Lecture 3 - International Economy After the Recovery

Lecture 3 - International Economy After the Recovery -...

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International Economy after the Recovery 1. International Payments a. Debt and Reparations b. Investments 2. Gold Standard 1. International Payments (Debt/Reparations) - Chain of debt that continued to grow - Insisted on being paid in US dollars - It was difficult to sell goods to the USA (see diagram of Financial Investments – Lecture 1) – if anything happened to break the flow then Germany and Allies would be in trouble - In 1928 Wallstreet had a boom where this reduced foreign investment - Once Wallstreet crashed, US foreign investment completely stopped - Britain and France went to take the Gold Standard afterwards (Investment) - Investment patterns had shifted (badly) - British foreign investment was becoming stabilized internationally - UK pattern of Foreign Investment (pre 1914) o UK foreign investment – primarily producers o Recession in the UK lead to an increase in foreign investment in primary producing countries o Recession offset the exports into the UK o The UK had counter-cyclical investment (working against the economy to stabilize the country)
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