Are a Great Depression and World War on the way again?
History doesn’t repeat itself, but it rhymes, according to a famous American philosopher named Mark Twain.
More than 15 million Americans lost their jobs and were in need of money during the Great Depression, the most tragic economic collapse in US history.
By 1932, nearly one in every four Americans was unemployed, and by 1933, it was estimated that 25% of the population was unemployed.
Though the unemployment rate in the United States has not yet reached that level,But the coronavirus pandemic has left the country’s economy in its most vulnerable state in nearly a century.
Though the unemployment rate in the United States has not yet reached that level, the coronavirus pandemic has rendered the country’s economy vulnerable to the greatest extent in nearly a century. However, when we look at global inflation, it appears to be years after the 1929, similar to the beginning of the Great Depression.
The Great Depression, according to Bernanke and other economic historians, was a disaster because of its length, depth, and consequences. The Great Depression lasted a decade, beginning in 1929 and ending in 1942. Industrial output has plummeted. Unemployment has skyrocketed. Families were harmed. Marriage rates have declined. The contraction originated in the United States and spread throughout the world. The Great Depression was the longest and most severe downturn in American and modern industrial history.
The onset of the Great Depression would derail any efforts to create a more open, cooperative, and peaceful postwar world. The 1929 stock market crash in the United States resulted not only in the cessation of loans made to Germany under the Dawes Plan, but also in the total recall of previous loans.
Money and credit tightening eventually led to the failure of Austria’s largest bank, the Kreditanstalt, in 1931, triggering a wave of bank failures throughout Central Europe, including the complete disintegration of Germany’s banking system.
Yes, we have not yet witnessed banking system failures, but we have witnessed currency depreciation. World wild, including major currencies such as the US dollar
Along with this, most countries are likely to default on their debts, as Sri Lanka has done for the first time in its history as the country grapples with its worst financial crisis in more than 70 years.
Lebanon, Sri Lanka, Russia, Suriname and Zambia are already in default, Belarus is on the brink and at least another dozen are in the danger zone as rising borrowing costs, inflation and debt all stoke fears of economic collapse.
The sovereign default world record holder appears set to increase its tally. The peso is now trading at nearly a 50% discount on the black market, reserves are critically low, and bonds are trading at only 20 cents on the dollar – less than half of what they were after the country’s 2020 debt restructuring.
According to Morgan Stanley and Amundi, Russia’s invasion means Ukraine will almost certainly have to restructure its $20 billion in debt.
Egypt has a debt-to-GDP ratio of nearly 95 percent and has seen one of the largest outflows of international cash this year, totaling $11 billion, according to JPMorgan.
FIM Partners estimates that Egypt will have to pay $100 billion in hard currency debt over the next five years, including a $3.3 billion bond in 2024. Great Depression and World War
Making bitcoin legal tender effectively ended IMF hopes. Trust has deteriorated to the point where a $800 million bond maturing in six months trades at a 30% discount, and longer-term bonds trade at a 70% discount.
This week, Pakistan reached an important IMF agreement. The breakthrough could not have come at a better time, as high energy import prices have pushed the country to the brink of a balance-of-payments crisis.
Foreign currency reserves have dwindled to as little as $9.8 billion, barely enough to cover five weeks of imports. The Pakistani rupee has reached new lows. The new government must cut spending quickly because interest payments consume 40% of its revenue.
While World War II was undoubtedly a geopolitical event, some of its underlying causes have been identified as economic.
Following WWI, reparations imposed on Germany left the country poorer, and economic woes caused resentment among its people.
The Great Depression of the 1930s, as well as a collapse in international trade, exacerbated Europe’s economic situation, allowing Hitler to rise to power on the promise of revitalization.
Great Depression and World War
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