What Has Been the Main Cause of the Major Global Economic Disasters?

658 Words3 Pages
In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is caused by a multitude of factors including the breakdown of the market, bankruptcy, high/ hyper inflation or factors such as high unemployment. They are considered bad for an economy because of the large scale effects and problems which it causes. Economically if a market breaks down then all sectors of society are hit. It makes the standard of living for the masses suffer. The price of basic necessities sky rocket, like the recent price rise in gas and other fuels. I hope to explore several individual cases of economic disasters and depressions and asses what was the root cause of their failure. My first case study is the German Hyperinflation of 1918-1924. Before the first world war had started the Germans over spent and went into a massive deficit because they thought that when the won the war they would inherit the country and its wealth. Therefore this justified the government printing large amounts of money in order to fund their cause. Another cause is the war reparations which they had to pay back was agreed at 60 billion marks in order to pay for this more money was printed, could this mean that it was pressure from other countries that were to blame. Though not the worst hyperinflation ever it did have some of the most devastating effects. In 1914 the exchange rate of the dollar to the pound was $1 to 1mark, by 1923 the exchange rate was $1 to 1trillion marks. This is an astronomical rate of inflation.As you can see from the graph the rate of inflation rocketed upwards in around 1923. It affected everyone in society. The rich bought expensive material good while they could so their price didn't change. For me there are several causes of this failure. The first is an over ambitious government who relied on the fact that they would win the war
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