Dollar crisis

Falling product prices make it impossible for businesses to repay their bank loans. A similar process occurs when excessive credit creation causes asset price bubbles in the stock market and the property market. Rapid loan growth causes asset prices to rise. Frequently banks accept the inflated assets as collateral for additional loans. This process continued for so long in Japan that the imperial gardens in Tokyo came to be considered as valuable as California. Eventually, it becomes impossible to pay the interest expense on such extraordinarily overvalued assets. The owners default, the banks then refuse to make new loans, the house of cards in asset prices begins to shake, panic sets in, the bubble pops and banks fail.