The purpose of this paper is to identify the nature and root causes of theUSfinancial crisis and to consider the effects of the global crisis and recession on the Iranian economy. The author argues that the cause of the crisis is not the competitive market function but in fact it emanated from wrong interference of the US Administration in the economy. By low rates of interest, theUSmonetary authorities had distorted the information system regarding prices within the competitive market and then they had interrupted the link between the monetary and private sectors which finally led to the economic crisis.From the author's viewpoint, the global crisis and recession would affect the developing countries including the Islamic Republic of Iran. Although, this crisis consists of some potential opportunities for the Iranian economy, its threats are stronger than those opportunities which finally can lead to recession of the country's economy.
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