WHY THE ‘MAKE AMERICA WORSE’ BILL WILL LEAD TO HIGHER INFLATION | WHAT REALLY HAPPENED X-Frame-Options: SAMEORIGIN

WHY THE ‘MAKE AMERICA WORSE’ BILL WILL LEAD TO HIGHER INFLATION

When Sultan Abdulmejid I of the Ottoman Empire declared war on Russia in the summer of 1854, he assumed it would be an easy victory that would restore his crumbling empire back to its former glory.

But Abdulmejid’s dream never came true.

The Ottoman Empire was already in dire economic condition by the mid-1800s; Abdulmejid’s predecessor (and father) Mahmud II had presided over a major budget deficit, plus a devastating loss of territory. The Empire was shrinking and growing weaker.

So when Russia tried to capitalize on this weakness by invading Ottoman territory in 1853, Abdulmejid refused to back down. He allied himself with Britain and France, both of whom wanted to check Russian power, and they all went to war.

This became known as the Crimean War. And it was exceptionally costly, both in blood and treasure.

Abdulmejid was out of funds within a year. And in August of 1855, he turned to London bankers for a loan.

Initially they extended a £5 million loan (worth roughly $750 million today) at an effective rate of 7.5%. That was a significant sum of money back then. But the money quickly ran out, so Abdulmejid had to borrow another £3 million shortly thereafter.

The Russians were finally defeated in 1856. But the victory was so expensive that the Ottoman Empire was nearly bankrupt.

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