Credit Crunch 600 years ago

“The problems did not take long to materialise. Fragmentation and rebellion broke out in the Persian provinces as Timur’s heirs jostled to take control of his empire. But more structural difficulties were unleashed by a global financial crisis in the fifteenth century that affected Europe and Asia. The crisis was caused by a series of factors that resonate 600 years later: over-saturated markets, currency devalnations and a lopsided balance of payments that went awry. Even with the growing demand for silks and other luxury products, there was only so much that could be absorbed. It was not that appetites were sated or that tastes had changed, it was that the exchange mechanism went wrong: Europe in particular had little to give in return », ceramics and spices that were so highly prized. With la effectively producing more than it could sell abroad, there to keep buying goods dried up – The result has often been described as a “bullion famine’.”

Frankopan P., The Silk Roads, ch 10, pg. 197, Bloomsbury, 2016


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