The Roaring Twenties were a period of economic prosperity and cultural change in the 1920s. They ended abruptly with the stock market crash of 1929. The following depression, known as the Great Depression, was the worst economic crisis in recent history.
The Great Inflation was a period of high inflation between 1965 and 1982. In 1980, year-over-year inflation reached nearly 14.5%. As a result of the high inflation, Federal Reserve chair Paul Volcker raised the target federal funds rate to 20%.
Stagflation is an economic phenomenon marked by high inflation and simultaneous high unemployment and stagnating economic growth. The term first came up in the 1960s to describe a novel phenomenon that Keynesian economists couldn’t explain at the time. Inflation is thought to stimulate economic growth and lower unemployment.
A recession is a significant decline in economic activity that is spread across the economy and lasts more than a few months. The most severe recession on record, which doesn’t meet the definition of a depression, was the Great Recession between 2007-2008 in the aftermath of the Global Financial Crisis.
On May 9th, 2022, the stablecoin UST lost its peg to the dollar and collapsed. The Terra collapse wiped out over $40 billion worth of value in a single week. It sent shock waves throughout the cryptocurrency market. Terra is an algorithmic stablecoin that aims to maintain a peg to the US dollar.
Quantitative tightening (QT) is when central banks let assets run off their balance sheets. It is the opposite of quantitative easing. As part of quantitative tightening, central banks don’t roll over assets like government bonds and mortgage-backed securities. This is usually done after weathering an economic crisis.
A stablecoin is a cryptocurrency that is pegged to another currency, commodity or asset. The most widely used stablecoins are pegged to the US dollar. This means, one stablecoin should be worth $1. Stablecoins combine the digital and borderless nature of cryptocurrencies with the low volatility of traditional fiat currencies.
The Global Financial Crisis took place between 2007-2008 when the US housing bubble burst. The housing bubble was the result of several factors, including loose lending requirements. During the Global Financial Crisis, real estate prices and stocks dropped sharply as millions of American home owners defaulted on their mortgages.
The Austrian Business Cycle theory aims to explain booms and busts through artificial credit expansion. According to the theory, economic boom and bust cycles aren’t due to flaws of the free market or natural occurrences but caused by artificially low interest rates. The theory originates from the Austrian school of economics.
Fiat currency is a form of government-issued money that isn’t backed by a commodity like silver or gold. Nation states adopted fiat currency as primary form of money after 1973.