealth distribution
As earlier mentioned, the primary reason for the formulation of the Dodd-Frank Act was to enhance consumer protection after years of harassment under the unregulated financial market. For this cause, the law led to creation of the Consumer Financial Protection Bureau that would be tasked with the responsibility of ensuring that consumers get a fair share of the financial benefits from their relationships with the banks.
The role of the Dodd-Frank Act in reducing the growing wealth disparity among the American population centered on holding the financial sector players accountable for their actions. This would be achieved by increasing regulations and enforcing some of the policies that surround the topic of wealth disparity. This would mean that the Federal government could now take more control in reducing the overdependence on the banks. Additionally, the government would also help dissolve any financial institution that proved too big and indispensable. All these regulations were meant to ensure that taxpayers no longer needed to assist in bailing out these banks in related cases in future. The regulations also included limiting the large banks from engaging in business practices that would more often hurt the consumers, for example, risky lending. The Act also provided the consumer the power to fight corruption in the financial industry while also ensuring making it easy for them to access all the financial information they deem important.
Works Cited
Davidson, Adam. Wall Street Is Using The Power Of Dodd-Frank Against Itself. Nytimes.com. N.p., 2015. Web. 17 June 2015. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“History of ECON Book Report/Review Example | Topics and Well Written Essays - 500 words - 1”, n.d.)
History of ECON Book Report/Review Example | Topics and Well Written Essays - 500 words - 1. Retrieved from https://studentshare.org/macro-microeconomics/1698483-history-of-econ
(History of ECON Book Report/Review Example | Topics and Well Written Essays - 500 Words - 1)
History of ECON Book Report/Review Example | Topics and Well Written Essays - 500 Words - 1. https://studentshare.org/macro-microeconomics/1698483-history-of-econ.
“History of ECON Book Report/Review Example | Topics and Well Written Essays - 500 Words - 1”, n.d. https://studentshare.org/macro-microeconomics/1698483-history-of-econ.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF History of ECON

Econ

...?Your Full Your Prof IMF: Past and Present In the 1930s, with the world economies facing acute difficulties, most countries tried to counter it by devaluing their currencies in order to boost their exports. However, as this move was followed by most countries, it did little to arrest the sharp drop in world trade accompanied by rising unemployment rates and lowering standards of living in most countries. This breakdown of the international trade and monetary system led to the creation of the IMF with the purpose to stabilize the exchange rates of currencies and to encourage members to increase international trade by making a pool of funds available to member countries experiencing balance of payments difficulties. The IMF... Full Your Prof...
1 Pages(250 words)Essay

Econ

...? “The government’s fiscal policy is its plan for spending and taxation, it is designed to steer aggregate demand in some desired direction” (Baumol and Blinder 600). The fiscal and monetary policy is important because it determines the amount of intervention or lack thereof by the government in stimulating the economy. The ‘invisible hand’ as proposed by the great economist Adam Smith and to whom the classical view is attributed to, suggests that the economy is able to repair itself without a need for a change in policies such as government spending or including tax reductions. Economic problems and such as recession naturally happen subject to correction by the economy itself. Keynes, on the other hand, argued for a more... “The...
1 Pages(250 words)Essay

Econ

...? Discretionary fiscal policy is one of the tools that the government can use in helping the economy recover from recession. In fact, discretionary fiscal policy is so important that some even suggest for it to have an automatic trigger, where it can combat circumstances that can make it ineffective, such as time lag. The purpose of this paper is to explain the advantages and disadvantages of having an automatic trigger for discretionary fiscal policy. Specifically, this paper seeks to look at how fiscal policy will affect the economy when there is an IS or MP shock. Perhaps, one of the benefits of having this new policy is that it can help the economy to maintain the level of output in the presence of an IS or MP shock without... Discretionar...
5 Pages(1250 words)Essay

Econ

... the burger example and assumption of $4 as the equilibrium price, suppliers would be willing to supply 20 burgers at that level. Raise the price to $5 and they would say that they would even want to supply 30 or more because of the profit prospect. If prices decline to $2, then they might only want to sell five or less or even nothing at all because at that level they will not be able to cover their expenses in making and selling their burgers. Works Cited "Reviews of the Laws of Supply and Demand." Curriculum Link Organization. N. d. 03 December 2008 econ/materials/sdlaws.html>... 04 December 2008 Using Economics in Everyday Decision Making At first, economics appears to be useful only in complicated situations in the market. For instance, I have always related...
3 Pages(750 words)Essay

Econ

... Federal Reserve and the Financial Crisis Question Financial panics were a big problem during the gold standard, causing many banks to close down. For example, there was a severe financial panic of 1893, which saw more than 500 banks failing across the country (FRFC, 18). Therefore, the gold standard was associated with financial instability, which in turn caused great frustrations to the banks. Since a gold standard requires that the value of currency be fixed in terms of gold, for example an ounce of gold being worth $20 and 60 cents, then gold had to be sort and brought to the central bank so that it could be valued relative to money. Additionally, with a gold standard, the central bank could not apply monetary policy in order... Federal...
3 Pages(750 words)Assignment

ECON

...PART I Question If France produces cars and camcorders only using specialized resources, which means some resources are more suitable in producing cars while others are more suitable for producing camcorders, then, considering the two graphs based on the initial description of specialized resources, graph 2, which is concave in shape best represents the trade-off France faces between producing cars and carmcorders. The concave shape of Graph 2 therefore, indicates that as France produces more cars and fewer camcorders, the opportunity cost of producing each additional car increases. Question 2 John and Akila illustrated that opportunity is value foregone for producing one product instead of the other (507). Opprotunity Cost... I Question ...
2 Pages(500 words)Essay

ECON 5110 HISTORY OF ECONOMIC THOUGHT

... Assignment is due History of Economic Thought A) Marshall’s attention was mainly directed towards microeconomic problems but aggregative theme had a place in his thought. He perceived the major economic question as determination of general price level. He developed a general price level developed around a version of “quantity theory” of money (Barber 186). Marshall modified the existing procedure on this theory by shifting focus from rate of money turnover to an examination of money balances the community held. Marshalls cash balance approach was later to open up a fresh analytical horizon from one of his pupils (Barber 186). He maintained that the amount of money held was determined by institutional arrangements of the economy... as...
1 Pages(250 words)Essay

Econ

... Due Cowen and Tabarrok: The Invisible Hand Cowen and Tabarrok said that,“See the invisible hand, understand your world.” This tagline applies to the modern approach in economics. This tagline meant that economics is a scientific type of misery which is deep, inspiring, fundamental similar to that of the universe which is rapidly expanding or those forces that tend to bind the matter. This statement tries to explain the manner in which order can result from the freedom of choice. This involves the Solow Model, ideas in economics, real exact business cycles and the Keynesian approach in economics.This approach assumes that when businesses fluctuate, then this is a clear interpretation of the fluctuation in the output’s growth rate...
12 Pages(3000 words)Essay

History of ECON 2

... History of Econ 2 Theories of value The need to understand value resulting from commodity production and market prices requires a deep exploration on the perception held by the two theories of value: labor theory of value and utility theory of value. In which case, each has differing explanations for the price system in the market. This essay provides a critical review of the two concepts, by first explaining the difference existing between the theories; then using this as rationality for verifying economist classification of objective and subjective theory. Labor theory of value states that by determining the total amount of socially obligatory labour needed to produce a good an individual can ascertain the economic value... the value...
2 Pages(500 words)Book Report/Review

History of ECON 4

... Karl Max meaning of social form of wealth According to Karl Max, when wealth grows poverty also grows. Karl Max understood why individuals were living in poverty yet there was an abundance of wealth in the same society (Heilbroner, 164). Karl Max argued that capitalism was the main reason there were wealthy and poor individuals at the same time. He argues that capitalism involves organizing an economy such that private individuals and not the government own the productions and distribution means. Max believes that in a capitalist economy the social form of wealth is directly related to the economic activities of the society. Social wealth comes from the production of economic goods in a capitalist economy (Heilbroner, 168... Karl Max...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Book Report/Review on topic History of ECON for FREE!

Contact Us