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Government Influence - Coggle Diagram
Government Influence
Inflation, overconsumption, and lack of savings caused the downfall of Usonia..
When the Usonian government realized they did not have any fish to cover their Fish Reserve Notes, they did not stop spending, save fish, and raise taxes. They created fake fish and caused inflation.
The Usonian's fake fish lost value at a high rate prices rose and again they ran out of regular fish and fake fish. Meanwhile, they continued to hide their financial troubles and spend Fish Reserve Notes.
The Usonians deal with Sinopia put the Usonian government back on track. They had an over flux of real and fake fish. Instead of conserving their earnings, they continued to spend by giving out loans, lowering interest rates and taxes, as prices continued to grow.
The Usonian were consuming the fish before they could use the fish. They closed the Fish window and people could no longer redeem fish for their Fish Reserve Notes. Which also was depleting their economy.
The Sinopians opened Fish Reserve Bank where they deposited their Fish Reserve Notes, saved their overflow, and invested in capital and production and their economy began to swell.
The Usonians had so much money they only focused on the interests of the people. They forgot about the necessities of life and focused on buying bigger huts and taking surfing lessons. Thier priorities were blinded because they thought their fish supply would never run out.
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Loans are a great way for the economy to make money because the bank charge interest rates on the loan. The best way to describe interest rates is giving one dollar to receive two. ,.
Loan programs popped up all over the island. There were loan programs who catered to the rich and took on high risk loans in hopes of larger returns.
The loan programs stopped people from depositing their money into the banks because they were able to apply for the loans and pay outright for what they wanted.
Usonians had different loans programs. Prices swelled as they made money from the loans. They were able to provide credit on top of credit. The decreased interest rates, extended loans, and stopped lowered taxes. Spending continuously.
The loans helped the Usonian economy grow, increased credit limits, and made a huge impact on the money supply. However, they gave the money right back out.
The Usonians saw their economy was in bad shape. People stopped taking risks and loans. They wanted to abort their investments and sell them. This closed their loan programs and companies shutdown.
This where their savings would have kicked in and the economy could have proven its wealth. However, there was nothing everyone was scared. Everything was folding.
People stopped trusting in the economy and stopped spending, they stopped getting loans, and using credit. Even after the senator gave out a stimulus payout. People would not spend.
The Sinopians saw the value and keeping their fish and loaning their reserves. They traded with one another and swelled their economy. The Usoninans were so broke they allowed the Sinopians to buy them out.
Taxes are necessary! They help the government spend their money on benefit programs, roads and buildings, transportation, schools, and other governmental necessities.
If the Usonians kept their integrity and lead with the island at heart instead of their pride and popularity, their island would have remained in power.