What is Financial crisis?

Economic crisis in the world

In the simplest definition, the financial crisis is the reduction of the circulation rate of money in the market. So the money is interrupted between the producer and the consumer. Economy works like a machine. The deterioration of one of the components affects the whole system.

Financial crises are the constant destiny of countries that consume more than they produce. Of course, the financial crisis in developed countries would be, but the effects are very different. In the economic crisis, wealthy citizens will postpone only a few vacation plans and stop some luxury needs. Poor countries may experience starvation in the financial crisis.

The first thing that raises the financial crisis is the rumors about the crisis. The psychological impact of financial crises on society is as great as financial effects. The reason why there is no money in the market, that is, the main reason for the decrease in shopping is that people are afraid of spending money. People don’t want to spend money on anything other than basic needs, they think their future is uncertain. Luxury products, holiday plans, home, car, goods replacement projects were largely abandoned. Every segment of the poor or rich society begins to think in this way.

The biggest impact of financial crises is generally seen on the poor and middle-class sectors. In times of economic crisis, consumption and investment in total expenditures decrease.

One of the first losses in financial crises is the large decrease in debt payment rates. In particular, the payment of credit debts is interrupted.

The arrival of economic crises gives many signs in advance. The result is a concrete mathematical calculation. Country resources, import-export rates, public expenditure, loans, debts, factories, businesses, etc. everything is obvious. But politicians treat every crisis as if they have no news. The cheapest of these tactics is the excuse of ” Game of external powers ”. The main reason for this is the fear of damage to votes.

Banks and factories are the first to be affected by financial crises. Mass layoffs and canceled investments, especially in large workplaces, are the worst situation in which the economic crisis is felt by all segments of society. Some of the rich are affected by this situation, but for the poor this means disaster.

Economic crises have been one of the most important factors shaping world history. 1799 French revolution, the 1878 economic crisis, the 1929 economic crisis, the crises in the 1970s, and the large-scale crisis such as the 2008 mortgage scandal have shaped the world history.

So far we have studied the issue of what is the economic crisis. What are the individual measures to be taken in the economic crisis? Click here to learn the detailed answer.

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