This war could be known as WWI and also The Great War. The was consisted of Germany, Austria-Hungary, and Turkey—against the Allies—mainly France, Great Britain, Russia, Italy, Japan, and the United States. The war was a war that will always be remembered as an unprecedented in the slaughter, carnage, and destruction it caused.
As the above table shows the nominal interest rate was declining over the course of the economic decline from 1929 to 1933 but because the rate of inflation was negative the real interest rate was much higher than the nominal interest rate.
Overproduction and Underconsumption
Many banks gave loans out to farmers who used the money to buy new machines. But when the crops of the farmers were not being bought, the farmers had no money to pay back the banks. Then nervous depositors withdrew their money from the banks. The bank is losing money from the withdraws and not receiving money from the loans it has given out. The bank is then forced to close because it has no money to return to their depositors. By 1933, the money from 9 million savings accounts had vanished.
Effects in the US
The impact of the Great War on the United States saw political, economic and social changes. The United States emerged from the war as a world military and industrial leader. Unlike the war-torn cities of Europe the homes and industries of the nation were relatively unscathed by the Great War. The late entry of the US meant that fewer men had lost their lives than in Europe. Production and efficiency in industries and factories had increased. Technology had advanced and the nation had entered the age of steel and electricity.
Effects in Germany
With the economy in ruins and the German government printing more and more money prices kept going up. Inflation became out of control; the price of an item could double in a matter of hours. By the autumn of 1923 a loaf of bread cost 200,000,000,000 marks. Workers paid by the hour found their wages were worthless, because prices had risen since they began their shifts.
Effects in Britain
A decision to return to the gold standard in 1925, at a rate which many believe was 10-14% overvalued. This overvaluation of Sterling reduced demand for exports, leading to lower economic growth. Many heavy industries, such as steel and coal become less competitive in this period. Deflation. The overvaluation of Sterling and relatively high real interest rates contributed to periods of falling prices. This deflation increased the burden of debt and reduced spending.