We live in a world balanced between consumerism and capitalism. Every other aspect of society is driven by the twin forces of trade and economy. For the common man, the economy is often synonymous with the stock market. Thus when the stock market crashes, it is aptly seen as the dipping of the economy. The world has survived many severe losses in an economy that had plunged the public into sudden poverty. Now as the world is again on the brink of economic decline let us remember two of the most severe depressions in the economy the repercussions of which had been felt worldwide.
The great depression
The most famous stock market crash, the great depression lasted for almost a decade between 1929 and the late 1930s. It was preceded by a period of rapid technological advancement marked by the inventions of the radio, the automobile, the telephone and many more. While there are many schools of thought arguing over the main causes, some of them are panic and loss of confidence in the stocks which led to depletion of money in the flow of the economy, the disappearance of banks due to the banking crisis and low-level equilibrium of economic activity.
The Global Financial Crisis of 2007-0
The great depression is the biggest crash in the economy, the global financial crisis is seen compared to the same. This event of severe financial decline cost the economy trillions of dollars. It all started due to the build-up of a housing bubble. Due to the accumulation of subprime mortgages that let people acquire credit for home loans with severe risk, the situation escalated greatly and was thwarted just in time. Had it not been done so, it would have led to the collapse of the world financial system. It nevertheless did hamper the global economy greatly. This crisis was brilliantly portrayed in a Hollywood movie as well.