tema 9

Flashcards covering the themes of Deglobalization, the First World War economic impact, the Gold Standard, and the Great Depression based on the provided lecture notes.

Free movement of capital

A feature of the $1913$ economy where the absence of capital controls allowed investments and loans to flow freely between countries.

Gold Standard

A monetary system in which national currencies were backed by gold, guaranteeing exchange rate stability and facilitating international trade.

Trade integration

High levels of international commerce with low tariffs that favored economic growth and interdependence prior to $1914$.

London

The main global financial center in $1913$ that facilitated trade financing and international infrastructure investment.

Monetary discipline

A principle of the Gold Standard ensuring that a state cannot print money beyond its gold reserves, restraining inflation.

External deficit

A situation that under the Gold Standard could lead to gold outflows, forced contraction of the money supply, and slowed economic activity.

Great Britain (pre-$1914$ capital)

The world's leading exporter of capital which financed infrastructure, public debt, and production expansion in numerous countries.

Total War

A conflict such as the First World War that involves a massive increase in public spending, significantly affecting the accounts of the State.

Direct costs of WWI

The end of the first globalization and heavy losses in terms of both human and physical capital.

Human costs of WWI

Approximately $8.5$ million soldiers killed in battle, $2$ million by disease, and about $9$ million civilian deaths.

$1918\text{-}20$ Flu Epidemic

A global health crisis that caused roughly $50$ million deaths worldwide, exceeding the mortality of the First World War.

Military costs of WWI

Estimated between $\$180,000$ million and $\$230,000$ million in $1914$ prices, which was $4$ or $5$ times the US GDP in $1914$.

Money printing (WWI financing)

A strategy used by countries like Germany to print banknotes without gold backing, resulting in inflation and loss of currency confidence.

War bonds

Internal debt instruments issued to capture resources from citizens and companies, often marketed as a patriotic act.

External debt (Allies)

Loans obtained by countries like Great Britain and France from the US, consolidating future American financial influence in Europe.

Asset sales

The liquidation of foreign investments and colonies by Germany and Great Britain to finance the costs of the First World War.

Textile market loss

The displacement of British textile producers in Asia by Japanese producers during the First World War.

Post-war agricultural surpluses

The oversupply of food occurring after the war when combatant countries resumed production, causing international prices to fall.

War reparations

The $\$33,000$ million debt imposed on Germany to compensate winners for damages, representing an annual cost of $6\%$ of German GDP.

German deflation (Reparations mechanism)

The requirement for Germany to lower prices via high interest rates to export more and obtain the gold needed for payments.

Overvalued Libra

Great Britain's decision in the $1920s$ to set its currency value too high relative to gold, increasing imports and draining gold reserves.

German Hyperinflation

The economic catastrophe of $1923$ where the mark fell from $21,000$ per dollar to $6$ trillion per dollar by the end of the year.

Rentenmark

The new currency introduced in Germany in November $1923$ to stabilize the economy by being backed by American loans.

Fiscal consolidation

Government efforts to reduce budget deficits by cutting spending and increasing revenue to control public debt.

Invasion of the Ruhr

The $1923$ occupation of Germany's main steel and coal region by France and Belgium to demand reparation payments.

Passive resistance

The German government's policy of asking workers to refuse cooperation with occupation forces in the Ruhr, leading to a general strike.

Plan Dawes ($1924$)

A negotiation allowing Germany to pay reparations annually without using gold, aided by credit from the United States.

Plan Young ($1929$)

An agreement that reduced the total German debt to $\$26,350$ million and extended the payment term to $58.5$ years.

New York Stock Market Crash

The $1929$ event where stock prices fell by $90\%$, triggering the Great Depression.

Industrial production drop

The collapse in output during the Great Depression, falling by $50\%$ in the US and $30\%$ in Europe.

Deflation (Great Depression)

A $30\%$ fall in prices in developed countries that caused consumers to postpone purchases and increased the real value of debt.

Unemployment rate (US)

The share of the workforce out of a job, which rose from $3\%$ to $24\%$ in the three years following $1929$.

Speculation

The practice of buying stocks using easy credit with the expectation of selling at higher prices, driving the US bubble of the late $1920s$.

Kindleberger Spiral

A graph illustrating the dramatic contraction of world trade between $1929$ and $1933$.

Debt burden (Effect of deflation)

The increase in the real value of loans as nominal incomes fall, making it harder for firms and households to pay fixed debts.

Bank run

A massive withdrawal of deposits by holders fearing bank insolvency, which agudizes the bank's failure.

Demand accounts (Cuentas a la vista)

Bank accounts allowing funds to be withdrawn at any time without notice, facilitating deposit flight during financial panics.

Agricultural periphery crisis

The economic collapse in countries like Argentina or Australia due to food overproduction and falling global prices in the $1920s$.

Bank deregulation

A factor in the US that expanded credit making the economy vulnerable prior to the $1929$ crash.

NSDAP votes (Relationship to unemployment)

The correlation in Germany where high unemployment levels paved the political way for Adolf Hitler's rise to power.

Minimal State Orthodoxy

The pre-$1929$ liberal paradigm favoring low public spending and self-regulating markets.

Keynesianism

An economic model advocating for increased state intervention, regulation, and public spending to stimulate demand.

Monetary rigidity

Alimitation of the Gold Standard that prevented governments from printing money to stimulate the economy or finance public spending.

Liberal solutions (Initial response)

Deflationary measures like wage cuts, credit restriction, and public spending reductions initially used by states to address the crisis.

New Deal

The program of reforms launched by Franklin D. Roosevelt in $1932$ to exit the crisis in the United States.

Dollar devaluation ($1933$)

A surprise measure taken by the US to improve export competitiveness despite holding $1/3$ of world gold reserves.

Expansionary fiscal policy

A strategy involving increased government spending and tax cuts used in the New Deal to stimulate internal demand.

Full employment commitment (Nazi Germany)

A political promise by the Nazi regime achieved through state intervention and a Four-Year Plan.

Industrial and infrastructure expansion

The construction of public infrastructure and growth in production used in Germany to reduce unemployment under the Nazis.

Rearmament

The military expansion in Nazi Germany that served as a significant engine of industrial demand and job creation.