Economic and financial stability are crucial focal points for any successful society, but constant nuances and fluctuations can occasionally make these variables hard to manage, which in turn can lead to times of crisis. Unfortunately, there are have been several significant economic crises that have occurred throughout history all over the world.
Below are a few of the worst economic crises of all time.
One of the first significant economic crises in the United States, the Panic of 1893 was a four-year depression that deeply impacted the US economy on all levels. The crisis’s roots are typically traced to the over expansion of railroads, which quickly bankrupted Philadelphia-Reading Railroad and led to the subsequent mass closing of over 500 banks.
Arguably the most well-known economic disaster of all time, the Great Depression was the biggest financial crisis of the 20th century. The depression originated in the US following the stock market crash of the late 1929, quickly spreading to all Western industrialized countries. The depression resulted in the loss of “income, record unemployment rates, and output loss, especially in industrialized nations,” and it was further exacerbated by poor policy decisions by the US.
Though some economies began to rebound by the mid-1930s, other economies continued to feel the brunt of the depression until the end of World War II.
This crisis began when members of the Organization of Petroleum Exporting Countries (OPEC) retaliated against the US for sending arms supplies to Israel during the Fourth Arab–Israeli War. This retaliation included an embargo on oil exports to the US and its allies, which led to increased oil prices and major oil shortages. Some economists dubbed this crisis a period of “stagflation” due to the presence of both inflation and stagnation, which occurred simultaneously.
Originating in Thailand following the financial collapse of the Thai Baht, the Asian financial crisis of 1997 impacted the majority of eastern Asia and mostly affected Indonesia, Thailand, and South Korea. The cause of the disaster is disputed to this day, but many economists trace its beginnings to an era of economic optimism put in motion by “speculative capital flows from developed countries to the East Asian economies of Thailand, Indonesia, Malaysia, Singapore, Hong Kong, and South Korea.”
This optimistic interpretation led to an overextension of credit, which in turn created high amounts of accumulated debt and influenced Thailand to abandon its fixed exchange rate. These developments created panic of a total economic meltdown.
One of the most recent significant financial crises in history, 2007’s Great Recession was yet another major economic problem in the US (the most severe crisis since the Great Depression). The recession began following the housing bubble collapse in the US, which led to the subsequent collapse of Lehman Brothers, “one of the biggest investment banks in the world.”
Furthermore, the crisis soon warranted unprecedented government bailouts in order to stabilize the situation, but not before it had eliminated millions of jobs across the country.