Economic collapse

In the U.S. the Embargo Act of 1807 forbade foreign trade with warring European nations, causing a severe depression in the heavily international trade-dependent economy, especially in the shipping industry and port cities, ending a great boom.

The blockade of Germany during World War I led to starvation of hundreds of thousands of Germans but did not cause economic collapse, at least until the political turmoil and the hyperinflation that followed.

During the collapse of the Soviet Union, Armenia experienced three major shocks during this early phase of transformation, resulting in hyperinflation and loss of huge part of commerce.

[6] First, the old central planning regime collapsed, and many big Armenian companies that had been developed to serve the Soviet Union lost their markets almost overnight.

[8] During financial crises and even less severe situations, capital controls are often imposed to restrict or prohibit transferring or personally taking money, securities or other valuables out of a country.

The Taiping Rebellion followed by internal warfare, famines and epidemics caused the deaths of over 100 million and greatly damaged the economy.

The U.S. fully recovered by 1941, the eve of its entry in World War II, which gave rise to a boom as dramatic as the Depression that preceded it.

The high unemployment was partly a result of the productivity gains, allowing the number of hours of the standard work week to be cut while restoring economic output to previous levels after a few years.

During the 1980s, the Eastern Bloc, which relied on a highly centralized form of planned economy, experienced a decade-long period of stagnation from which it did not recover.

The end of the decade saw revolutions and the fall of communist regimes throughout Central and Eastern Europe, and eventually in the Soviet Union (USSR) by 1991.

Other nations of the former Soviet Union also experienced economic collapse, although a number of crises also involved armed conflicts, like in the break-away region Chechnya.

The default by Russia on its government bonds in 1998 led to the collapse of highly leveraged hedge fund Long Term Capital Management, which threatened the world financial system.

[17][18][19] The depression, which began after the Russian and Brazilian financial crises,[17] caused widespread unemployment, riots, the fall of the government, a default on the country's foreign debt, the rise of alternative currencies and the end of the peso's fixed exchange rate to the US dollar.

[23] In May 2020, annual inflation reached more than 800% following the reintroduction of the local currency, after which the government stopped releasing statistics as they had previously done over a decade earlier.

It's the worst in Venezuelan history, caused by the economic policies of the president, Nicolás Maduro the successor of Hugo Chávez, the fall in oil prices and internal and external factors.

In 2021, Italian and French banks increased their holdings of sovereign debt to slightly worrying levels, as a result of stimulus spending and monetary policy.

[40] Some economists (i.e. the Austrian School, in particular Ludwig von Mises), believe that government intervention and over-regulation of the economy can lead to the conditions for collapse.

The "boom" was created by "malinvestments," as Mises called them; business decisions that are bad investments and unsustainable in the long run because lowering interest rates by padding the supply of money and credit will only work in the short-term, but will ultimately collapse because the government can only hold down interest rates so long before fear of inflation kicks in (and deflation comes at the peak of the business cycle), or they go into hyperinflation (which is completely outside the realm of the ABCT).

Romanian American economist Nicholas Georgescu-Roegen, a progenitor in economics and the paradigm founder of ecological economics, has argued that the carrying capacity of Earth—that is, Earth's capacity to sustain human populations and consumption levels – is bound to decrease sometime in the future as Earth's finite stock of mineral resources is presently being extracted and put to use; and consequently, that the world economy as a whole is heading towards an inevitable future collapse, leading to the demise of human civilisation itself.

[42] Georgescu-Roegen is basing his pessimistic prediction on the two following considerations: Taken together, the Industrial Revolution in Britain in the second half of the 18th century has unintentionally thrust man's economy into a long, never-to-return overshoot-and-collapse trajectory with regard to the Earth's mineral stock.

From that point on, ever deepening scarcities will aggravate social conflict throughout the globe and ultimately spell the end of mankind itself, Georgescu-Roegen conjectures.

Georgescu-Roegen was the paradigm founder of ecological economics and is also considered the main intellectual figure influencing the degrowth movement.

Consequently, much work in these fields is devoted to discussing the existential impossibility of allocating Earth's finite stock of mineral resources evenly among an unknown number of present and future generations.

In effect, any conceivable intertemporal allocation of the finite stock will inevitably end up with universal economic decline at some future point.