Vorlesung Teil 3: Flashcards
Middle of 1920s:
Prices for agricultural goods began to fall due to a higher productivity of land and labor, particularly in the USA
- > Income of farmers declined
- > Farmers borrowed more money to keep up investment
- > their debt rose
- > bankruptcy of farmers was the consequence
- > land and farm prices declined because of this
Trigger of the Great Depression is the crash of the US stock market in October 1929 (Black Thursday)
caused by unbridled speculation which led to a bubble
Since Black Thursday (Oct. 3, 1929):
Equity prices began to fall
because those who had financed themselves short-term, ran into insolvency so that they sold shares
- > downward spiral
- > losses in wealth
- > mortgages and house price dropped, because of excessive supply
- > construction industry fell into a recession and automobile industry collapsed
- > Unemployment rose rapidly, deflation occured
- > USA started, Germany was second
- > World depression followed
The world economy suffered in two respects:
International trade and thus international division of labor was drastically reduced (particularly by protectionist policies, but also because the slowdown of gerneral economic acitvity)
Southern European countries and Scandinavian countries suffered less, because they relied on agriculture and not industry
