Economic crises are painful stages in history that deprive millions of people of work and savings. The ability to recognize a crisis at the initial stage can help a person save their money, and sometimes even stay “in the black”.
Decreased purchasing power
Prices for essential products in stores are starting to rise, while salaries remain the same. This financial situation is called the "overproduction crisis". The most serious crisis of overproduction occurred in the 1930s in the United States and was called the Great Depression. Millions of Americans found themselves on the streets, and only the competent policy of President Franklin Roosevelt made it possible to minimize casualties.
Currency fluctuations
Changes in quotes occur for several reasons. Firstly, the instability (including bankruptcy) of large enterprises and entire states causes the activity of stock exchange traders, who make money on exchange rate fluctuations. A number of traders do not even try to make money, but to minimize losses by lowering prices for “unreliable” financial instruments, wanting to sell them as soon as possible.
So the crises of 1987 ("Black Monday") and 2008 were associated with excessive speculation in the Japanese currency (yen). Crisis (and currency depreciation) are often also influenced by political events, especially wars.
According to Kondratyev's theory, the economy consists of cyclical periods lasting 40-60 years. Recessions and crises are necessary for society to "reset" the financial system.
Bulk cuts
Due to a decrease in the purchasing power of the population, a number of enterprises are losing their sales market, goods are not sold, and the cash flow ends. You have to pay salaries, but there is no money. The "domino principle" is triggered. The ruin of several large enterprises can cause bankruptcy of all others.
If people remain on the street (the newspapers often report this), this again leads to a decrease in purchasing power. All links of the system are interconnected. Therefore, the crisis can affect even relatively economically prosperous market sectors.
Historians believe that the first economic crisis occurred in ancient Rome. It was caused by government debt and a short-sighted policy of "violent deflation".
Antifragility
The theory of "Antifragility" was proposed by the American financier Nicholas Taleb. According to the theory, fragile financial systems rely on loans and transactions with “leverage” (leverage, credit secured by existing cash and liquid systems), while “antifragile” systems rely on cash and small investments in high-risk assets.
According to Taleb, the 2008 global financial crisis occurred due to the fragility of new financial instruments - derivatives, credit bonds. Tracking the popular financial transactions of the stock market can help determine the onset of a crisis more quickly.
