As the name implies, the financial crisis is the crisis of the financial system, because the human economy is inseparable from the financial system now, so the financial crisis is often accompanied by a serious economic crisis. The financial crisis is extremely destructive and has a particularly wide scope, not only involving all aspects of society, but also affecting other countries and even the whole world. Countries with financial crisis will fall into extreme depression, a large number of enterprises will close down, people will lose their economic resources, and the whole country will fall into turmoil. In history, countries have changed power because of the financial crisis. There are various reasons for the financial crisis, but most of them are related to financial products. For example, the subprime mortgage crisis in the United States, which has the greatest impact in recent years, has not even come out of the shadows. The rise and fall of prices in the financial crisis depends on the type of financial crisis.
I. Inflation
If the financial crisis is caused by inflation, prices will skyrocket. This is because the currency circulating in the society is far greater than its actual carrying function, and there will be cases where large denomination currency is used to buy few materials. After severe inflation, money will lose its credit. For example, in Shanghai during the war of liberation, prices soared, and people did not agree with money, as long as gold was enough.
Second, deflation.
If it is a financial crisis caused by deflation, prices will plummet. At this time, the funds flowing in the society are far less than the funds needed, which will cause the price to plummet. Small denominations of money can buy metamaterials, and merchants will go to property hoarding, which will lead to the non-circulation of goods, or the merchants will simply damage the goods and not sell them. In short, the financial crisis caused by whatever factors is devastating to the economy.
Do you think prices soared or plummeted during the financial crisis? Welcome to leave a message for discussion.