Running Head: The Coming Collapse of the U.S.

Economy 1

The Coming Collapse of the U.S. Economy

MLDR 536 – Research Design/Social Lab
Bryce Wylie
Point Park University
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Abstract
The economic conditions of a nation reveal whether or not a nation is prospering or
financially distraught. The U.S. Economy in the past, was a model for other nations of the free
world to emulate. Established trade, strong investments, and other vibrant conditions stimulated
the American economy for over 270 years. However, in 1929, the Great Depression marked a
turning point for the U.S. economy where millions of citizens were affected by the sudden
downfall of the American dollar—resulting in mass unemployment, loss of investments and life
savings, and America losing its standing in the global market. Since then, the U.S. Economy has
bounced back through several decades, including World War 2 and Vietnam Era. Another
turning point in the U.S. Economy is the 2008 Micro-depression or Great Recession, which was
claimed to be more severe than the Great Depression. Several reasons will be examined as to
what caused the U.S. economy to lapse rapidly since 2008, which continues to be in a downward
spiral void of any hope of restoration, stimulating an argument about what led to America’s
current economic demise and the future of the U.S. economy.
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Table of Contents
Chapter I: Introduction
Abstract i
List of Figures ii
Table of Contents P. 3
Problem Statement P. 5
Background to the Problem P. 5
Purpose of the Study P. 5
Significance of the Study & Significance of Study to Leadership P. 6
Nature of the Study P. 7
Current Issues & Challenges P. 7
Research Query P. 7
Theoretical Framework P. 8
Definitions P. 8
Assumptions P. 9
Scope & Limitation of the Study P. 9
Summary P. 10
Chapter II: Literature Review
The Great Depression P. 10
Economy during World War II P. 12
Vietnam Era (1960s) P. 14
Economy of the 1980s (“Reaganomics”) P. 15
2008 Micro-Depression & Beyond P. 16
Chapter III: Needs / Gap Analysis
Background: Detail, Current Issues, Concerns, Perceived Needs P. 17
Organizational Governance P. 17
External SWOT P. 18
Internal SWOT P. 18
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Need/Gap Analysis P. 18
Analysis of Strategic Factors: Advantages, Disadvantages, Model Case(s) P. 19
Strategic Alternatives P. 20
Recommended Strategy P. 21
Conclusion P. 21
References
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List of Tables
U.S. Bureau of Labor Statistics (2016)
Figure 1. Growth in gross domestic product, 10-year compound average annual rate
1964-2014 and projected 2014-24 6
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Problem Statement
The U.S. Economy has been a problem not since 2008 when a micro-depression
occurred, but since 1929 when the Great Depression occurred. Here is why the U.S. Economy is
in trouble of collapse again:
 We find between these two milestones (1929 & 2008), procrastination of economic
stabilization through the war machine (World War 2, Vietnam Era, etc.), and devaluation
of the U.S. Dollar in foreign markets
Background to the Problem
Government debt is a major contributing factor to the rising deficit. For example, the U.S.
Government owes China $1.238 trillion and $6.183 trillion total to other countries (Amadeo,
2016). This debt represents one-third of the U.S. deficit, which is closely approaching $20
trillion. Why does the U.S. Government owe China and foreign nations so much? This, I believe,
is the key to understanding the U.S. economy’s downward spiral and the problem that initiated
this degraded state is: debt.
Purpose of the Study
The purpose of this case study is to enlighten the audience to understanding the
intricacies of the U.S. Economy and to inquire about ways or systems to restore the economy to
divert a total collapse. This study also examines various periods of American history to
determine whether or not the U.S. economy has always had major problems which were
ignored—which may lead up to a collapse due to high deficit ($20+ Trillion, as of 2016).
Significance of the Study & Significance of Study to Leadership
Understanding the intricacies of the U.S. economy and the machine of economics, should
be a significant role of every American. This study is significant because it not only does it
explain basic economics for inquisitive U.S. citizen, but it also reveals some of the aspects
of the U.S. economy regarding debt, deficits, etc., which affects every American—whether they
realize or acknowledge this fact or not.
The economy, of any nation for that matter, is what keeps the infrastructure churning
and operating. I will compare the economy with the human body as an analogy and for the
purposes of argument. Like a human body, should the economy become “sick” or “ill”, the
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nation will feel the “symptoms” and the economy will become sluggish and despondent. If
the economy heals, as the human body does, functions become restored and the economy
becomes fully operable. If the economy does not restore and plunges even deeper, it will “die”
as a human body would die if the sickness or ailment is not cured. To date, there is no cure
for the U.S. economy.
Ultimately, it is the U.S. government’s responsibility to initiate and implement reforms to
alleviate any debt ceiling, which would naturally occur in an economy. Military defense
spending, taxes, unemployment/social security benefits, etc., all contribute to the debt ceiling
because these deduct and extract funding percentages from the GDP, which irritates and
fans the flames of the deficit.
Nature of the Study
To study and have a thorough and working knowledge of the U.S. economy and some
positive and negative outlooks regarding the U.S. Economy. The nature of this study is based on
facts—not opinions, to help the audience understand why the U.S. economy is headed towards a
downfall should we, as a nation and government, not confront the root issue of the economy’s
degradation.
Current Issues & Challenges
Currently, the U.S. government does not have a strategic plan to curtail the mountainous
debt and national deficit. Some challenges to the failed economic plan are overlooks in spending;
healthcare is a priority versus military spending (to protect America from enemies foreign and
domestic), etc. Bottom line there is no plan or no attempts to stop the rising deficit.
Challenges involving this dilemma are concentrated more along the lines of monetary
and budgetary concerns. In short, the U.S. does not have a “pot to piss in” in regards to a bailout
scenario similar to what occurred in Greece, where the EU bailed out the Greek government and
assisted in the re-stimulation of Greece’s economy. Other challenges include a weak trade
agreement with China, which contributes limited economic growth to the U.S. economy and
the current economic condition.
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Research Question
How can the U.S. economy be diverted from a collapse with an exceedingly high Gross
Domestic Product (GDP) or Deficit of $20+ Trillion? Consequently, the reason for this case
study is to enlighten others to the high probability (possibility) of an economic collapse in the
United States.
Theoretical Framework
The framework would be a simple formula: the United States needs more demand from
our products—but the U.S. NEEDS, in effect, more products to supply the international market
to offset the deficit and to start chipping away at the massive (accumulating) debt. Supply &
Demand (Trade) = Debt Liquidation. Further, more jobs would be created because of the supply
and demand ratio of U.S. products increasing, which would stimulate the economy.
Unfortunately, similar trends that occurred prior to and during the Great Depression, are
being observed once again by economic analysts and financial experts.
Definitions
Throughout this study, terms and definitions will help define the meanings involving
economic research. All key terms are provided courtesy of The Economist (an academic journal
subscription available online and magazine format, which examines and analyzes economic
affairs, trends, statistics, comparative data, and other information). Such key terms (definitions)
are:
a.) Debt—Crucial ingredient for economic growth. The price of debt is interest.
b.) Deficit—When more money goes out than comes in. Budget deficit occurs when public
spending exceeds Government revenue.
c.) Depression—A bad, depressingly prolonged recession in economic activity.
d.) GDP—Gross Domestic Product, or a measure of economic activity in a country. It is
calculated by adding the total value of a country's annual output of goods and services.
e.) Growth—What economic activity is all about, but how can it be made to happen? Economists
have plenty of theories, but none of them has all the answers.
f.) Reaganomics—Policy implemented by President Ronald Reagan between 1981-1989, in
which he proposed decreased social spending, tax cuts, more military spending, and better
domestic markets (Investopedia, 2016)
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g.) Recession—A period of slow or negative economic growth.

h.) Supply & Demand—Twin driving force affecting market economy.
Assumptions
- A national scale revolution is assumed to occur should the U.S. economy fail because of
infrastructural instability and immediate needs of citizens (possibly, however, I would
believe that most citizens would actually band together to quickly restore the U.S. and
help in the creation of a new economy or a barter trade system utilizing precious metals
such as gold, silver, etc.)

- The U.S. deficit is assumed to be actually higher than what is published (there may be
some debt that is unreported, such as “black budgets” regarding defense and intelligence,
but there is no publication and/or reports that can be confirmed to attest to this and
therefore, cannot be confirmed as true or fact, making this an assumption)

- The U.S. president is assumed to create an economic plan (not true, Congress and Senate
have established committees/sub-committees pertaining to employment/labor, financial
and budgetary affairs, and economic interests; the President only voices what is occurring
with the economy)
Scope & Limitation of the Study
The inquisitive nature of this study is to analyze and dissect the U.S. economy
from a particular originating point (Great Depression) up to the current state of being (2016).
This will also examine a hypothetical analysis of the future of the U.S. economy up to 2024,
should the U.S. continue to exist up to that point.
This study includes in the scope specialized resources examining the U.S. economy
available from Point Park University’s Library system and other peer-reviewed sources available
from online databases.
Summary
This case study examines the overall impacts on the U.S. economy (internally and
externally). Foreign markets and economic systems, such as China and the European Union, for
example, are interactive components and even driving forces to stimulate the U.S. economy. Yet,
government debt seems to drown out these driving forces—the U.S. is accumulating a massive
deficit versus strong supply/demand variables in the global marketplace.
Even with subject matter experts, well-versed entrepreneurs, and business moguls
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providing advice and feedback, the U.S. economy is still in shambles and in need of a massive
overhaul.
This case study will examine specific periods of time in order to evaluate
the possibilities of one particular era of being the culprit of the U.S. economy’s standing
currently. The Great Depression will be the starting point for America’s current economic
dilemma.
U.S. Economy during the Great Depression Era (1929-1941)
The Great Depression era was a time of uncertainty, instability, and loss. Many citizens
lost their jobs and took their own lives as a result of unemployment because they could no longer
provide for their families. As a result of families not provided for, the family unit itself became
unstable and disintegrated, resulting in hunger and mass-homelessness. So, the event itself
caused a ripple effect or domino effect—from the American heartland, to the nation’s capital, to
every street corner, every American felt the shuddering effects of loss and sorrow because of the
Great Depression.
The Great Depression occurred on October 29, 1929 when over 16 million shares of the
U.S. stock market failed to generate profits, resulting in the loss of hundreds of millions of
dollars. Because of this, banks were forced to consume savings of its clients and cease
operations. Some of the root causes of why 16 million shares were lost in the investment limbo
(which means nothing more than investments are no guarantee of financial success or prosperity
and is considered risky if done ignorantly or improperly) were improper uses of credit, deflation,
etc. (economists today are STILL figuring out some other variables and factors causing one of
America’s, if not the world’s, greatest financial catastrophes). Apocalyptic? Outlandish? Hardly.
The previous description is not a dystopian view of the U.S. economy. This was an
actual event—though it sounds outlandish and bizarre, the U.S. economy has experienced
similar mini-depressions since this time. But prior to the Great Depression (between 1920-1929),
the U.S. economy was stable through the sale of stocks and other industries—which promoted
economic growth and prosperity. Wall Street, America’s center of investment power and the
heart of capitalism, became swamped with investors and banking professionals with strong
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economic wisdom and knowledge of how to multiply the American dollar into profits.
Even in all the wisdom of certified stockbrokers equating to over 50,000 years of
business education and financial experience, there was a failure to predict an economic crisis of
such monstrous proportions such as the Great Depression. One would believe that such an event
could have been diverted based on the experience and academic levels of expertise of Wall
Street. Yet, America is at the threshold of another Great Depression or could it be something
worse?
Willie Harrell, an Associate Professor at Kent State University, stated in his article that
“the economic crisis we face is the worst since the Great Depression” (Harrell, 2015). If this is
true based on the research data of an economic subject matter expert, does this means that
America is dangling on the brink of economic chaos? David Smick, founder & editor of the
academic journal International Economy states “The United States is about to enter a fiscal trap,
chasing its tail just to pay off its creditors. That is an experience heretofore confined to Third
World countries” (Smick, 2010). Is another Great Depression looming on America’s horizon?
Let us dig deeper to understand some other pitfalls that occurred during the Great Depression
era.
In the years following the Great Depression (1929-1932), we see other elements which
may have contributed to this event. Hindsight is a valuable commodity and is a highly preferred
method of research, especially when conducting predictive analysis and comparing trends, such
as employment and labor statistics. One such trend, for example, are the hours worked during
and after the Great Depression. Robert Higgs examined this issue with passion and scrutiny and
revealed Pre- and Post-Great Depression era facts regarding employment hours (Higgs, 2009).
Higgs’ case study ties in the Great Depression with World War 2 (WW2), which some experts,
including Higgs, believes is when the Great Depression actually ended. For this reason, I will
take a closer look at the U.S. economy during World War II utilizing Higgs’ case study as a
transitional bridge between the Great Depression and WW2 eras.
U.S. Economy during World War II
The Great Depression was not a single event—it lasted close to a few decades according
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to some experts. “For these analysts, the Great Depression is almost defined as the long period
when real GDP remained well below its trend high-employment capacity and the rate of
unemployment stood persistently above its normal range” (Higgs, 2009). What aspect was
affected during this era was, in fact, employment hours worked.
“Total hours worked fell substantially from 1929 to 1932. Then unlike the standard
depiction of the economy’s course, they [work hours] hit rock bottom and stayed put in a
virtually flat-bottomed trough for three years, 1932, 1933, and 1934” (Higgs, 2009).
For three straight years, the labor force was virtually lifeless, which affected the U.S.
economy negatively. During the WW2 years, however, the creation of jobs specifically
aimed at producing war-time materiel, helped stimulate the economy. Unemployment
vanished due to the military draft; “the gigantic military was remarkable for many reasons.
For present purposes, it is germane to note that the rise in military hours accounted for 54%
of the rise in the economy’s total hours worked between 1940 and 1944” (Higgs, 2009).
WW2, did in fact, not only create more jobs to stimulate the economy, it also boosted
working hours. Yet, some researchers disagree with Higgs’ claim that WW2 officially ended the
Great Depression era: “As we continue to debate the effectiveness of large-scale government
expenditure to speed recovery from the Great Recession, we should not be looking at the
wartime experience of the 1940s as a guide” (Horowitz & McPhillips, 2013). So, whether or
not the Great Depression ended because of WW2, is left to speculation dependent upon one’s
perception of some of the macro-economic variables analyzed during this era.
The 1960s or the Vietnam Era, however, truly represents, in my opinion, the growth of
not only employment, but the unveiling of the military industrial complex, or the collective
military establishment and armaments industry, which will be covered in the next section of this
case study.
Vietnam Era (1960s)
The 1960s was an era of liberation, self-discovery, and sub-cultural development (i.e.
The Moonies or followers of the Reverend Moon Cult, the Hippie youth movement, and the
Beatniks). It was also a period of economic reform, success, and upheaval as several resources
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will reveal in this case study.

The 1960s looked more optimistic for the U.S. economy than 20-30 years earlier, when
the Great Depression consumed Americans life savings, employment, and even American lives.
Between 1960-1964, labor statistics fluctuated, as distribution of wages teetered and then finally
skyrocketing from an index scale of 101 (out of 105) in 1960 to 104 near the end of 1968
(Blecker, 2014). The 1960s offered re-stimulation of the U.S. economy through the growth of
industries, trade, and investments. Yet, the 1960s also marked a time of conflict and war, with
the start of the Vietnam War, which would be preceded by Eisenhower’s January 17, 1961 final
presidential address (and warning) about the rise of the military-industrial complex (only a
portion of Eisenhower’s speech relevant to the military industrial complex is referenced and not
the entire speech; interpretation is at the discretion of the reader):
This conjunction of an immense military establishment and a large arms
industry is new in the American experience. The total influence – economic,
political, even spiritual – is felt in every city, every State house, every office
of the Federal government. We recognize the imperative need for this
development. Yet we must not fail to comprehend its grave implications. Our
toil, resources and livelihood are all involved; so is the very structure of our
society.
In the councils of government, we must guard against the acquisition of
unwarranted influence, whether sought or unsought, by the military industrial
complex. The potential for the disastrous rise of misplaced power exists and
will persist.
We must never let the weight of this combination endanger our liberties or
democratic processes. We should take nothing for granted. Only an alert and
knowledgeable citizenry can compel the proper meshing of the huge industrial
and military machinery of defense with our peaceful methods and goals, so that
security and liberty may prosper together.
Akin to, and largely responsible for the sweeping changes in our industrial-
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military posture, has been the technological revolution during recent decades
(MSU, 1961).
Today, we see this chilling advisory being fulfilled abundantly and yet, the military-
industrial complex does little to stimulate America’s economy. If anything, para-military
contractors have their rewards of tax-free status up to $80,000.00 during a typical overseas
assignment up to one year. Contractors such as Haliburton, Academic LLC, DynCorp—are
sub-contracted by U.S. Government agencies such as Department of State, Central Intelligence
Agency, and other Department of Defense components for various overseas security and
protection assignments of government personnel. For this reason, many perks and tax breaks are
provided leisurely…at no cost to the taxpayer of course. Did Eisenhower predict America’s
economic future through his cryptic warning about the military-industrial complex?
The 1960s added limited hope to a recovering post-Great Depression economy. In
the late 1960s/early 1970s, we see a change in the gears of America’s economic machine.
The World Trade Organization (WTO) influenced U.S. trade policies with China and Europe
during the Johnson and Nixon Administrations (Bergsten, 2013, p. 235), but encouraged the
abandonment of gold bullion, for example. So, simple investment vehicles, like gold, went
overlooked—which I believe if gold would not have been discouraged, outlooks and even
the deficit, may have been in a lower bracket ($11-14 trillion in lieu of the current $20 trillion)
because of the valuation of precious metals, such as gold (and silver). Government debt started
accumulating in the early 1970s, which also contributed to the deficit we have today.
Federal borrowing started increasing after the 1974-75 recession (Hubbard, 2012), and
the government continued borrowing after every recession through 2009. Foreign shareholders
also impacted the U.S. economy in the 1970s, as over 40% “significantly increased their
holdings of Treasury instruments” (Hubbard, 2012). So, foreign individuals and organizations
began its occupation of American financial assets and products during this time frame, which
I believe, has significantly created a pattern of reliance on foreign markets rather than domestic
shareholders.
Though the Vietnam era had impacted the U.S. economy both positively and negatively,
 Running Head: The Coming Collapse of the U.S. Economy 16

the Reagan years (1981-1989), would prove to be more beneficial to the working American
based on President Reagan’s economic stimuli objectives.
Economy in the 1980s (“Reaganomics”)
The 1980s proved to be more promising for the U.S. economy. Governor of California
Ronald Wilson Reagan, because America’s 40th President. Iran released American hostages
during the Iranian Revolution. The U.S. economy was stable. Reagan implemented a group
of initiatives aimed to stimulate the economy and was known as “Reaganomics” or “a popular
term used to refer to the economic policies of Ronald Reagan, the 40th U.S. President (1981–
1989), which called for widespread tax cuts, decreased social spending, increased military
spending, and the deregulation of domestic markets” (Investopedia, 2016).
Under this plan, Reagan instituted tax reforms, through Reaganomics—which evolved
into the Tax Reform Act of 1986 (Feldstein, 2012). This greased the wheels by allowing tax
breaks for certain income brackets in the U.S. Yet, the economy was still staggering with
a deficit of $221.2 billion in 1986 (high rate for this time period) because of Reaganomics—
which proved not to be as strong as believed; although, the U.S. economy was still flourishing.
The 1980s, however also proven to be a time of standoffish relations with the Soviet
Union. Reagan created the Strategic Defense Initiative (SDI) or “Star Wars” ICBM missile
defense program to defend U.S. installations in Europe and the American homeland from Soviet
strikes. The U.S. defense budget was dehydrated from funding SDI, which was discontinued in
in early 1993 after years of building and constructing far-fletched science fiction-esque military
devices such as hypervelocity rail guns, neutral particle beam accelerators (used for
missiles), chemical lasers, and various assortments of other mechanisms, which would be used
to counter any Soviet airborne and/or atmospheric attacks.
So, we see the majority of the U.S. economy was hijacked for SDI and
through “Reaganomics” reforms—contributing to the deficit. The U.S. economy and
government debt/deficit continue to swell and fluctuate in the 1990s through 2008—
when another Great Depression-esque recession hit America once again.
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2008 Micro-depression & Beyond

This case study has analyzed the U.S. economy up to this point from the 1929 Great
Depression to a similar event occurring in September 2008. Unemployment skyrocketed, which
dwindled investments and savings—resulting in a recession. Some argue, however, if this
particular recession would have not occurred, “the U.S. GDP would be $1 trillion or 5% more
than what it is today” (Altman, 2014). Further, economic experts continue to claim the 2008
Recession was preserved because “U.S. macro-economic policy did considerably more, if not
enough, to support economic recovery than the austerity policies adopted by many other
advanced economies” (Miller, 2015).
The 2008 Micro-depression, although seen as a bump in America’s road to economic
recovery, took even a more rugged path when in 2010, “U.S. Foreign debt is the same size as the
U.S. GDP. Even worse, total debt run up by U.S. private, business, and public sectors over the
fat years amounts to almost 400 percent of GDP” (Moller, 2010). Based on this statement alone,
these figures would be staggering in the $30-40 trillions. What is required would be a strong
valuation of the U.S. dollar…which does not exist. Truth is, the American dollar has lost its
value over the years. “The dollar has in fact fallen over the past several decades and fallen
sharply in the past year despite the mantra favoring a strong dollar” (Feldstein, 2011).
This goes to show that economic analysts and gurus are beginning to acknowledge
the future of the American dollar is bleak. Experts such as Martin Feldstein, provided
four solid reasons why the U.S. dollar will continue to degrade and decrease in value over
the next couple of years. The first reason the American dollar is losing its value is because
of foreign exchange.
Asian nations, such as China, Korea, and Singapore, spent over $3.5 trillion in exchange
in U.S. treasury notes and other bills. Once these nations decided that U.S. treasury notes were a
shorter-term investment, “they began shifting out of the dollar and into other currencies. The
primary currency they bought into to was the Euro” (Feldstein, 2011). So, a loss of interest in the
U.S. dollar translated to foreign markets exchanging the American dollar or what the economic
community labels as “dumping” (rapidly exchanging a currency unit in order to maintain full
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cost of the investment as to not lose value), because the Euro had a better market value than the
U.S. Dollar.
The second reason why the U.S. dollar is failing is because “the enormous size of the
current U.S. deficit” (Feldstein, 2011). The GDP is severely affected by foreign currencies to
the point of the U.S. dollar being devaluated rapidly. Trade also affects this variable as well.
The merchandise trade deficit was $680 billion or about 4% of the United States’ GDP. As
this occurs, the deficit is not being decreased fast enough because of these vacuums involving
trade and foreign currency exchange transactions. China is not helping the U.S. economy’s
current dilemma either.
China is the third reason the U.S. dollar is being degraded, Feldstein points out, because
“China’s new goal of increasing consumer spending in China…Although China’s rapid
economic growth has led to a substantial increase in the standard of living of Chinese
households, the level of consumer spending has not increased as rapidly as China’s overall GDP”
(Feldstein, 2011). This clearly indicates that China’s economy is thriving and its GDP is stronger
in investments and savings at both the consumer and national levels. Another point worth noting
is China is the largest debtor or lender to the U.S., which funds the deficit. Should China cease
purchasing American dollars, “the dollar will fall” (Feldstein, 2011).
Lastly, “relatively low level of real interest rates” (Feldstein, 2011), the FRB or
Federal Reserve Board vowed to keep funding rates at virtually zero for long timeframes.
Because of inflation, the actual rates would be in the negative—affecting the overall health
of the U.S. GDP (account deficit).
There is no light at the end of the tunnel regarding the U.S. economy’s full restoral.
“Our global output has dropped from 50% at the end of the Second World War to 20% today”
(Bergsten, 2011). This proves the demand for the American dollar is degrading. Foreign
markets are dumping American dollars rapidly because there is a new American dollar, the
Euro, which is quickly attracting larger, more durable, economies, such as France, Britain,
China, and other nations. “The dollar remains the world’s key currency, but the Euro provides
its first real rival in almost a century and the Chinese renminbi could represent another in the
 Running Head: The Coming Collapse of the U.S. Economy 19

near future” (Bergsten, 2011).

Yet, Bergsten (2011) declares the “U.S. is $1 trillion richer as a result of its trade
integration.” This is due in part because of globalization, or the unification of commercial and
financial markets, which could severely impact or improve an economy. The U.S. economy
could become less constricted if the interest rate would rise above zero. “Zero interest rate
policies in the USA contribute to rising macro-economic and political instability in developing
countries and emerging market economies, while they are unlikely to stimulate U.S. growth”
(McKinnon & Liu, 2013).
This is pretty much the problem in a nutshell—raise the interest rate because U.S.
interests are feeding and stimulating political instability rather than economic trends or
percentages like it should be. The solution, according to McKinnon and Liu, is quite
laid out and simple:
if interest differentials are too wide, capital controls will always fail. The
first item on the G-20 agenda should be to abandon monetary policies by
the mature industrial economies, led by the USA, which set interest rates
near zero. This would lessen the incentive of central banks in emerging
markets to keep their interest rates low despite the inflationary pressure
that they face and despite the fact that their ‘natural’ rates of interest are higher.
(McKinnon & Liu, 2009)
The future of the U.S. economy is not too far away. The future of our economy is
now, because if this vicious cycle continues NOW then we will not have a THERE to believe
in or plan for. This will require a lot of work from politicians, analysts to determine what can
be done, business/trade experts on what supply/demand should occur, etc. “Determining how the
U.S. economy will behave over the next 10 years is challenging, because the business cycle
cannot be anticipated or modeled well over extended periods” (U.S. Bureau of Labor Statistics,
2015).
Investments have always been a strong vehicle or mechanism to build wealth. This
mentality has diminished; investing in technology would drive production for further products,
 Running Head: The Coming Collapse of the U.S. Economy 20

which would in turn, for example, allow stimulation of the economy in that area. “Some
economists believe that initial investments in such technology will pave the way for stronger
productivity growth in the future” (Bureau of Labor Statistics, 2015). The U.S. economy
could thrive because of a stimulation in the investment arena—pharmaceuticals, biotech,
oil/natural gas, technology…the list continues of endless possibilities to re-invest into the
U.S. economy for restoration.
Here is the problem, however. Over 50% of Americans who work “full time” work
25-35 hours per week, receiving minimal or no employment benefits—so what pay they receive,
are spent on co-pays for health and dental benefits, leaving little funds for food, clothing, etc.,
leaving nothing for savings or investments.
This similar cycle occurred during and after the 1929 Great Depression, which indicates
we are repeating history. Unfortunately, there are quite a few more variables that are affecting
the U.S. economy as research indicated in this case study. “Debt crises in the Eurozone,
emerging-market bubbles, and slowing growth in China all present real risks to the U.S.
economy over the projection period” (Bureau of Labor Statistics, 2015). So these risks are
intensified compared to the factors experienced during the Great Depression. Should we, as
productive citizens contemplate making durable plans by saving and investing for the future?
“Clearly, this is not an economy that has a future” (Roberts, 2015).
Background: Detail Current Issues, Concerns, Challenges, Perceived Needs
As addressed in this case study, multiple concerns, challenges, and perceived needs are
existent regarding the current condition of the U.S. economy. Something (a particular event
or scenario) will need to occur rapidly in order to revert the economic cataclysm the U.S. is
destined for. Obviously, a concern would be the deficit, which is sitting at $20 trillion. This
figure is increasing DAILY. Which leads to challenges. This is a challenge. Countless experts
and financial whizzes are baffled; they have understanding of the situation and knowledge of
how to repair the U.S. economy. I believe there are limited decisions being offered by America’s
leadership (Senate, Congress, Independent Agencies, and ultimately, the U.S. President. I believe
perceived needs are non-existent in this type of case study because there is actually a mega-
 Running Head: The Coming Collapse of the U.S. Economy 21

dilemma, which would not offer any alternatives; a pseudo-environmental conditions or any
perceived need(s) is completely irrelevant based on the facts, data, information, and expert
opinions presented in this case study. “The United States is about to enter a fiscal trap, chasing
its tail just to pay off its creditors. That is an experience heretofore confined to Third World
countries” (Smick, 2010).
Organizational Governance
We are governed by three branches of government (Legislative, Judicial,
and Executive). Only one branch of government, however, interfaces and influences the
economy. Senate and Congress have the authority and right of way to draft and vote on
reforms affecting the U.S. economy. The President, has the overall authority to either
approve or veto (cancel/deny) the bill or reform. I believe the latter factor (President) is also part
of the problem rather than the solution. For example, the Keystone Pipeline project would have
over 40,000 jobs (Kessler, 2015), which would have stimulated the economy—possibly not to
the proportions desired to eliminate the deficit completely. But this would have been one
variable to offset the deficit, for example, and yet, the government is not taking this, as this
project was rejected by President Obama last year. There needs to be more executed to assist
in the restoration of the American economy. If anything, the government does not do enough
to inquire and/or interface with the problems of unemployment, government debt, over-
spending, and a high deficit. So, interaction between government leaders needs to occur;
communication and coordination would definitely be a much needed (required) variable in
helping all sides understand the implications
External (Environmental) SWOT
Strengths—Individual persistence of population to survive despite unstable economy
Weaknesses—Continued bad economy, negative image of leadership
Opportunities—Opportunities for new leaders to emerge to handle economic crises
Threats—Greed, corporate influence
Internal (Organizational) SWOT
Strengths—Desire to improve economy
 Running Head: The Coming Collapse of the U.S. Economy 22

Weaknesses—Bad planning, not enough economic reforms / lack of action

Opportunities—Opportunities for new economic gurus/experts to learn and emerge
Threats—Inexperienced decision makers
Need/Gap Analysis
It is no secret or surprise that the U.S. economy is failing. The current or present state of
the American dollar is degrading and dwindling rapidly. The future of America and the U.S.
economy depends on some of the factors and variables, which were analyzed, being improved
and taken seriously in order to prevent a total collapse.
Some actions that can be identified in the Need/Gap Analysis would be:
- Create real jobs and maintain the 40-hour work week so U.S. economy does not
experience another Great Depression

- Raise the interest rate as identified by McKinnon and Liu, so U.S. economy will
be able to survive inflation and not completely flatline

- Stimulate the desire to invest to create a stronger circle of spending, saving, and
re-investing profits, as Hubbard explained

- Find a way to make the American dollar attractive rather than the Euro, as pointed
out by Feldstein, so foreign markets will retain the U.S. dollar in lieu of shifting to
the Euro or other currency

- Create a presidential initiative, similar to Reaganomics, in order to curtail spending,

reform taxes, yet maintain national security through appropriate defense spending (i.e.
Reagan spent on SDI, Obama needs to spend on counter-terrorism against ISIS, etc.)
Analysis of Strategic Factors: Advantages, Disadvantages, Model Case(s)
Strategic factors contribute both positively (advantages) and negatively (disadvantages)
to the U.S. economy. Some advantages would be:
- America STILL has an economy. Based on some of the facts and information included
not only in this case study, but in other forums, America still has hope
- Saving and investing is still encouraged by the financial & investment community
Some disadvantages would be:
- Alternative media influencing Americans of current state of economy, which influences
Americans NOT to save, spend, invest, etc. This may also be a contributing factor to
why the economy is not being stimulated
 Running Head: The Coming Collapse of the U.S. Economy 23

- Leadership blunders and oversight is not doing enough to curb spending, Federal debt
acquisition, etc.
Strategic Alternatives
- Place value on employment opportunities

- Indexing minimum wage for appropriate employment (i.e., first responders should
receive a higher wage than food service laborers/general laborers, etc.)

- Protecting overtime rights for employees/laborers/workers

Recommended Strategy
Based on the author’s background (the author of this case study is neither an economic
analyst nor a financial guru, so a recommended strategy involving improvement of the U.S.
economy is strictly based on the author’s opinion and/or any educated guesses or academic
inquiries), the author would recommend serious budgetary revisions and stronger trade
agreements with China to re-stimulate the U.S. economy in order to divert a financial
cataclysmic event, which the author believes (and agrees) would propel the world into a
financial tailspin (global Great Depression) affecting the international economic scale.
Conclusion
This case study examined the U.S. economy during various eras and how each era had
contributed variables to affecting the current state of the American economy, which is degrading
daily, even at the publication of this case study.
Government debt is being downplayed and is, in fact, drowning the U.S. in accumulating
a massive deficit. Unemployment is skyrocketing; according to Forbes Magazine, the current
unemployment rate is at 12.6%. The 40-hour work week, which in the past, was considered full-
time. Now, 25-30 hours per week is the new “full-time”, which is disintegrating work ethic and
creating a new pattern of “work spreading”, as we seen occur during the Great Depression.
Further, this case study examined the U.S. economy and America’s future standing as a
potential third world nation because of factors and variables previously mentioned affecting
the national economy. Consequently, the Great Depression was the start of America’s current
economic dilemma, which will end in yet another financial catastrophe similar or even greater
 Running Head: The Coming Collapse of the U.S. Economy 24

than the 1929 event.

 Running Head: The Coming Collapse of the U.S. Economy 25

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