Economy
A Narrative – The Unfolding of the Global Financial Crisis. Part 1 (Update 3)
In 1980 a series of large apparently engineered [1] increases in the global price of oil [2] led to the destabilisation of the global economy, particularly in debt-dependent third world nations.
The resultant inflationary-deflationary spiral (stagflation) ultimately contributed to vulnerability in the US national banking system[3],[4].
Of other notable significance was the issuance of extraordinarily large loans issued by big financial institutions to a very small number of individuals – the Hunt and Saudi royal family[5] – for speculation in commodities.[6] The US-dollar devalued quickly.
This situation prompted the Fed to take drastic action. It implemented a general credit squeeze throughout the domestic economy, which (in turn and along with the then usurious level of interest rates[7]) led to a record quarterly economic decline. Transnational corporations evaded this squeeze, however, through their global back-channel loan operations.
The public were left largely unaware that the Fed’s credit squeeze and experiment with monetarism had actually failed to control the US money supply.