Cases of Economic Collapse
There are few well documented cases of economic collapse. One of the best documented cases of collapse or near collapse is the Great Depression, the causes of which are still being debated.
"To understand the Great Depression is the Holy Grail of macroeconomics." —Ben Bernanke (1995)
Bernanke's comment addresses the difficulty of identifying specific causes when many factors may each have contributed to various extents.
Past economic collapses have had political as well as financial causes. Persistent trade deficits, wars, revolutions, famines and depletion of important resources have been listed as causes. Incompetent governments are another cause, especially when they go bankrupt and resort to money printing, causing hyperinflation.
In some cases blockades and embargoes caused severe hardships that could be considered economic collapse. In the U.S. the Embargo Act of 1807 forbade foreign trade with warring European nations, causing a severe depression in the heavily international trade dependent economy, especially in the shipping industry and port cities, ending a great boom. The Union blockade of the Confederate States of America severely damaged the South's plantation owners; however, the South had little economic development. The Blockade of Germany during WWI lead to starvation of hundreds of thousands of Germans but did not cause economic collapse, at least until the political turmoil and the hyperinflation that followed. For both the Confederacy and Weimar Germany, the cost of the war was worse than the blockade. Many Southern plantation owners had their bank accounts confiscated and also all had to free their slaves without compensation. The Germans had to make war reparations.
Following defeat in war the conquering country or faction may not accept paper currency of the vanquished, and the paper becomes worthless. (This was the situation of the Confederacy.) Government debt obligations, primarily bonds, are often restructured and sometimes become worthless. Therefore there is a tendency for the public to hold gold and silver during times of war or crisis.
Read more about this topic: Economic Collapse
Famous quotes containing the words cases of, cases, economic and/or collapse:
“... in all cases of monstrosity at birth anaesthetics should be applied by doctors publicly appointed for that purpose... Every successive year would see fewer of the unfit born, and finally none. But, it may be urged, this is legalized infanticide. Assuredly it is; and it is urgently needed.”
—Tennessee Claflin (1846–1923)
“You all know that even when women have full rights, they still remain fatally downtrodden because all housework is left to them. In most cases housework is the most unproductive, the most barbarous and the most arduous work a woman can do. It is exceptionally petty and does not include anything that would in any way promote the development of the woman.”
—Vladimir Ilyich Lenin (1870–1924)
“The great dialectic in our time is not, as anciently and by some still supposed, between capital and labor; it is between economic enterprise and the state.”
—John Kenneth Galbraith (b. 1908)
“The world was a huge ball then, the universe a might harmony of ellipses, everything moved mysteriously, incalculable distances through the ether.
We used to feel the awe of the distant stars upon us. All that led to was the eighty-eight naval guns, ersatz, and the night air-raids over cities. A magnificent spectacle.
After the collapse of the socialist dream, I came to America.”
—John Dos Passos (1896–1970)