Economic History

The timing and severity of the Great Depression varied substantially across countries. The Depression
was particularly long and severe in the United States and Europe; it was milder in Japan and much
of Latin America. Perhaps not surprisingly, the worst depression ever experienced by the world
economy stemmed from a multitude of causes. Declines in consumer demand, financial panics, and
misguided government policies caused economic output to fall in the United States, while the gold
standard, which linked nearly all the countries of the world in a network of fixed currencyexchange
rates, played a key role in transmitting the American downturn to other countries. The recovery from
the Great Depression was spurred largely by the abandonment of the gold standard and the
ensuing monetary expansion. The economic impact of the Great Depression was enormous, including
both extreme human suffering and profound changes in economic policy.

The Great Depression

As the effects of the Depression cascaded across the US economy, millions of people lost their jobs. By
1930 there were 4.3 million unemployed; by 1931, 8 million; and in 1932 the number had risen to 12
million. By early 1933, almost 13 million were out of work and the unemployment rate stood at an
astonishing 25 percent. Those who managed to retain their jobs often took pay cuts of a third or
more.^22squared

Out of work Americans filled long breadlines, begged for food, or sold apples on street corners. A
Chicago social worker wrote that “We saw Want and Despair walking the streets, and our friends,
sensible, thrifty families, reduced to poverty.”^33

Hoover's response to the crisis

President Hoover initially met the economic downturn from the perspective of his long-
held voluntarist principles—that is, his belief in minimal government interference in the economy, as
well as a conviction that direct public relief to individuals would weaken individual character, turn
people away from the work-ethic, and lead them to develop a dependency on government handouts. By
1931 Hoover reversed his earlier approach and embraced government intervention in the economy. The
1932 Reconstruction Finance Corporation (RFC) authorized the lending of $2 billion to banks, railroads,
and other privately held companies, and in July 1932 the federal government appropriated $300 million
for the nation’s first relief and public works projects.^77

What Caused the Great Depression?

Throughout the 1920s, the U.S. economy expanded rapidly, and the nation’s total wealth more than
doubled between 1920 and 1929, a period dubbed “the Roaring Twenties.”

The stock market, centered at the New York Stock Exchange on Wall Street in New York City, was the
scene of reckless speculation, where everyone from millionaire tycoons to cooks and janitors poured
their savings into stocks. As a result, the stock market underwent rapid expansion, reaching its peak in
August 1929.

Stock Market Crash of 1929

On October 24, 1929, as nervous investors began selling overpriced shares en masse, the stock market
crash that some had feared happened at last. A record 12.9 million shares were traded that day, known
as “Black Thursday.”
Five days later, on October 29 or “Black Tuesday,” some 16 million shares were traded after another
wave of panic swept Wall Street. Millions of shares ended up worthless, and those investors who had
bought stocks “on margin” (with borrowed money) were wiped out completely.

The two classic competing economic theories of the Great Depression are the Keynesian (demand-
driven) and the monetarist explanation. There are also various heterodox theories that downplay or
reject the explanations of the Keynesians and monetarists. The consensus among demand-driven
theories is that a large-scale loss of confidence led to a sudden reduction in consumption and
investment spending. Once panic and deflation set in, many people believed they could avoid further
losses by keeping clear of the markets. Holding money became profitable as prices dropped lower
and a given amount of money bought ever more goods, exacerbating the drop in demand.
Monetarists believe that the Great Depression started as an ordinary recession, but the shrinking of
the money supply greatly exacerbated the economic situation, causing a recession to descend into
the Great Depression.

Debt deflation
Irving Fisher argued that the predominant factor leading to the Great Depression was a vicious circle
of deflation and growing over-indebtedness.[37] He outlined nine factors interacting with one another
under conditions of debt and deflation to create the mechanics of boom to bust. The chain of events
proceeded as follows:

1. Debt liquidation and distress selling

2. Contraction of the money supply as bank loans are paid off
3. A fall in the level of asset prices
4. A still greater fall in the net worth of businesses, precipitating bankruptcies
5. A fall in profits
6. A reduction in output, in trade and in employment
7. Pessimism and loss of confidence
8. Hoarding of money
9. A fall in nominal interest rates and a rise in deflation adjusted interest rates[37]

Ang Matinding Panlulumo, Masidhing Panlulumo, o Dakilang Depresyon na kilala sa Ingles

bilang Great Depression o Depression of the 1930's (Ang Panlulumo noong Dekada ng
1930)[1] ay ang malawakang krisis na pang-ekonomiyang nagsimula dahil sa Pagbagsak ng Wall
Street noong 1929 (pagbagsak ng pamilihan ng mga kabahaging puhunan) sa Estados Unidos.[2], at
nakaapekto sa ibang mga bansa. Ang mga presyo sa pamilihan ng mga kabahaging puhunan
sa Wall Street ay malakihan ang naging pagbulusok mula Oktubre 24 hanggang 29 Oktubre 1929.
Maraming mga tao ang nawalan ng trabaho. Sa pagsapit ng 1932, 25–30% ng mga tao ang nawalan
ng mga hanapbuhay.[3] Naging mahirap sila at nawalan ng mga tirahan. Ito ang nagwakas sa
kayamanan ng Dumadagundong na Dekada 1920 (Roaring Twenties). Maraming mga tao ang nag-
iisip na ang Matinding Panlulumo ay nagsimula noong Maitim na Martes, subalit ang Maitim na
Martes ay isa lamang nakapailalim na suliranin na tutulong sa pagdurulot ng Panlulumo.
Magmula 1929–1932, mas lalong lumala ang depresyon. Marami ang naghihinala na ang pagtaas
ng halaga ng buwis sa mga mamamayang Amerikano at ang pagtataas ng mga taripa (mga buwis
sa mga bansang nakikipagkalakalan sa Estados Unidos) ang nagpalala rito. Sinabi ng ekonomistang
si Milton Friedman na ang Matinding Panlulumo ay lumala dahil naglimbag ng mas kakaunting salapi
ang Reserbang Pederal kaysa pangkaraniwan.
Nang magsimula ang Matinding Panlulumo, si Herbert Hoover ang pangulo ng Estados Unidos, at
bilang resulta, siya ang sinisi rito. Naghalal ang mga tao ng bagong pangulo noong 1932. Si Franklin
D. Roosevelt ang naging bagong pangulo ng Estados Unidos. Nagawa ni Roosevelt na magpasa
ang pamahalaan ng maraming bagong mga batas at mga programa o palatuntunan upang
matulungan ang mga taong nasaktan ng Matinding Panlulumo. Ang mga programang ito ay tinawag
na Bagong Kasunduan (New Deal). Isa sa mga palatuntunang ito ang Civilian Conservation
Corps (CCC) o "Hukbo ng Konserbasyong Sibilyano". Naglagay ang CCC ng maraming kabataang
mga lalaki na magtatrabaho sa labas ng mga gusali. Binayaran ang mga lalaking ito ng 1 dolyar
bawat linggo upang maghanapbuhay, at nakatanggap sila ng libreng pagkain at matutuluyan. Isa pa
sa mga programang ito ay ang Segurong Sosyal, na nagbigay sa matatandang mga tao ng maliit
na kita upang mayroon silang pera para sa mga bagay na kailangan nila. Napakasama talaga ng
Matinding Panlulumo, subalit dahil sa tulong ng bawat isang tao, magiging mainam ang katayuan.
Sa pagitan ng 1939 at ng 1944, mas maraming mga tao ang muling nagkaroon ng pagkakakitaan
dahil sa Ikalawang Digmaang Pandaigdig, at sumapit ang wakas ng Matinding Panlulumo.

Paglalarawan[baguhin | baguhin ang batayan]

Bago sumapit ang Matinding Panlulumo noong dekada ng 1930 sa Estados Unidos, karamihan sa
mga tao ang naniniwala na ang mga depresyon o panlulumong pang-ekonomiya ay mawawala ng
kusa at mabibigyan ng solusyon ng kusa. Bago maganap ang Matinding Panlulumo, nakaranas na
ang Estados Unidos ng walong naunang grabeng mga depresyon, at lahat ay nalunasang kusa.
Subalit noong 1933, kahit na nagkaroon ng bagong pangulo sa katauhan ni Franklin D. Roosevelt,
hindi nagkaroon ng pagbuti o pag-inam ang katayuan ng mga negosyo, at ang lahat ay lumalala
pang lalo.[4]
Isang mahalagang dahilan para sa Matinding Panlulumo ay ang Kasunduan sa Versailles.[5] Dahil sa
Kasunduan sa Versailles naging napakayamang bansa ng Estados Unidos. Kapwa nagbigay
ang Gran Britanya at Pransiya ng malalaking halaga ng salapi sa Estados Unidos, at ang Alemanya
ay dapat na magbayad ng malaking halaga ng pera para sa pinsalang nagawa nila noong Unang
Digmaang Pandaigdig. Subalit ang kayamanang ito ang nagpasimula upang bumulusok ang
pamilihan ng kabahaging puhunan.
Kahit na noong pagkatapos ng Pagbagsak ng Wall Street noong 1929, nagkaroon pa rin ng pag-
asa ang mga tao. Sinabi ni John D. Rockefeller na "Ito ang mga araw kung kailan marami ang
nahihinaan ng loob. Sa loob ng 93 mga taon ng aking buhay, dumating at lumisan ang mga
panlulumo. Ang kasaganaan (kayamanan) ay palaging nagbabalik (bumabalik) at muling
magbabalik."[6] Ngunit dagliang lalala at lalala pa ang epekto ng depresyon. Nawalan ng mga
trabaho, pera, at tahanan ang mga tao. May mga ulat na sa Alemanya at Estados Unidos,
nagkaroon ng malubhang kagutuman, pagkakasakit, at pagkamatay dahil sa kagutuman.
Nang sumapit ang 1932, tinatayang nasa mahigit sa 11,000,000 hanggang bandang 15,000,000 ang
mga walang hanapbuhay na mga Amerikano. Hindi ito dahil sa katamaran, subalit dahil sa mga
dahilang hindi matabanan ng mga tao. Nagresulta ito sa pagpapasa ng Kongreso ng Estados
Unidos ng Batas hinggil sa Segurong Sosyal. Naging matagumpay ang mga programang
pinagtulung-tulungan ng mga pamahalaan ng mga estado at ng pamahalaang pederal. Dahil sa
katagumpayan ng mga programang ito, bago sumapit ang dalawang taon ay naglunsad na ang
bawat isang estado ng Estados Unidos ng katulad na mga programa.[7]

Paglaban sa Matinding Panlulumo[baguhin | baguhin ang batayan]

Nilabanan ni Franklin D. Roosevelt ang Matinding Panlulumo sa pamamagitan ng kanyang Bagong
Kasunduan o New Deal. Nakatuon ang Bagong Kasunduan sa pagbibigay ng tulong mula sa
pamahalaan sa mga tao, isang bagay na pinaniniwalaang mahalaga ng maraming mga tao upang
maiwasan ang pag-urong o resesyon at panlulumo o depresyon ng ekonomiya. Nakasaad ang
ideyang ito sa Batas na Pangtrabaho ng 1946 ng Estados Unidos. Kabilang sa mga programa ng
Bagong Kasunduan ang pagkakaroon ng mga seguro kapag nawalan ng trabaho ang isang tao, ang
segurong sosyal para mabigyan ng pera ang matatanda na at retirado.[4]
Bukod sa pagpapasimula at pagpapasigla ng negosyo, naglunsad din ang Bagong Kasunduan ni
Roosevelt ng mga katangiang pangkaligtasan ng ekonomiya o kabuhayan ng Estados Unidos.
Nilikha ang Federal Deposit Insurance Corporation (FDIC) o Pederal na Korporasyon para sa
Seguro ng Deposito at mga programa nito na pangsegurong pandeposito upang mapruteksiyunan
ang mga tagapagdeposito ng salapi sa mga bangko. Nilikha rin ang Securities and Exchange
Commision (SEC) o Komisyon sa mga Panagot at Palitan, isang ahensiyang magbabantay laban sa
mga hindi patas na mga gawain sa pamilihan ng mga kabahaging puhunan at hindi matabanang
pagbabakasakali sa pamumuhunan sa negosyo. Bilang mga aral na natutunan mula sa pagkaranas
ng pagbulusok ng kabahaging puhunan at Matinding Panlulumo, naging bahagi na ngayon ang
FDIC at SEC ng unang depensa sa mga panahon ng matinding pagbagal o pagbaba ng mga
negosyo sa Estados Unidos.[4]
The Asian financial crisis was a period of financial crisis that gripped much of East
Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown
due to financial contagion.
The crisis started in Thailand (known in Thailand as the Tom Yum Goong crisis; Thai: วิกฤตต ้มยำกุ ้ง)
on July 2nd, with the financial collapse of the Thai baht after the Thai government was forced
to float the baht due to lack of foreign currency to support its currency peg to the U.S. dollar. Capital
flight ensued almost immediately, beginning an international chain reaction. At the time, Thailand
had acquired a burden of foreign debt that made the country effectively bankrupt even before the
collapse of its currency.[1] As the crisis spread, most of Southeast Asia and Japan saw slumping
currencies,[2] devalued stock markets and other asset prices, and a precipitous rise in private debt.[3]
Indonesia, South Korea, and Thailand were the countries most affected by the crisis. Hong
Kong, Laos, Malaysia and the Philippines were also hurt by the slump. Brunei, mainland
China, Singapore, Taiwan, and Vietnam were less affected, although all suffered from a loss of
demand and confidence throughout the region. Japan was also affected, though less significantly.
Foreign debt-to-GDP ratios rose from 100% to 167% in the four large Association of Southeast
Asian Nations (ASEAN) economies in 1993–96, then shot up beyond 180% during the worst of the
crisis. In South Korea, the ratios rose from 13% to 21% and then as high as 40%, while the other
northern newly industrialized countries fared much better. Only in Thailand and South Korea did debt
service-to-exports ratios rise.[4]
Although most of the governments of Asia had seemingly sound fiscal policies, the International
Monetary Fund (IMF) stepped in to initiate a $40 billion program to stabilize the currencies of South
Korea, Thailand, and Indonesia, economies particularly hard hit by the crisis. The efforts to stem a
global economic crisis did little to stabilize the domestic situation in Indonesia, however. After 30
years in power, Indonesian President Suharto was forced to step down on 21 May 1998 in the wake
of widespread rioting that followed sharp price increases caused by a drastic devaluation of
the rupiah. The effects of the crisis lingered through 1998. In 1998, growth in the Philippines dropped
to virtually zero. Only Singapore and Taiwan proved relatively insulated from the shock, but both
suffered serious hits in passing, the former due to its size and geographical location between
Malaysia and Indonesia. By 1999, however, analysts saw signs that the economies of Asia were
beginning to recover.[5] After the crisis, economies in the region worked toward financial stability and
better financial supervision.[6]
Until 1999, Asia attracted almost half of the total capital inflow into developing countries. The
economies of Southeast Asia in particular maintained high interest rates attractive to foreign
investors looking for a high rate of return. As a result, the region's economies received a large inflow
of money and experienced a dramatic run-up in asset prices. At the same time, the regional
economies of Thailand, Malaysia, Indonesia, Singapore and South Korea experienced high growth
rates, of 8–12% GDP, in the late 1980s and early 1990s. This achievement was widely acclaimed by
financial institutions including IMF and World Bank, and was known as part of the "Asian economic
miracle".
Asian Financial Crisis

By JIM CHAPPELOW

Updated Jul 25, 2019

What Was the Asian Financial Crisis?

The Asian financial crisis, also called the "Asian Contagion," was a sequence of currency devaluations
and other events that began in the summer of 1997 and spread through many Asian markets. The
currency markets first failed in Thailand as the result of the government's decision to no longer peg the
local currency to the U.S. dollar (USD). Currency declines spread rapidly throughout East Asia, in turn
causing stock market declines, reduced import revenues, and government upheaval.

Understanding the Asian Financial Crisis

The business cycle, also known as the economic cycle or trade cycle, is the downward and
upward movement of gross domestic product (GDP) around its long-term growth trend.[1] The length
of a business cycle is the period of time containing a single boom and contraction in sequence.
These fluctuations typically involve shifts over time between periods of relatively rapid economic
growth (expansions or booms) and periods of relative stagnation or decline (contractions
or recessions).
Business cycles are usually measured by considering the growth rate of real gross domestic
product. Despite the often-applied term cycles, these fluctuations in economic activity do not exhibit
uniform or predictable periodicity. The common or popular usage boom-and-bust cycle refers to
fluctuations in which the expansion is rapid and the contraction severe.[2]
Stages of the Business Cycle
All business cycles are characterized by several different stages, as seen below.

1. Expansion
This is the first stage. When the expansion occurs, there is an increase in
employment, incomes, production, and sales. People generally pay their debts
on time. The economy has a steady flow in the money supply and investment is
booming.

2. Peak
The second stage is a peak when the economy hits a snag, having reached the
maximum level of growth. Prices hit their highest level, and economic indicators
stop growing. Many people start to restructure as the economy's growth starts to
reverse.

3. Recession
These are periods of contraction. During a recession, unemployment rises,
production slows down, sales start to drop because of a decline in demand, and
incomes become stagnant or decline.

4. Depression
Economic growth continues to drop while unemployment rises and production
plummets. Consumers and businesses find it hard to secure credit, trade is
reduced, and bankruptcies start to increase. Consumer confidence and
investment levels also drop.

5. Trough
This period marks the end of the depression, leading an economy into the next
step: recovery.

6. Recovery
In this stage, the economy starts to turn around. Low prices spur an increase in
demand, employment and production start to rise, and lenders start to open up
their credit coffers. This stage marks the end of one business cycle.

Ang siklo ng negosyo (Ingles: business cycle o economic cycle) ang ekonomikang pagbabago-bago
(fluctuations) sa produksiyon o gawaing ekonomika sa loob ng ilang buwan o mga taon. Ang pagbabago-
bagong ito ay nangyayari sa isang pangmatagalang takbo ng pag-unlad at karaniwang sumasangkot sa
pagbabago sapanahon sa pagitan ng mga periodo ng mabilis na paglagong ekonomika (expansion o
boom) at periodo ng relatibong stagnasyon o pagbagsak (resesyon). Ang siklog negosyo ay karaniwang
sinusukat sa pamamagitan ng pagtingin ng reyt ng paglago ng real na pangkalahatang produktong
domestiko (GDP). Bagaman ito ay tinawag na "siklo, ang mga pagbabago-bagong ito sa gawaing
ekonomika ay hindi sumusunod sa isang mekanikal o mahuhulaang mga periodikong paterno.[1]

Economic growth is the increase in the inflation-adjusted market value of the goods and services
produced by an economy over time. It is conventionally measured as the percent rate of increase in
real gross domestic product, or real GDP.[1]
Growth is usually calculated in real terms - i.e., inflation-adjusted terms – to eliminate the distorting
effect of inflation on the price of goods produced. Measurement of economic growth uses national
income accounting.[2] Since economic growth is measured as the annual percent change of gross
domestic product (GDP), it has all the advantages and drawbacks of that measure. The economic
growth rates of nations are commonly compared using the ratio of the GDP to population or per-
capita income.[3]
The "rate of economic growth" refers to the geometric annual rate of growth in GDP between the first
and the last year over a period of time. This growth rate is the trend in the average level of GDP over
the period, which ignores the fluctuations in the GDP around this trend.
An increase in economic growth caused by more efficient use of inputs (increased productivity of
labor, physical capital, energy or materials) is referred to as intensive growth. GDP growth caused
only by increases in the amount of inputs available for use (increased population, new territory) is
called extensive growth.[4]
Development of new goods and services also creates economic growth.[5]

Ang ekonomiks na pangkaunlaran o ekonomiks na pampag-unlad (Ingles: development

economics) ay isang sangay ng larangan ng ekonomika na humaharap sa mga aspetong pang-
ekonomiya ng proseso ng kaunlaran sa mga bansang mababa ang kita. Hindi lamang ito nakatuon
sa mga paraan ng pagtataguyod ng paglago ng ekonomiya at pagbabagong pangkayarian subalit
gayundin sa pagpapainam ng potensiyal para sa masa ng populasyon, halimbawa na ang sa
pamamagitan ng mga kalagayan ng kalusugan, edukasyon at pook ng hanapbuhay, sa
pamamagitan man ng mga pinagmumulang publiko o pribado.[1]
Kasangkot sa ekonomiks na pangkaunlaran ang paglikha ng mga teoriya at mga metodo na
nakakatulong sa pag-alam o determinasyon ng mga patakaran at mga gawain, at maaaring
isakatuparan sa kahit na antas na domestiko o internasyunal.[2] Maaari itong kasangkutan ng muling
pagbubuo ng kayarian ng mga insentibong pampamilihan o ng paggamit ng mga paraang
pangmatematika na katulad ng optimisasyong intertemporal; para sa pag-aanalisa ng proyekto, o
maaari itong kasangkutan ng isang kahaluan ng mga paraang pandami (kuwantitatibo) o
kuwalitatibo.[3]
Hindi tulad ng maraming iba pang mga larangan ng ekonomiks, ang mga pagharap na nasa loob ng
ekonomiks na pangkaunlaran ay maaaring magpaloob ng mga bagay na panlipunan at pampolitika
upang makagawa ng partikular na mga plano.[4] Gayundin, katulad ng iba pang mga larangan na
pang-ekonomiks, walang pagkakasundu-sundo hinggil sa kung ano ang dapat na matutunan o
malaman ng mga mag-aaral.[5] Ang iba't ibang mga pagharap ay maaaring magsaalang-alang ng
mga bagay na makapag-aambag sa pagtatagpong pang-ekonomiya o hindi pagtatagpo sa
kahabaan ng mga kabahayan, mga rehiyon, at mga bansa.[6]