John Maynard Keynes And The First World War

Keynes initiated a revolution in economic thinking by challenging the beliefs that neoclassical economists held. He argued that their ideas that free markets would naturally provide full employment in the short to medium term is

One type of economic belief is called Keynesian economics. This belief or theory is in favor of total spending in the economy. It also agrees with total spending output and inflation, prices of goods rising consistently. This form of economics was developed in the 1930’s by a economist, John Maynard Keynes, in hopes of gaining a better understanding of the Great Depression. Keynes was for more government spending and lower taxes that would possibly pull the U.S. out of the depression. Basically, this gave hope that America’s government could get out of its low production time by stabilizing goods. Before the idea of Keynesian economics, people believed that the fluctuations in the output of manufactures would handle itself. The flaw in this

WWI was a war going on from 1914 to 1918 which involved The Allies, Great Britain, France, Russia, And Italy, Then The Central Powers, Germany, Austria-Hungary, Bulgaria, and the Ottoman Empire. The Great Depression was something that happened after WWI (October 29, 1929), which happened because of the U.S. stock market. (WWI notes)

Keynes economics theory refers to the concept that optimal economic performance could be achieved. In addition to optimal performance , Keynes believed that economic downfall could be prevented. To attain this outcome , Keynes believed that through activating stabilizers such as taxes, optimal economic performance and prevented downfall in the economy could be achieved. Intervention policies by the government would also be necessary. Keynes theory was considered to be a “demand side” theory. The notion that the reduction in wage rates could be a possible way to restore full employment in an economy was opposed by Keynes. In the Keynesian theory it is stated that employers will not employ additional employees to produce goods or services that do not sell well or are making a loss for the company because demand for such products or services is decreasing. Keynes noted that there may be a reduction in capital investment when prices are reduced as companies may see the market reducing and profits from such a market decreasing , rather than investing in equipment purely because the price of the equipment has dropped. They will take into account the real value of the purchase. This would have a knock on effect on the overall expenditures and employment , resulting in a reduction of overall expenditure and employment. Keynes believed that an increase in aggregate demand for good and services would boost the economic situation of any given

Imagine a man that had an ability to sense events and outcomes of wars. Now, stop imagining because that man is real. His name is Winston Churchill and he was Prime Minister of England from November 30, 1874 to January 24, 1965. Winston Churchill was an amazing leader, but on top of it, he had also significantly helped to put the Nazi regime to an end.

The Treaty of Versailles’ required reparations caused hyperinflation in Germany’s economy, effectively rendering money completely useless. Even so, Germany still could not pay the ridiculous demands asked of them, and was invaded by France and Belgium who forcefully took crucial factories and resources in place of the money they were owed. This led to even greater inflation, and unemployment rates soared. The people were miserable. Then, in 1924, there was sudden hope for Germany, as a new plan was enacted where the country would take loans from the USA, and boost its economy back to working business that way. This worked great for 5 years, and that period of time was known as the “Golden Years” for Germany. Then, the Great Depression hit, and just like the rest of the world, Germany was utterly devastated, for it now depended intensely upon the USA’s economy. Germany went down with the United States of America, was sent back into horrible, debilitating economic depression (Economic

In June 1919, the German country reluctantly signed the famous Treaty of Versailles. They were furious with the standards the treaty set but had no choice as their country lost all of their arms and lost many of their soldiers. Many people back then thought that the punishment should be harsher, harsh enough to where the country would no longer be able to ever fight again. Little did they know, the treaty as it was, was enough to destroy Germany’s economy. The Treaty of Versailles was unfair and made the punishment far worse than what it should have been.

The second case is about the economic impact of the Treaty. The Treaty of Versailles criticized Germany for begging the war. This makes Germany responsible for the cost of the war. Reparations would be paid monthly and would total some £6,600 million. In addition,

Although the loss of territory had impacted Germany physically, and became perhaps the driving force behind the Nazi imperialistic policies, it was perhaps the least damaging restriction to the economy from the treaty, especially since many of the areas were poor agricultural fringe areas who had a different ethnic culture to that of the Germans. Another implication of the Treaty of Versailles was the disarmament of the German forces, being cut down to a force of only one hundred thousand men, and crippling the German military industry. As well the Allies were to occupy the left bank of the Rhine River, a site of industry for the Germany military. Perhaps the most damaging to the German economy were the reparations which the Allies forced upon Germany. The Allies demanded that Germany repay most, if not all of the $150.5 billion that they calculated the war cost. There were other significant features of the treaty designed to make Germany unable to compete on the international market such as not being allowed to impose tariffs on the Allied goods until 1925, and the transfer of German patents to the Allied forces. After the war the Germany economy had been crippled, and was slow to recover. Essentially recovery came when the restrictions on Germany had been ignored.

Another economic effect of Versailles was the reparation total – which would be shouldered entirely by Germany. The reparations would inevitably lead to the collapse of German currency and hyperinflation to such a degree that it took billions of dollars to buy a single loaf of bread. The payments – which totaled close to 40,000,000,000 dollars – made it so that and economical positivity, which was already next to impossible, would simply be taken away from them and seen as the payment of a guilty nation. The people of that guilty nation were the saddest story of this

Economic depression, specifically the Great Depression (also caused by the Stock Market crash), is one cause of WWII.

Among Time magazine’s most important people of the century in 1999, John Maynard Keynes (5 June 1883 - 21 April 1946), was widely considered to be one of the most influential economists of the 20th century and the founder of modern macroeconomics. The magazine stated “his radical idea that governments should spend money they don’t have may have saved capitalism.” In addition to being an economist, Keynes also served the British Civil Service, directed the Bank of England, and was part of the Bloomsbury Group of intellectuals. Fundamentally, his ideas changed the practice and theory of macroeconomics and the economic policies of governments. Many of his ideas are revolutionary, known as Keynesian economics, that can define virtually all economists who came after him.

For an economy to grow, succeed and become stable there has to be an involvement of the government. Keynes's theory shows how the total spending in the economy affects output (production) and inflation (Increase in prices).

In John Keynes’s The Economic Consequences of the Peace, Keynes begins by informing the audience on his belief that the peace treaty offered by France and England to Germany was not only illogical but hazardous. He follows up his statement by pointing out that Europe is built on a single foundation that began to fall apart with Germany’s actions and would eventually crumble due to the reparations imposed by the peace treaty. Keynes then moves on to discuss the Treaty of Versailles and its consequences. He explains that the architects of the treaty had several

developed his theory based on the Adam Smith’s theory. Keynes did not entirely disagree with