EVERY Financial Crisis Explained

this is a timeline of the most important recessions in history wait wait oops that's not the one okay that's right it's almost funny to see how each one of them is just a repeat of the same cycle it's the same players abusing power making the same mistakes and the losers just always the regular folks people who had no idea what was going on for example all of these recessions were caused by government or its lack of preparedness for external forces all of these were caused by failures in the financial system and all of these were

caused by greedy Millionaires and speculators just playing dice with the economy but so many of them started here and depending on where you're lean politically you might think that the culprit is like a lack of government oversight or too much intervention and you might be right but you shouldn't just Echo what media says recessions are caused by unpredictable events that lead to severe D are part of our business cycle Supply shock demand shock geopolitical issues that come about recession or will it be a bad always start with an economy that's been I do believe recessions

are really in you should judge these stories yourself and just know the facts and draw your own conclusion so here's every single recession in [Music] history we traveled tens of thousands of miles on this video you you'll see in a sec and the only reason we can get away with that is because we're not just a YouTube channel like slidebean is a SAS subscription business been running for eight years now and through all those eight years the backbone of our metrics has been CH mogle our sponsor for today they have what I believe one of

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that you'll get a $600 credit compared to to their usual planned price CH mle supports our Channel and they help us make these videos and if you check them out they'll keep doing it and we'll keep making them I'm done I want out it's just money the 1796 recession in the US is like this cookie cutter model for so many others it's it's also one of the first scares for America as a country and it involved one of the founding fathers who ended up in jail so the setup is the end of the Revolutionary War

that's the one where American colonies rebelled against the British and so the Brits had claimed all the land all the way to the Mississippi River now it technically belonged to the former US federal government but speculators started buying up these vast lands the government needed money it was cheap uninhabited land and it was obviously going to grow in value as more settlers eventually came in and I'm going to go back to that now over on the East Washington DC was under construction the capital of this new country and these three clever guys figured that they

can also purchase some land there and that it was also going to appreciate quicker they formed the North America Land Company and by 1793 they owned 40% of all the land of what is now DC and to buy up all this land they they wanted to raise money from European investors but Europe was concerned with some other guys so to keep funding this expansion they started issuing their own bank notes their own currency yeah it was backed by all the Western lands that they had purchased at this time we had a First Bank of the

United States it existed it's the equivalent of a central bank but there was no established currency in the country each Bank was able to issue their own notes and this was very weird but definitely legal and there were other land speculators around they were not the only ones but North American Land Company co-founded by Morris who was a founding father was respected and trusted enough to issue its own currency taxfree and backed by the full faith and credit of The Sovereign Sandia Republic but the war in Europe and and other factors were causing a lot

of businesses to go belly up around 1796 and some land speculators started Landing in jail because of their debt including this guy who was an associate US Supreme Court Justice now a rumor spread that Robert Morris was in jail as well and that was the trigger by this point the North American Land Company had issued 10 million moris dollars the equivalent of $232 million in today's money and so the company and all other land speculation schemes started imploding the the recession hit coastal cities especially hard with with shopkeepers and Artisans and wage laborers just taking

the biggest hit and and going out of business but luckily luckily we learned some really good lessons from this thing for example avoiding these protoc currencies like currencies that are not regulated by a central bank and we learned never to do it again okay so now cue that video that we like 1637 1797 1819 29 1937 1974 97 2000 and whatever we want to call this it's all just the same thing over and over we can't help ourselves yeah of course yeah so protoc currencies were part culprate for the 1819 the the 1837 the 1857

and the 1873 panics real estate speculation was at the core of the 1819 crisis the 1837 the 1873 and of course the 2024 I'm sorry I mean the 2009 2009 real estate crisis perhaps the biggest lesson here for this Young America was how interconnected world economies were which 1796 Americans understandably didn't get very well but that's a lesson that took way longer for other people to learn the 1957 crisis was directly caused by This Global dependence and 200 years later they learned the same lesson here in iand where the three biggest banks in the country

imploded these Banks were overleveraged they overreached they had too many loans that they could not afford to pay when the 2009 crisis hit begging Russia for a loan of almost $5.5 billion primary concern is the sustainability of the banking system as well as the best interest of the Icelandic people but for Iceland this crisis meant riots and the top Old Government people went to jail and the country's currency was severely devalued which silver Landing helped Spike Iceland as a tourist destination during the 2010 part of the reason we are here I can't really talk right

now I'm on my way to a volcano uh by the way like we didn't fly me here just for this shot I had a layover and I just couldn't help myself but by the way by the way on this little timeline that we'll make as we eventually edit this video we have the symbol which references how severe each crisis was in our scale of say wallet wobble to Holy economic apocal PHS Batman the 2009 recession that's a 5 out of five but the Great Depression in 1929 I think it deserves a category of its own

every time America has had a panic in the past it has paid people to buy stocks in the midst of the excitement in 2009 even with countries like Iceland and the US on the verge of collapse worldwide GDP saw a 1% decrease but between 1929 and 1932 worldwide GDP decreased by 15% let me tell you why stock prices plummeted sickly across the board spurring the rush of sell orders from terrified speculative still more so we're coming out of the 20s and it's crazy times this is a post-war boom Ford invents the car and there's wood

and rubber and and Steel Industries growing in the US and in Europe and the US economy doubled in size from 1920 to 1929 and who was funding this growth loans of course and Banks so Farmers took out mortgages to pay for equipment and to expand their land factories expanded and they hired people to ramp up production so the entire US economy doubled in size but it had done so using credit and and the US was printing money like crazy to keep up with all of this activities and with so much money on the street people

wanted to invest this time not on real estate but on this cool little game gamble they play here called stocks Millionaires and cooks and janitors they all ran to put their money their life savings into the stock market and and Banks wanted a piece of this but since Banks can't technically invest in the stock market they found a workaround to get into the game they would lend people money so that they would invest in the stock market and this new creative instrument was called margin trading and they did a lot of it you could essentially

borrow 90% of the money to buy stocks for example say you wanted to buy an Apple share worth $180 you only really needed $118 and the bank would lend you the rest and so when the bank had lent all their money they'd borrow from another bank to just keep playing the game and the party was never going to stop customers thats were backed by stocks this very stable thing that never ever changes in value drastically and those were solid and not inflated at all right cuz from 1922 to 1929 the Dow grew by 220% people

were really investing in this thing and and they were doing it with money that they didn't really have and the US did have a central bank by now and they were scared of wait for it they were scared of inflation so they decide you know where this is going they decide to raise interest rates and weird things happen when interest rates go up so drastically wait inflation is the problem so the FED just made other things more expensive they managed to stop people from borrowing all right but people also started spending less which meant Less

sales which meant all that borrowed Capital to ramp up production wasn't really getting paid and it meant people started losing their jobs and then of course those leveraged trades on the stock market suddenly start plummeting and then Banks can't collect their margin calls because people are unemployed and stocks are down which means that they can't pay their own debts to the other Banks and there's this domino effect on Black Tuesday alone the stock exchange lost $14 billion that's roughly $240 billion of today's money the tremendous crowds which you see gathered outside the stock exchange are

due to the greatest frash in the history of the New York Stock Exchange and market prices in total it's estimated that the crash cost $600 billion in losses in today's money the stock market didn't stop plummeting until 1932 by then the US market had lost 89% of its value but outside of Wall Street things were way worse one out of every four Americans was out of a job and this meant lines for basic Goods lines for food the go Government tried to fix things they tried to make things better so for example they tried putting

t on imported goods so that people would buy local groceries local production but they got slapped with retaliation tariffs instead and have we seen this before Donald Trump has threatened to impose major new tariffs on cars imported to the US and the European Union it comes on the same day that EU tariffs on iconic American Goods came into effect by the end of this crisis in 39 over 60% of rural households at 82% of farm families were classified as has impoverished and they had nothing to do with what was going on here and then by

this time the US was very much a developed economy and it's still so hundreds of people die of hunger unemployment hit virtually every country in the world it doubled in France and Germany and they all had to find a way to cope and the silver Landing a shopping holiday which I wish was a joke but is but what did we learn we learned to never again speculate on stocks we learned to ban all margin trading altogether and we learned to stop Banks from overleveraging their positions and we learned that crazy stuff happens when you suddenly

bump interest rates and what that does to the economy we learned all that now in all seriousness like there there are a lot of factors that affect what interest rates can do and even the top economists can't agree but um yeah some similarities many Americans are beginning to really feel the ripple effect as the FED interest rate today we took another step by raising our policy interest rate a qu% 10th consecutive interest rate hike as the country tries to fight off inflation by way I've always wondered how much Tech went in into stock trading back

in the 1920s uh it worked like this you would call your broker who then would call the floor they'd find a Trader of that stock and they would find the best possible price and then once you've got a price uh then the purchase was made and then the sale was recorded at the exchange first in a slip of paper and then handed to keyboard operator who typed it in using the stock symbol that's that's what they were used for and then this got distributed using Telegraph technology into these tickers that these this these slips of

paper and you'd instantly or I guess mostly instantly know what happened even if you were on the other side of the world it is kind of like in the internet I guess but the first crisis to be arguably caused by the telegraph itself was the Panic of 1857 the first panic that we would consider a worldwide or at least a West e wide crisis okay it's happening everybody Cal down so we're coming out of the Gold Rush this is the 1850s if you don't know the Gold Rush was was gold was found in California and

about 300,000 people moved to the state to try and get their hands on some of it and then the railroad was a key part of this the railroads were a great business back then Banks again started lending money to these entrepreneurs to build more railroads but many of them never made it past what they called paper railroad companies they' never built a single line or owned a single train now meanwhile Dread Scott who was who was black slave had sued for his freedom and his case had made it all the way to the Supreme Court

but he lost at that point black people were not considered citizens and therefore he couldn't really Sue but this decision also meant that the Supreme Court could not forbid slavery anywhere else in the US and this was of course an issue CU people in the North like they didn't want to move to a state or to a region of the country where slavery is legal or allowed which meant that this bubble of railroad investment and railroad stocks popped meanwhile another Factor this bank called the Ohio life insurance and Trust Company went belly up and and

and these news spread quickly thanks to the telegraph but there's one other piece of the puzzle and this is kind of like a Hollywood style almost piece of the puzzle back then getting from California to New York even with this railroad infrastructure was very slow so the best way the quickest and most efficient way to send gold from California to New York was through here in Central America and this is a humble brag this time cuz I'm actually from here but anyway ship leaves California and instead of going all the way around South America they

stop at Panama offload the gold ship it to the other side where the SS Central America would pick it up and then sail up north and this is all a great plan until you come across a hurricane and sink and die on September 12th 1857 the S of Central America sank off the coast of North Carolina with 300,000 lb of gold worth about $1 billion in today's money oh my God it's like 30 degrees here oh Jesus continuity man this continuity now here in Great Britain the cherry on top for this story is that the

Brits have circumvented the gold standard they didn't really call it the gold standard they call it the bank Charter Act of 1844 but it is somewhat the same thing by the way in a nutshell the gold standard is a policy where money issued by Banks must be backed by gold or by silver in other words each Bank Bill represents a certain amount of gold that the bank owns and its values are tied together and then the last Factor was the end of the war in Crimea and then here in Crimea no no I'm just kidding

not really Crimea just just 150 years ago an army of British French and Turkish soldiers landed on Russia's Southern Shore war in Crimea just ended which meant that the crimeans stopped buying American wheat like they needed it before they didn't need it anymore uh which also really affected the US oh and then by November that year Napoleon was already tweeting a telegraphing about it it's not the real Napoleon this is like his nephew Napoleon thei but yeah they were concerned and by the looks of this it sounds like this crisis affected the investors and the

banks but that always always trickles down to regular folks like railroad companies shut down all over the country worker salaries were cut Farmers could no longer make payments on their land which cycled again into Banks domino effect and and and banks failed across the pond here in the US and and in Great Britain and even though this crisis doesn't rank so high in our scale people still suffered we learned some great lessons from this um we learned never to speculate on stocks especially railroad stocks yeah cuz that also caused the 73 the 84 the 93

and especially the 1901 crisis where two billionaires tried to admit themselves buying stocks on the Northern Pacific Railway and it made wall street collapse one of those guys was ah Harman and the other one we probably know by name this was the first ever stock market CFT crash and that's probably the reason why Jeremy Irons brings it up 190107 Jesus didn't that [ __ ] [ __ ] me up good but it only really ranks 2 out of five in our scale it looks like it wasn't a big deal for average people except small investors

they learned that it's really big investors who call the shots who run the show and that we are all at their mercy and never ever again did someone some small investor gamble their life savings in the stock market it's pretty crazy how speculation is just the common cause of all of these recessions it's like we can't help ourselves and this has been the story ever since the first one so the first one was toip Mania um and we actually made a whole video about that one now that I think about it we've I think we've

made dedicated videos for a bunch uh we did 2009 housing crisis explained with the Monopoly we did the 2001. com bubble with a much younger me still one of our favorite videos the last thing I have to ask is do you want us to keep going let us know in the comments and hit that red button if you want to watch the next one see you next [Music] week