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Sovereign Default of 400 BC
(Syracuse, Greece) – Dionysius confiscates gold and silver money,
re-mints it keeping the weight the same but changing the denomination from
one to two drachmae — the first known official devaluation at the
expense of the general population. A virulent inflation ensues.
Sovereign
Default of 377 BC (Ephesus, Greece) – Gold and
silver jewelry confiscated to pay budgetary deficit and avoid a collapse of
the city-state, no compensation is paid to owners (reported by Aristotle).
Punic
Wars Inflation of 241-146 BC
(Rome) – Continuous debasement of gold and silver coinage to pay for
wars against Carthage. Wealthy classes of savers, who saved in the form of
metal, suffered greatest losses, heavily indebted masses did not object.
Sovereign
Default of circa 200 BC (Miletus, Greece)
– Economic depression, first instance of forced public bond
subscription by citizens to pay the debts of bankrupt city-state.
Inflation
Crisis of 64 AD (Rome) – Emperor Nero debased
gold, silver and copper coinage as an indirect tax on Roman savers, policy
ignited inflation and caused general impoverishment of the lower classes.
This same devaluation tactic was used repeatedly by emperors during
Rome’s decline and fall.
Inflation
Crisis of 301 (Rome) – Emperor Diocletian
minted an overvalued silver denarius and touched off a rapid and
devastating price inflation, then speculative frenzy and social chaos.
Inflation
Crisis of 1020 (China) – One of the first
paper money printing schemes (S’ung
Dynasty) to buy off potential invaders that led to rapid inflation.
(Note:
China’s Cai Lun
invented paper in 105 AD, so it is fitting that China would introduce the
first paper banknotes in 806 AD. Upon Marco Polo’s return from China,
he described its use as money: “All these pieces of paper are issued
with as much solemnity and authority as if they were of pure gold or
silver; and on every piece a variety of officials, whose duty it is, have
to write their names, and to put their seals. And when all is duly
prepared, the chief officer deputed by the Khan smears the Seal entrusted
to him with vermilion, and impresses it on the paper, so that the form of
the Seal remains printed upon it in red; the Money is then authentic.
Anyone forging it would be punished with death.” It would follow too
that the first abuses in the printing of paper money would occur where it
was first issued.)
Hyperinflationary
Crisis of 1166 (China) – Money printing
scheme (Chin Dynasty) based on government monopoly of tea and salt to pay
for war against Mongols led to hyperinflationary breakdown.
Inflation
Crisis of 1296, 1309, 1350 and 1374
(China) — Series of inflationary crises related to debased currency
issuance by various dynasties, explosive credit and subsequent economic
breakdowns.
Inflation
Crisis of 1455 (China) – Excess issuance of
paper money caused inflation to soar, paper currency eliminated as means of
payment for several hundred years.
Medici
Bank Collapse of 1494 (Florence, Italy)
– Corruption, faulty investment, political intrigue and incompetent
management brought down the famed Florentine bank — millions lost
resulting in tyrannical taxes imposed on citizenry.
Inflation
of 1520-1640 (Spain, Europe) – Gold and
silver from the New World drove down the value of money leading to
Europe-wide hyperinflation. Spain defaulted on its sovereign debts in 1557,
1560, 1575 and 1596.
Tipper
and See-Saw Debt Crisis of 1621
(Holy Roman Empire) – States in Europe minted debased coinage that
touched off an inflationary nightmare resulting in widespread riots,
political instability and crippled economies.
Tulipmania
of 1637 (Netherlands) – Speculative
frenzy in tulip bulbs ruined thousands when the bubble burst.
South
Sea Bubble of 1720 (Great Britain) – Collapse of
inflated shares in the South Sea Company ruined investors; value depended
on individuals willing to pay ever higher prices for shares, not company-
generated profit.
Mississippi
Bubble of 1720 (France) – Financial crisis
and paper money scheme perpetrated by John Law based on exaggerated wealth
and trade opportunities in Louisiana. French economy collapsed when the
bubble burst.
Crisis
of 1772 (Great Britain) – Triggered
by collapse of a major London banking house.
Continental
Currency Failure of 1779 (United States)
– America’s first currency collapsed, George Washington
complained that a “wagon load of money will scarcely purchase a wagon
load of goods”, Spanish silver dollar cost 1.25 Continentals in 1777
and 500 Continentals in 1781.
Fiat
money inflation of 1789 (France) –
Over-issuance of paper money plunged nation into decade-long inflationary
crisis leading ultimately to the French Revolution.
Panic
of 1792 (United States) – Brought on
by credit expansion of newly formed Bank of the United States and rampant
speculation by prominent bankers.
Panic
of 1796 (United States, Great Britain)
– Precipitated by collapse of inflated land prices.
Debt
panic of 1813 (Denmark) – Early sovereign
default created internal financial crisis.
Panic
of 1819 (United States) – End to
first American boom-bust economic cycle fueled by unrestrained issuance of
paper money through the Second Bank of the United States, encouraged
speculation resulting in financial disaster.
Panic
of 1825 (Great Britain) – Stock
market crashed due to widespread failure of British banks, near collapse of
the Bank of England.
Panic
of 1837 (United States)–
Deflationary breakdown in the United States caused 25% unemployment rate,
bank collapses, business failures.
Panic
of 1847 (Great Britain) – Financial
markets collapsed following 1840s railroad boom with similar effects to the
Panic of 1837, specie standard reinstituted as a result.
Panic
of 1857 (Global) – First pervasive
international economic breakdown. New York financial sector did not recover
until after the Civil War Panic of 1866.
Panic
of 1873 (United States, Europe) –
So-called “Long Depression” lasting twenty years started with
financial failures in Vienna and spread to rest of Europe and finally the
U.S., resulting in widespread bank failures and railroad bankruptcies.
Panic
of 1884 (United States) – Caused by
tight credit following depletion of gold reserves in Europe and failure of
two New York City banks with ripple effect to other banks.
Panic
of 1890 (Great Britain) – Crisis
triggered when Barings Bank nearly went bankrupt due to poor investments in
Argentina. Bank of France bailed out British central bank.
Panic
of 1893 (United States)– Gilded Age
collapse and stock market collapse similar to 1873 triggered by shaky
railroad investments and a coup in Argentina, also caused a run on gold at
the U.S. Treasury.
Panic
of 1896 (United States)– Commodity
price deflation and a drop in U.S. silver reserves caused stock market
collapse and minor economic depression.
Panic
of 1901 (United States) – First crash
on the New York Stock Exchange precipitated once again by speculation in
railroad stocks.
Panic
of 1907 (United States) – Major
banking panic, run on deposits, stock market collapse (many feel that this
panic led ultimately to the creation of the Federal Reserve System). JP
Morgan organized bank bailout to keep financial failure contained.
Panic
of 1910–1911 – The after-effects of the
Sherman Anti-Trust Act, the break-up of Standard Oil caused slight
depression.
Nightmare
Hyperinflation of 1923 (Germany) –
Inflation rate hit 3,250,000% per month at its peak, many blamed World War
I reparations as the cause of the money printing binge that brought on the
crisis. (Note: Similar hyperinflationary crises, though not as severe,
occurred during the 1920s in Hungary, Poland, Austria and the Soviet
Union.)
Wall
Street Crash of 1929 (United States,
Global) – The most devastating stock market crash in U.S. history
launched the Great Depression of the 1930s.
Nightmare
HyperInflation of 1944 (Greece) – Started with the German occupation and reached its
peak after liberation. Citizens refused to accept the Drachma in commerce,
the country became impoverished.
Nightmare
Hyperinflation of 1946 (Hungary) –
Worst inflation ever recorded, prices doubled every fifteen hours wiping
out savings.
Stagflation
Crisis of 1973 (United States,
Global) – Global double-digit inflation rates and high unemployment
caused by decoupling gold from the dollar and two associated dollar
devaluations (1971, 1973).
Debt
Crisis of 1982 (Latin America) – Excessive
external debt triggered most serious capital crisis in Latin American
history, currency devaluations and
sovereign debt defaults.
Stock
market crash of 1987 (Global) –
Began in Hong Kong, spread to Europe and then the United States, the
largest one-day percentage decline in history of Dow Jones Industrial
Average (called Black Monday).
S&L
crisis of 1989-1991 (United States)
– Nearly one-fourth of U.S. savings and loan associations failed as
the result of bad real estate loans and brought on a mirror real estate
crash and disinflationary economic environment.
Asset
bubble of 1990 (Japan) – Stock and real
estate prices crashed launching Japan’s Lost Decade, deflationary
– disinflationary crisis largely confined to Japan.
Scandinavian
banking crisis of 1990 (Sweden, Finland)
– Currency and financial institution
breakdown, real estate bust.
Pound
sterling crisis of 1992–93
(Great Britain) – Speculative attack on British pound forced
UK’s withdrawal from European Exchange Rate Mechanism and caused
recession.
“Tequila
Crisis” of 1994 (Mexico) –
Sudden devaluation of peso touched off high inflation,
asset destruction, bank runs and controversial bailout by the
United States government.
Financial
Crisis of 1997 (Asia) – Financial contagion
affected several Asian nations, including stock market collapses, high
inflation and unemployment, real estate busts and a general financial
panic.
Monetary
Crisis of 1998 (Russia) – Russia devalues
ruble, defaults on its debts with knock-on effects globally, including an
11.5% drop in the Dow Jones Industrial Average in three trading sessions
and the collapse of Long Term Capital Management.
Economic
collapse of 1999 (Argentina) – Government
defaults on sovereign debts causing bank runs, riots, capital flight.
Overnight, the government freezes all bank accounts for 12 months. The
economy grinds to a virtual halt.
Dot-com
bubble bust of 2001 (United States) – Internet stock speculative frenzy ended in
general stock market collapse and malaise that lasted for over a decade.
Helped launch gold’s secular bull market.
Bank
crisis of 2008 (Iceland) -
Banks’ collapse caused depositor run, sharp drop in value of
Icelandic kronor.
Nightmare
Hyperinflation of 2008 (Zimbabwe)
– The worst 21st century hyperinflation thus far, a 79.6 billion per
cent annual inflation rate at its peak in 2008.
Financial
Crisis of 2008 (United States, Global) –
Near collapse of global financial system caused extensive, widespread
government bailouts and strong international safe-haven gold demand among
private investors, institutions and central banks.
Sovereign
debt crisis of 2010 (European Union)
– Began in Greece and spread through most of Europe. Ongoing crisis
precipitated fear among global investors about stability of Europe’s
banking system and the euro currency bloc.
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REFERENCES
Financial
Crisis/Wikipedia
Hyperinflation/Wikipedia
Foreign Bonds: An Autopsy/Max
Winkler (source ancient examples)
Ten Fascinating Economic Collapses/Richard Urban
China’s First Experience with Paper Money/Mike Hewitt
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