F.

Global Financial Crisis

Financial crisis that simultaneously impacts numerous nations is referred to as a
global financial crisis. Financial institutions, markets, businesses, and consumers are all
going through a time of great difficulty. During a worldwide financial crisis, traders cease
purchasing financial instruments, financial institutions lose confidence and stop lending
to one another. Most lending eventually ceases, and firms suffer greatly. The 2007–
2008 global financial crisis had a significant effect on the world economy. Its causes
included the housing market bubble, unethical subprime mortgage lending practices,
and the overproduction of complex financial products like mortgage-backed securities.

The crisis caused a sharp decline in housing values, a large number of

foreclosures, and a freeze in the credit markets. This in turn created a financial crisis
that necessitated bailouts from the government and a global recession. Globally felt
repercussions of the crisis included a decline in employment and economic growth, as
well as widespread economic misery. The following are some causes of the financial
crisis. Subprime mortgage lending practices: To borrowers with poor credit, banks and
other financial organizations issued riskier loans known as subprime mortgages. Due to
the frequent packaging and marketing of these loans as securities, the housing market
was inflated. Because there were no rules governing the financial industry, complex
financial products including mortgage-backed securities, credit default swaps, and
dangerous lending practices emerged, which were difficult to assess and understand.
G. Economy of the 20th Century
The Great Depression is frequently referred to as a "defining moment" in
American history during the twentieth century. Its greatest enduring result was a change
in how the federal government interacted with the economy. Many Americans accepted
and even called for a greatly increased role for government as a result of the protracted
downturn and agonizingly slow recovery, despite the fact that most businesses
despised the expanding federal oversight of their operations. With the establishment of
Social Security, the federal government assumed control of the senior population and
began providing unemployment benefits to the forced unemployed. The Great
Depression altered how people view the economy. The Keynesian perspective that
government can and should stabilize demand to avert future depressions remained the
prevalent opinion in the economics profession for at least the following forty years since
many economists and others blamed the depression on insufficient demand.

The start of the Great Depression at the end of the 1920s was a global
occurrence. By 1928, the economies of Southeast Asia, Brazil, and Germany were all in
recession. Early in 1929, the economies of Poland, Argentina, and Canada all saw a
decline; around the middle of the year, the United States economy did as well. The
worldwide gold standard served as the principal link connecting these nations, as
demonstrated by Temin, Eichengreen, and others. By 1914, the majority of
industrialized nations had switched to the gold standard, which established a fixed
exchange rate between their national currencies and gold. Due to price inflation brought
on by European countries' decision to print money during World War I, a significant
portion of the world's gold was transferred to American banks. Without changing the
dollar's gold value, the United States maintained the gold standard. Gold was moved to
the United States by investors and other gold owners, where it kept its value as a
secure investment.