why were interest rates so high in 1990
Early 1990s recession in Australia In October 1987, the international Stock Market Slump saw markets crash around the world. The crisis originated when Japan and West Germany pushed up interest rates, pressuring US rates also to rise, triggering a massive sell off of US shares. Global share prices fell an average of 25%, but Australia saw a 40% decline.[1] 17 of the 18 major OECD economies experienced a recession in the early 1990s.[2]
Great Depression in the United States The Stock Market Crash of 1929 is often cited as the beginning of the Great Depression. It began on October 24, 1929, and was the most devastating stock market crash in the history of the United States. A lot of the stock market crash can be blamed on over exuberance and false expectations. In the years leading up to 1929, the stock market offered the potential for making huge gains in wealth. As share prices rose, people started to borrow money to invest in the stock market. However, on October 24 (Black Thursday), share prices began to fall and panic selling caused prices to fall sharply. On October 29 (Black Tuesday), share prices fell by $14 billion in a single day, more than $30 billion in the week. [9] The value that evaporated the week was 10x more than the entire federal budget and more than all of what the U.S. spent on World War I. By 1930 the value of shares had fallen by 90%. [10]