The treaty of Versailles greatly humiliated Germany forcing it to accept soul responsibility for the war. Another fault in this treaty was that it did not work as intended. The idea that Germany could ever afford to pay the reparations to full amount was ludicrous as it was already suffering from the defeat of war. These reparations caused runaway inflation throughout Germany. But perhaps the biggest problem of all was that those who created it themselves did not enforce
The strong form of the Say's law stated that the "costs of output are always covered in the aggregate by the sale-proceeds resulting from demand". Keynes argues that this can only hold true if the individual savings exactly equal the aggregate investment. While Classical economics believes in the theory of the invisible hand, where any imperfections in the economy get corrected automatically, Keynesian economics refuses the idea. Keynesian economics does not believe that price adjustments are possible easily and so the self-correcting market mechanism based on flexible prices also obviously doesn't. The Keynesian economists actually explain the determinants of saving, consumption, investment, and production differently than the classical economists.
“Complacent and ultimately harmful to British Interests” How far do you agree with this opinion of GB foreign policy in years 1925-1929? Between the years 1925-1929 British concerns on foreign policy were primarily on the basis of preserving peace and easing the Franco-Germany tensions, defence of Britain, maintaining the status quo, and healing the economy. The terrible losses of the First World War made both politicians and public recoil from the prospect of another war. Thus, Britain seemed to have everything to lose and nothing to gain from a major war, therefore the emphasis on preserving peace were made quite clearly throughout foreign policy as well as compromise, conciliation and concession to prevent any aggression. However some historians would say that Britain was too complacent when it came to foreign policy, and as soon as they believed they had reached satisfactory targets, they wouldn’t go any further, and so risk harming British interests.
How did government’s reaction to the Great Depression affect the United States? “Democracy cannot succeed unless those who express their choice are prepared to choose wisely. ” Said Franklin F. Roosevelt in 1938. When the Great Depression had first started in the States the government was not prepared to such a severe worldwide economic depression. They did not chose wisely.
This angered Stalin as he did not want West Germany to recover and be given Marshall Aid. Marshall Aid made tension worse because it divided Europe further, the west could get richer and the east would go poorer because Stalin would not accept Marshall Aid. The back round of the Berlin Blockade and airlift cause tension because the west wanted Germany to be more prosperous but Stalin wanted Germany and Berlin to be weak. Tension increased because Britain and America joined their zones together creating Bizona. Stalin got angrier when he heard that France joined to create Trizona.
Which one? If not, what economic system do you think your nation runs? 2. In the space below, organize your economic data. Highlight statistics that you think would indicate that your country runs a market-oriented economy.
Federal Reserve and Economic Policies Roberto Rodriguez ECO/372 6/26/2013 Shah Danyal Federal Reserve and Economic Policies Multiple factors and policies influence the regulations and guidelines that the Federal Reserve exercises in shaping the economy. The Federal Reserve operates with monetary policies to avoid inflation as well as to control the money supplies. Banks set their specific interest rates based on the discount rates implemented by the Reserve. Stimulus plans directly affect the money supply and the circulation of funds through the money multiplier effect. Discount rate is an indicator signifying change to the monetary policy rather than controlling the money supply.
In the early 30’s US due to President Hoover’s views on Foreign Policy believing that the US should not go into “firm commitments” where they would have to promise security to other countries. He did however believe in treaties but opposed using economic sanctions against dissentients, saying it would only cause military involvement. This almost detached was the US was going is looked back at was our stage of isolationism. We started severely isolationist in the start of the 30’s as time progressed towards the late 30’s and early 40’s America does a 180 and starts to interfere sneakily with the World’s problems. As the economy started to fail America seemed to have stepped back from foregin affairs and focused on problems within their own
The treaty was not the only reason for the failure of the Weimar Republic, issues such as the period time and the great depression contributed to this also. To state the treaty of Versailles was the only significant factor is difficult, as no single factor contributed to the rise of the Nazi party and eventual fall of Germany. The Treaty of Versailles stated that Germany was to loose essential territory to various victors of World War One. The most significant being loosing Alsace and Lorraine to France. The treaty added to Germany losing six million inhabitants and essential resources that contributed to their exports and in turn the economy.
When Keynes rejected the scale of reparations placed on Germany and resigned from his post at the Treasury, he lead the way for what many leading politicians were to understand later on. Keynes supported the approach of Lloyd George that for economic and political reasons, Europe needed a successful Germany, which would be seriously difficult to achieve whilst the excessive reparations were placed on them. Furthermore, his book The Economic Consequences of the Peace (1919), was successful in influencing the view of Britain that a weak Germany would only make the recovery of Europe after the war, a lot more difficult. On the other hand, from taking this view, politicians were criticised for being 'too lenient' towards Germany. Even Lloyd George, who took a much tougher political approach towards the reparations, received criticism.