The Great Depression and The Global Economy

Decent Essays

Since the great depression, the global economy has been facing a number of ups and downs. With the markets being built rapidly and crashing down in the other instant, elements that actually make up the skeleton of the international economy seems to have correlated variables. These variables seems to have been correlated with each other in numerous combinations and their correlation is what makes the market fluctuate. The volatility of the global market becomes more apparent in times of recession when the correlation between variables like stocks, bonds, US dollar, Euro, gold and oil becomes more apparent. Therefore, it is of paramount importance that these correlated variables should be studied with a very keen eye. Since the link between currencies, commodities, stocks an bonds runs very deep, change in any one of them seems to have a profound impact on the rest hence changing the face of the market.
One way to describe the correlation between the major assets of the international trade is that it should be seen as what compels the market that create dynamics between these variables. During long periods of prosperity and financial stability, players of the international trade ease up about the risk of loss either through a systematic underestimation of those risks, or a decline in their risk assessment tactics due to increasing wealth, or both. This aversion to the idea of risk and keeping that period of prosperity continuous makes the investors greedy, and

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