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    분류 Economy 학교 Asia Pacific International School
Recent Stock Market Crash in 2022 2022-05-29 오전 8:36:00

The U. S. stock market recently crashed. The overall stock prices greatly decreased, and Korea is being affected by it.

The reason behind this is that the Fed raised the interest rates to tackle inflation. Currently the U. S. inflation rate is at 8%, the highest in 30 years. Inflation is normal, but only at a 2% rate.
Inflation can happen of different reasons, and for example if the government prints too much money the situation can be like Venezuela.
However, America's inflation has different causes. In my opinion, it happened because of the production cost increase and the high demand. If production costs increase, that means the person selling it has to increase the price. If the demand is high, it is natural for the price to go up.
Because of the war in Ukraine, the wheat prices went up. Also, as COVID is going away, people are spending more, which is an increase in demand. However, the supply chain shrunk by COVID cannot handle the suddenly increased supply, which is why the inflation rate is increasing.

Because of this, the Fed raised the interest rates. Then how does this affect the stock market? The increase of interest rates result in people stepping out of dangerous investments, like stocks and NFTs. That is a big reason why the stock market is collapsing these days.

Korea is also being affected due to globalization. Lots of people invested large amounts of money, and about 50% of it is gone.

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Asia Pacific International School
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