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well today we are going to study the 1929 crisis as you can see in the title

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is 1929 the capitalist economy in crisis so this is going to be one we are going

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to see in this video the whole point it is a little bit difficult so I want you

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to pay attention and to revisit or to review this video if it's needed in

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order to understand it so let's see the first thing you need to know is we need

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an introduction. What we need to see is how is the economy before the

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crisis. The main characteristics of this capitalist

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economic system is first that there is absolute freedom of business and the

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market. It means there is no laws that they are going to restrict the trade,

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there is no laws in order to restrict the business. It means they are following

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the liberal ideas okay related with economy so the idea is they are going to

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let the companies do anything they want they are not going to set laws the state

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is not going to intervene in the economy so that means that there is no economic

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planning that determine how or what should be produced it means the company

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can decide what to produce and how to produce it there is no laws there is no

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there is no rules set in order to plan the economy or to control what the

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different companies are doing so there is no state intervention in the economy

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okay so that's the idea the state is not going to control for example the

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healthcare system. The state is not going to control, is not going to have public

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companies in order to compete with the private companies. No, the system is based

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on private companies and these private companies are

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going to be free, free to do anything they want. So if there is, for example,

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economic transactions, no rules, no laws, no state intervention. So it means

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is a world where the different companies can do anything they want also the

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banks okay the banks can give loans the banks can pay anything they want

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anything they are free to do anything they want so there is no state

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intervention and this world the world before 1929 is based on liberalism

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economic liberalism okay so that is important you need to understand that

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there is freedom for business or of business and there is no state intervention the economy is not

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planned the economy is free is kind of like nowadays but now the state has more power

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it's intervening in economy it means the state nowadays is not establishing for example the

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prices of the objects but the state is setting some rules for example if you want to send

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pay something or send money or make a big transaction related with a huge

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amount of money there are some limitations in this moment there is no

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limitations okay you can do anything you want related with a market related with

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business or related with the economy in general okay so what we are going to see

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now in the next slide is it's an a schematic explanation of the crisis of

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1929 ok so what I'm going to do is explain this this graphic using Spanish

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because it's going to be easier and the topic is a little bit hard so this next

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slide is going to be in Spanish the rest are going to be in English so let's see

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what you can watch this movie in this video I have uploaded to the all of it

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one so let's see this bien pasamos espanol lo primero que tenéis que tener

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in mind and we have seen it in class is how the capitalist system works we do not have a

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company the company wants to produce something is worth therefore create a product true to create

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that product that needs money capital from where it gets what it does is invest that capital

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according to from that product it sells it and by selling it it obtains a benefit with that benefit

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what does the company do pay salaries is worth paying a part obviously a part of the benefit is going to end

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in the payment in the salaries that the workers are going to receive another part is reversed in the company

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to improve the production improve the products and continue to sell according to

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so this is the circle that is to say the company produces something is worth investing money is worth

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obtaining means of production whether they are machines or factories and through

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the sale of those products gets a benefit with which, among other things, he pays the salaries.

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Well, where does the company's money come from? Generally, the company asks a bank for a credit,

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asks a bank for money to be able to invest and to be able to create that product. So far there is no

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problem, okay? This system that I am going to describe is the one that exists today, okay? The

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point is that this bank is not only going to give credits to invest in a private company that

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can be in the agricultural sector, that is, the primary sector or in the industrial sector, secondary sector,

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but it can also make investments in countries, for example, that is, this bank can lend

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money to or companies in other countries or it can give credit not only to companies in other

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countries but it can also be to the country itself to the government itself that gives it money to

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invest it in what it needs, therefore the bank lends money called credit credit

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in English is worth to invest so that the company invests in production creates a product and

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get through the sale a benefit with that benefit pays salaries among other things or

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improves production well the bank not only gives credit to national companies but can give it

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in other countries it can be given to other countries or to companies in other countries but fundamentally

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they are going to be industrial companies and farmers that is to say the bank gives credit an investment

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is worth that a company of industrial character can ask for a company of agricultural character or a

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farmer for their lands or a country or companies from another country that ask for credit to this

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bank because it is a large bank that has an important amount of money that has what is

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called liquidity, that is, it has a large amount of monetary resource to lend until it is clear

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then the company has this production base has this function and to be able to create this product

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to be able to produce it needs money who gives the money is fundamentally the bank through

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a concept of an element that is credit through it invests and can invest in countries

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in industrial companies or farmers or agricultural companies well what is the problem the

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problem is that a good company the problem what is if a company or the next the next

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phase let's say this is the this phase is the simplest the next phase is that a company

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can go out of stock what does this mean let's imagine that marco david and paula create a

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empresa que es una empresa de automóviles de acuerdo marco ha puesto el 40 por ciento de ese

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dinero para producir los coches y david y paula cada uno ha puesto un 30 por ciento vale por

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tanto de este beneficio que va a ir una parte de los salarios el resto del beneficio se reparte

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entre esas tres personas que poseen la empresa quien va a recibir mayor cantidad de beneficio

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evidently marco who put a 40 percent so that of this benefit it is worth the equivalent of a 40

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percent would go for marco a 30 percent would go for david and another 30 percent would go for paula

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is worth removing the salary margin is worth well what happens that this company when it is

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big enough goes out to the stock market what does this mean to leave the stock market is an institution

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vale en la que se pueden comprar y vender lo que vamos a denominar como acciones que es una

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opción una acción es el valor de la empresa dividido en unidades llamadas acciones me

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explico imaginemos que tenemos una empresa y la vamos a dividir en 400 acciones vale el 40% de

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las acciones estarían en manos de marco porque él puso el 40 por ciento del dinero o del capital

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to produce these objects to create the company a 30% would be in the hands of david and the

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final 30% would be in the hands of paula when this company goes into the stock market, participation is

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worth, that is, the shares the participation of these three people when creating the company

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converted into shares go on to be in this market of values ​​called stock market, that is, it is a place

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an institution that people come to and in which they can pay to buy these shares, that is,

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to buy the participation, it is worth a percentage of that company, therefore, let's imagine that we have

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Pablo, Pablo says well, I want to buy 40% of the shares that Marco has, it is worth

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so that I am the majority shareholder and I am going to control the company that Marco says yes perfect

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yo te yo te vendo mi 40 por ciento de acciones porque estoy cansado de participar en la empresa

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no quiero riesgos que la empresa quiebre y perder el dinero entonces dice bien yo te vendo el 40

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por ciento de las acciones mías que son el 40 por ciento de la empresa el problema es que imaginaos

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que marco puso pues a ver un 40 por ciento 400 euros este paula puso 300 y david puso 300 vale

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imaginemos para montar la empresa pone esa cantidad de dinero el problema es que como la empresa ahora

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has come out of the bag is a company that produces a large number of cars and is getting a

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great benefit obviously the shares that are sold are not going to be sold at 400 euros that is to say

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40 percent of the company is no longer 400 euros that I put at the beginning but maybe it has been

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multiplied by 10 because the benefits are so great that evidently marco is going to get a

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benefit of it, that is, because the person who bought that 40 percent of shares knows that he is going to

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obtain a greater benefit over time, therefore, Marco sells his shares but does not sell

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his 40 percent to 400 euros, maybe now those shares already due to the benefit that the company is

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obtaining and the great power it has instead of being 400 euros are 10 times more 4,000 euros

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multiplies by 10 is worth very well then Pablo arrives I pay I pay 4,000 euros he stays with

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40% of the shares and from then on 40% of the company's profit no longer goes to

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Marco's hands who has sold his shares but goes to Pablo's hands until it is clear this

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would be the current functioning of the economic system of the economic system a company produces a

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product sells it gets a benefit and with it pays salaries and also gets a benefit

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la persona que lo que controla la empresa vale esa empresa de donde saca la inversión gran parte de

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ella viene de un banco que al que pide un crédito el banco que hace con todo ese dinero que obtiene

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nos tiene por ejemplo de todos aquellos que ponemos nuestro dinero en las cuentas de banco pues lo que

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hace es o bien da créditos a empresas o puede darlo a países o puede darlo a agricultores o

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a empresas industriales o agrícolas vale si la empresa es fuerte es grande y está teniendo unos

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great benefits and it is growing ok imagine I know amazon at first it was a small company

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over time it has grown so much that now it is in stock what happens means that

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being in stock in this institution people can go there to buy the shares if they

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want to sell them to the person who owns the shares that are the shares the shares are those

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they are called titles they are worth those values are those portions of the company that control a

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persona y que tienen un valor es decir tienen un valor económico es parte de capitales dinero al

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fin y al cabo vale que son esas acciones es la participación de cada persona en la empresa como

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hemos visto antes marcó con un 40 por ciento porque puso los 400 euros 300 euros un 30 por

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ciento los puso paula y otros 300 que los puso david otro 30 por ciento quien tiene la mayor

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cantidad de acciones controla la empresa porque porque tiene la mayor parte del dinero que se ha

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invested at the time of production as it enters the stock market it means that these actions that participation

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fluctuates varies if the company earns more and more money the actions are made more valuable

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because because you know that if you have these actions the benefit that you have is greater what happens if the

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company begins to have economic problems for example now with crisis because it means that

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these actions lose value because they are producing less obtaining a lower benefit therefore

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the shares can be bought in a cheaper way the question is that these banks are not

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only going to lend money to companies or they are not only going to lend money to countries or farmers

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they are also going to lend it to these people to the speculators and these speculators can

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act in two areas or by creating companies or by buying stock shares a speculator is

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una persona que con una cantidad de dinero lo que hace es o bien montar una empresa para obtener un

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beneficio rápido o bien comprar acciones esperando que éstas se hagan más valiosas con un poco de

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periodo de tiempo es decir pues que tú compres acciones a 400 euros y que en un año valgan mil

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euros de manera que si tú las vendes has ganado 600 euros por tanto existen estas personas

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speculators, it is worth that either they buy shares in the stock market or they create companies from where they

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get money these speculators from the bank, that is, people who go to the bank and say I want a

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credit as we live in a moment in which there is no regulation remember it the state does not intervene

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there are no laws each one can do what they want there are no limits are not established that is to say

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no se te exige el banco no te va a decir oye vas a poder devolver este crédito no no yo te doy el

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crédito el dinero se mueve todo está creciendo la industria está recordar que son los felices

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años 20 la industria está produciendo que además los agricultores producen cada vez más los salarios

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están aumentando es verdad que no al nivel que el beneficio que se está obteniendo es decir no

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hay una relación paralela es decir si sube un 2% el beneficio sube un 2% el salario no no sube mucho

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el beneficio y sube el salario pero sube en menor medida qué ocurre con estos especuladores pues

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There are two options, either the speculators who buy shares from a large company, who know or who think or who believe that each time it will be bigger and it will get more and more benefit and therefore with the passage of time what they do is buy a share for 100 euros and a year they sell it for 1000 euros and therefore they have earned 900 euros, for example, or they are speculators who create a company.

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esta empresa produce un producto empieza a vender el producto cuál es el problema que no está

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vendiendo todo lo que debería es decir que el beneficio que obtiene no es suficiente para

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cubrir el crédito que ha pedido es decir el dinero que yo invierto vale es superior al beneficio cuál

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es la solución de estos especuladores pues dice muy bien en monta mi empresa yo produzco imaginaos

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que produzco radios no estoy vendiendo tantas radios mi beneficio es inferior a la inversión

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estoy perdiendo dinero como solucionan este problema pues muy bien vuelvo al banco pido

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otro crédito y con este dinero que es lo que hago vuelvo a invertir para que para que esta

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diferencia entre inversión y beneficio se equilibre que ocurre que esta empresa cada

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vez se está endeudando más con el banco porque está pidiendo créditos para suplir la diferencia

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between the money he invests which is the credit and the benefit he obtains therefore there are

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some companies that begin to put a lot of money without being able to return it to the bank until a

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moment when they can break because because as they have not achieved that the company

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works as they have not achieved that the benefit is higher than the investment they cannot

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return the credit and therefore enter bankrupt if that company enters bankrupt obviously

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the production falls because they cannot produce, it cannot be bought and people are fired, therefore

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unemployment increases. What is going to happen in 1929? Well, it will be related to this

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concept, with companies that produce a product whose benefits are not as high as the investment,

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therefore they have a deficit, they owe money and to solve the problem what they do

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is to ask the bank for more credit to continue making the company work, so what is going to

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happen in 1929 is that a company is going to break, it is clear so far, now we will continue with the

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company, the important thing is that within all this system, what is going to happen in the

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20s is that industrial and agricultural production is going to grow more and more and more, what is the

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problem when the supply grows a lot that if there is not enough demand that is to say if I

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produce a lot but I do not have so many consumers my benefit will be below my investment

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true and therefore that will affect wages or unemployment therefore what will happen in

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the 20s rise in production at exorbitant levels that is to say it is produced more and more and more

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but having so much production and having so little demand, that is, there are no people who want to

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buy more products, prices go down and when prices go down, what happens is that salaries

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necessarily go down because because in this production system if I produce a lot but I sell

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little, the benefit is lower, therefore, to try to balance this difference between investment and

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benefit an option is to reduce salaries to keep the company afloat you see it clear

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that is to say this which is the origin of capitalism has become more complex with the

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appearance of banks even more with the stock market with the internationalization of the loans that

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banks give that can be countries or international or national industries and with the

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appearance of these speculators that is to say people who pretend to make money fast as buying

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cheap shares to then sell the faces or as creating a company with which to obtain a

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benefit that happens if the benefit does not work because I take more money from the bank as it seems

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that that is not going to end of course what is the consequence of this whole system in which we see

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that there are a series of companies that are having a deficit and are not facing it

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that they are the only thing they are doing is creating an increasing bubble of credit that they owe to a bank

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and that they will not be able to pay the consequence will be a fall in production obviously because

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there is an overproduction is worth what in English it says over production not an overproduction

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therefore there is a moment in which the company produces a lot but no longer sells therefore it has

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to reduce production and therefore a fall in prices because by law of supply and demand if the

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offer is very high but the demand is to say the people who buy it is little the prices have to

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go down if you are not going to sell anything the opposite is that if the offer is low that is to say it is produced

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little but the demand is very high because the prices go up what is called inflation well and it will also

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mean an increase in unemployment because there will be companies that will obviously have to

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cut workers if production is reduced I have not needed so many workers therefore I reduce

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salarios y aumento el desempleo y finalmente lo que habrá es una caída del comercio porque porque

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evidentemente si la producción disminuye ya no hay compraventa y la compraventa internacional

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va a disminuir vale este es el sistema que tiene montado y lo que estaba surgiendo o sucediendo

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antes de 1929 especuladores en estas empresas especuladores comprando acciones en bolsa para

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obtener dinero rápido bancos que han prestado crédito tanto a especuladores para comprar

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actions as to create companies as to companies to produce both at an international and national level

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to industries and farmers is worth what is going to happen in 1929 a company is worth the one of

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photomaton the one of the photomaton company the one that created the photomaton machines breaks

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breaks that's why I told you, that is, I had a person who, due to the difference between

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inversión y beneficio decide pedir más crédito para seguir aumentando la producción y tratando

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de aumentar la venta bajando los precios que ocurre en un momento determinado que por mucho

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que baje los precios la gente no compra no consume su producto y se ha endeudado hasta tal nivel que

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la empresa entra en bancarrota vale qué ocurre cuando la empresa entra en bancarrota las acciones

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that they have, what happens to them, they increase in value or decrease in value, they decrease in value that

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these speculators are going to say that they had bought shares to sell the most expensive ones when they see

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that the value begins to decrease, I have to sell I have to sell the shares as soon as I sell

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the shares if the company enters a bankrupt obviously I am going to get I am going to have the

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least possible losses, that is, if I buy the share for a thousand, it is worth and right now the

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has already been in 800 because the company has entered bankruptcy because at least it has only lost 200 euros

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what happens that this company and its fall what is going to show is that the American economic system

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is fragile, that is, there is a large amount of credit distributed around the world

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and by all companies and it is seen that not all companies have done their duties that not all

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companies have told the truth about their benefits and therefore their shares are

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oversized, that is, the value of the shares is greater than it should be because

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its benefit is not the one that it is assumed that it would have to have, that is, as the company

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what it has done has been to say well I am having a benefit lower than the investment but what

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I do is put more credit to increase the production the investors the speculators in the stock market

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they say no this company is phenomenal I am going to buy shares and I am going to sell them more expensive than it happens when the

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company enters the market because nothing that the shares have wants to sell them as soon as possible the problem

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is that these speculators are not only going to want to sell the shares of this company but it

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will happen on that black Thursday on that black Thursday on that Thursday of October 24 October

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1929 not only the speculators are going to want to sell their shares on that company but

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de muchas empresas porque empiezan a sentir que no hay confianza que esas empresas pueden estar

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pueden tener unas acciones que valgan menos de lo que realmente se supone que valen vale de manera

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que todos en la bolsa quieren vender nadie quiere comprar qué ocurre cuando tú solo quieres vender

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y nada que nadie quiere comprar que el valor de las acciones se deprecia cae si el valor de las

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shares fall companies begin to enter bankrupt in general in the stock market the system falls and

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all that credit investment to companies and speculators disappears disappears you understand it

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therefore the bank is going to find a strong hole with a strong lack of money because

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are credits delivered to invest in companies or in speculators who create companies or in

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speculators who buy shares when the company breaks down and the speculators sell the

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share the share that is less and less money implies money that the speculator cannot return

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to the bank is worth imagine the speculator asked for 1,000 euros to buy the shares he expected to

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sell the shares for 2,000 and with that return the 1,000 euros to the bank and stay with another 1,000

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bueno a lo mejor paga un poco interés qué ocurre si ese especulador cuando vende sus acciones en

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vez de obtener en vez de venderlo por 2000 lo vende por 800 debe al banco mil euros más intereses y

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sólo tiene 800 o incluso se llega a la situación del black thursday en el que no es que lo vendas

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por 800 sino lo vendes por 5 dólares entendéis la cantidad de dinero que este especulador debe

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que la empresa que ha quebrado debe porque ha obtenido un crédito del banco para seguir

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producing that that other speculator who has created a company also owes that credit and that when

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entering bankrupt the company cannot return the credits the bank of course, that is, we find

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a very critical situation, the companies begin to close, which implies that wages are not paid,

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unemployment increases, the banks say we do not have money, we lack money, therefore we are going to stop

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giving loans to all these countries, agricultural industries, therefore agricultural

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industrial and agricultural companies without credit cannot maintain production and as

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salaries begin to fall, no one buys them and therefore they have to close as well, and if we add to that

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that these American banks had given money to European countries to rebuild themselves after

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the first world war this systemic crisis happens to European countries because the banks that

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used to give them credit for these countries to develop the credit disappears because the

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money does not have the bank does not have money and therefore these countries enter into a crisis similar to

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this the banks of European countries go through the same process when credit does not arrive from the

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American banks that credit does not reach European companies it is the actions in the European

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stock market also fall the speculators want to sell they do not manage to recover the money and the

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European banks are also affected by the process. Do you understand the complexity of the system and how

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is it all interrelated? As a company that in principle simply produces to

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obtain a benefit by linking to a bank and the stock market to sell shares, the system

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becomes so complex and so interrelated that a piece of the gear fails affects the rest.

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La consecuencia del crash de 1929 de la bolsa, de esa caída de las acciones que supone la bancarrota de empresas y con ello que los bancos no tengan dinero para dar crédito a otras empresas y por tanto aumente el desempleo, evidentemente el comercio con estos países cae y evidentemente no se puede producir tanto porque ya no hay crédito que es con lo que nosotros invertíamos para producir.

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Therefore, production falls, prices fall, unemployment increases and trade falls.

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Has it been understood?

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So this is the basis of the crisis of 1929.

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Now we have three slides in which we are going to see what is the situation in the United States before the crisis,

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how the crisis develops and what are the measures to solve the crisis.

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I already venture you that all this happens because no limit has been set,

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That is to say, banks gave credit very easily to a very low interest rate, so they did not worry that people could return the credit and also asked for very little extra money for the credit they gave.

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por tanto el dinero si se movía pero generaba lo que se llama burbuja una burbuja es la diferencia

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entre entre el precio o el valor real de una empresa y el valor de las acciones es decir

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el supuestamente basado en su beneficio vale se crea una burbuja quiere decir que hay un

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momento en el que se cree que aquí se está teniendo un beneficio que realmente no se

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is getting because it is not getting that benefit because the speculator puts more money

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through bank credits to solve the problem between investment and benefit is clear

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well we are going to continue and we are going to see now the evolution the evolution of the situation in the

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us first what is how the situation is before and then how the crisis develops but

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But this is the basis of the crisis and the basis of the system, you have to understand

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perfectly this scheme to be able to understand the crisis of 1929, it is the most difficult

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of the topic.

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Let's go, come on.

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So the economic situation before the crisis, what we call the roaring twenties or the happy

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twenties, come on.

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So between 1923 and 1929 what we have is a period of economic growth, what I said, the

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Different companies are producing a lot, they are getting credit from the banks and they

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are producing a lot.

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The problem is they are producing a lot but they are in a specific moment there are not

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going to be consumers in order to buy the products.

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So the prices are going to decrease and the salaries are going to decrease or unemployment

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is going to increase.

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So let's see, in the agricultural areas what we are going to see is agricultural overproduction.

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This is for example the production of main foods, and this is the prices, if you check

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from 1923 till 1926 more or less, the relation between the production and the prices is going

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to be balanced, ok? There is going to be, it's going to be balanced, an equilibrio, but the

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problem is from 1926 onwards what we see is the production is going to increase, everyone wants

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to get more money, so they said, ok, if I have a company in order to get more profit, what I have

306
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to do is to produce more and to sell more, so they start to produce more in order to sell more and

307
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get more profit what is the problem there is not that much consumers of the products so law of the

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offer and demand later offer to la demanda if the offer is high and the demand tends to decrease

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the prices are going to decrease to make the population to buy so that's why the stocks it

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means the quantity the production the quantity of product produced is going to increase but the

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prices are going to decrease, ok?

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So what we are going to see is, we are going to decrease the prices but we are going to

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increase the production.

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What was the solution for this problem in a specific moment related with the agricultural

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production?

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They are going to keep the prices steady this period of time, you see that the prices are

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going to be more or less steady.

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are going to keep the prices steady because of agreements between the countries what does

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it mean imagine I don't know Miguel and Carla both are producing bread ok or they are producing

320
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sorry wheat ok trigo so they are producing a lot of wheat ok the production is going

321
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to increase increase increase but they know that if they sell they they they

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try to sell all the production the prices are going to decrease so what

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they are going to do is to get an arrangement they are going to say okay

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we are going to sell 50% of our production and we are going to keep the

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other 50 percent in order to make the prices steady in Spanish would be okay

326
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para mantener los precios estables ok llegamos a un acuerdo tú miguel vendes el 50% de tu

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producción yo carla vendo el 50% de mi producción y mantenemos los precios estables porque si

328
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vendiésemos el 100% la producción sería tan alta que los precios bajarían por tanto vamos a vender

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solo el 50% y mantenemos los precios estables. The problem is, from 1926 and, but more important,

330
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after 1929, the producers are going to try to sell all the stocks, so that's why it's going

331
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to increase a lot, so the prices are going to decrease. ¿Qué quiere decir? Hay una sobreproducción

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agrícola, van a tratar de mantener los precios estables como a través de acuerdos para que los

333
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different countries do not sell all their production, only one part, so that if we do not say

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we have produced 1,000, we say we have produced 500, the prices remain. Problem, at a

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certain time the agreements are broken.

336
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an industrial overproduction because everyone wants to sell that is true but

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the other part is there is going to be an industrial overproduction because

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during the First World War okay the colonies are going to create their own

339
00:34:44,360 --> 00:34:51,340
industrial factories what does it mean if you remember imperialism we were

340
00:34:51,340 --> 00:34:56,119
talking about creating new colonies creating colonies because we want new

341
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markets to sell the products the European products okay so it means who

342
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is producing who has the machines who is producing the manufacturer products

343
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Europe who is buying for these products in the beginning Europe but after that

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we are going to create or we are going to conquer these territories creating

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the colonies so that we are going to sell to the colonies our products what

346
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What is the problem during the First World War?

347
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The different metropolis cannot sell their products to the colonies, because they need

348
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to face the war, they need to use all their production for the war, so it means the colonies

349
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are going to say, ok, we cannot have the manufactured products coming from Great Britain or France,

350
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so what we are going to do is to produce these products on our own, so when they are going

351
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to do that means that after the first world war the colonial factories are producing industrial

352
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products so the European factories are producing as well as the colonial factories so that

353
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we are going to have an overproduction because before the war only the European factories

354
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are producing. After the war we have the European factories and also the colonial factories.

355
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This is the industrial production until 1929. If you check, there is a decrease in 1921 thanks to

356
00:36:33,139 --> 00:36:38,579
a small crisis, then increase, decrease a little, increase, decrease a little, increase, so if you

357
00:36:38,579 --> 00:36:46,820
check okay since 1920 the production is really high but after the crisis when

358
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the crisis began or starts in 1929 the production is going to

359
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decrease really fast why remember the banks has no more money because the

360
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companies started to shut down or to fail bankrupt so what they are going to

361
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do is to have no money they are not going to give more credits so the

362
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different companies are going to decrease their production the salaries

363
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their employment is going to increase and these companies are going most of

364
00:37:20,099 --> 00:37:24,360
them are going to shut down so it means they are going to close so the

365
00:37:24,360 --> 00:37:31,679
production is going to decrease really fast you see not all the countries are

366
00:37:31,679 --> 00:37:39,239
going to be affected the same way depending on the importance of the

367
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industrial production in the economy of each country for example the US is

368
00:37:44,920 --> 00:37:51,780
controlling or is producing almost 50% of industrial products in the world so

369
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that's why his production is going to decrease that much France is going to

370
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have a huge decrease and also Germany and also Great Britain so this is

371
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because these are for industrial powers and they are having a high industrial

372
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production for example the US is 44.8 percent France is 7 percent Germany 11.5

373
00:38:20,260 --> 00:38:28,659
United Kingdom 9.2 and these countries the rest so it means that almost 75

374
00:38:28,659 --> 00:38:40,119
5% of the industrial production was in 1928 in hands of the US, Germany, the UK and France.

375
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So this crisis in 1929 is going to affect basically or the most important countries

376
00:38:46,780 --> 00:38:52,860
affected by this crisis is going to be these four countries.

377
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So the production is going to decrease a lot, the unemployment is going to increase a lot,

378
00:38:59,519 --> 00:39:05,820
the salaries are going to decrease, the companies are going to close or shut down, so this crisis

379
00:39:05,820 --> 00:39:13,960
that started in the US thanks to the credits that the US banks gave to these countries

380
00:39:13,960 --> 00:39:18,239
are going to affect to these countries, we will see later on.

381
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So keep in mind the picture of the schematic explanation from the last slide.

382
00:39:28,679 --> 00:39:33,119
So European and now overseas countries produce manufactures, what I said, the colonies are

383
00:39:33,119 --> 00:39:35,940
producing manufactured products and also the Europeans.

384
00:39:35,940 --> 00:39:42,539
So there is an overproduction in agriculture and industrial areas.

385
00:39:42,539 --> 00:39:46,239
Also what we have is a society based on mass consumption.

386
00:39:46,239 --> 00:39:52,559
population is going to start buying new products like for example the cars if you set in 1908

387
00:39:54,000 --> 00:40:01,119
the number of cars is going to be really really small and is going to increase and if you check

388
00:40:01,119 --> 00:40:10,000
from 1923 to 1927 is going to increase a lot okay this is the roaring 20s vale los felices años 20.

389
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how the population or how the population could afford could buy all these cars you could say

390
00:40:17,380 --> 00:40:23,300
okay if the the salaries are increasing during 20s but not that much how can they afford how

391
00:40:23,300 --> 00:40:29,639
can they pay for these cars easy i'm going to ask for a credit to the bank

392
00:40:29,639 --> 00:40:39,920
i cannot pay for the car i cannot pay to this uh to this company that's selling

393
00:40:39,920 --> 00:40:44,480
that is sending the cars so this company is going to have problems and it's going

394
00:40:44,480 --> 00:40:49,639
to go bankrupt too okay you understand what is the problem of the crisis and

395
00:40:49,639 --> 00:40:53,360
what is the problem the interrelation between the different factors in this

396
00:40:53,360 --> 00:40:58,800
crisis everything is connected and everything is going to affect everyone

397
00:40:58,800 --> 00:41:03,000
okay so what we have is a society based on

398
00:41:03,000 --> 00:41:10,380
mass consumption we have overproduction in these two economic areas of course

399
00:41:10,380 --> 00:41:14,239
these new products are going to increase the living conditions to have remember

400
00:41:14,239 --> 00:41:18,500
from the from the last epigraph they are going to buy radios they are going to

401
00:41:18,500 --> 00:41:24,719
buy refrigerators they are going to buy cars etc so different stuffs that they

402
00:41:24,719 --> 00:41:28,880
are going to make the American way of life remember that they are going to

403
00:41:28,880 --> 00:41:34,219
increase their living conditions thanks to that finally but it was easy to

404
00:41:34,219 --> 00:41:38,719
obtain credits what I said okay the interest were low so you get the credit

405
00:41:38,719 --> 00:41:46,639
so you can buy the car or the the the peasant can buy the machines to the

406
00:41:46,639 --> 00:41:53,599
industrial the industrial companies in order to increase the production also

407
00:41:53,599 --> 00:41:59,099
the industrial the industrial companies are going to get credits in order to

408
00:41:59,099 --> 00:42:05,699
increase the production to sell to the to the peasants or yeah to sell to the

409
00:42:05,699 --> 00:42:11,219
peasants or other companies etc so these are the four main characteristics of

410
00:42:11,219 --> 00:42:16,659
these rolling twenties related with economy overpopulation related with

411
00:42:16,659 --> 00:42:21,559
agriculture relate overpopulation related with industry a mass consumption

412
00:42:21,559 --> 00:42:27,800
because everyone can wants to buy new products and they can because it's easy

413
00:42:27,800 --> 00:42:35,199
to obtain credits so the production is going to increase but the consumption is

414
00:42:35,199 --> 00:42:42,320
going to decrease okay remember we were seeing or we were talking about asking

415
00:42:42,320 --> 00:42:48,079
for new credits the different companies because the consumption is decreasing so

416
00:42:48,079 --> 00:42:54,800
what they want is the profit to be as simple to have the same or to be equal at least the profit and

417
00:42:54,800 --> 00:43:02,480
the investment, that is, these credits will be used to increase agricultural production and

418
00:43:02,480 --> 00:43:07,760
industrial production also to buy certain products for people who do not have so much

419
00:43:07,760 --> 00:43:14,059
money, but remember that production will increase but consumption will end up decreasing

420
00:43:14,059 --> 00:43:21,139
because there are not so many people who can buy so many products and many companies to solve

421
00:43:21,139 --> 00:43:25,579
that deficit problem of that money that they are losing because they are not selling so much what

422
00:43:25,579 --> 00:43:31,679
they do is ask for more credits therefore the bubble grows because you are putting money in something

423
00:43:31,679 --> 00:43:36,719
that is not going to produce or that is not going to sell it that is not going to get the

424
00:43:36,719 --> 00:43:42,800
sufficient benefit as to return the credit therefore the bubble is created so this is the economic situation

425
00:43:42,800 --> 00:43:49,519
before the crisis remember we are going to increase the production but the prices are going to decrease

426
00:43:49,519 --> 00:43:56,369
but the problem is the companies are going to still making profit how they are going to make

427
00:43:56,369 --> 00:44:01,630
profit como van a conseguir más beneficios pues pidiendo más créditos que lo que hacen es pagar

428
00:44:01,630 --> 00:44:08,309
el que esto los costes de producción lo que se estaba diciendo es decir yo invierto un dinero

429
00:44:08,309 --> 00:44:13,510
para obtener un beneficio vendiendo si no vendo tanto y el beneficio es menor que la inversión

430
00:44:13,510 --> 00:44:19,809
should close the company, it is not profitable but I decide to take another loan because the bank

431
00:44:19,809 --> 00:44:26,230
gives loans very easily and I put it so that to solve this deficit these production costs

432
00:44:26,230 --> 00:44:33,909
that are coming out to me more expensive is worth because because I am selling little is worth all this

433
00:44:33,909 --> 00:44:40,590
that goes to how it will be able to maintain because banks give easy and cheap money that

434
00:44:40,590 --> 00:44:45,510
means cheap that when they lend the money they are not going to ask for 20% interest that is to say

435
00:44:45,510 --> 00:44:49,809
it is not that they return the amount that has been given and 20% more but that they have to return the

436
00:44:49,809 --> 00:44:56,050
money they have lent and maybe 2% which is very little therefore the benefit can be very

437
00:44:56,050 --> 00:45:03,989
high for the company ok so it was easy to obtain the credit because of this so this is one of the

438
00:45:03,989 --> 00:45:07,170
characteristics of the production is going to increase but the consensus is going to decrease

439
00:45:07,170 --> 00:45:11,610
is going to decrease the salary, so they are going to obtain more credits in order to try to

440
00:45:11,610 --> 00:45:18,250
change the situation. The companies, they are going to still make profit because they are using

441
00:45:18,250 --> 00:45:25,389
these credits in order to pay the production costs. And this is possible because the banks

442
00:45:25,389 --> 00:45:31,670
are giving money easy and cheap. So this is the situation before the crisis. You understand that

443
00:45:31,670 --> 00:45:36,530
the crisis is going to happen because the banks are giving a lot of money. There are companies

444
00:45:36,530 --> 00:45:42,449
that they are paying the production cost with credits and they are not making the real profit

445
00:45:43,090 --> 00:45:49,250
so that they cannot give back these credits to the banks so that the banks are going to lose

446
00:45:49,250 --> 00:45:54,449
the money and they are going to shut down they are going to close because they are they are going to

447
00:45:54,449 --> 00:46:00,610
lose all the money so this is what is going to happen oh sorry finally remember that they are

448
00:46:00,610 --> 00:46:07,389
going to give credits what I said also to the farmers in order to buy for

449
00:46:07,389 --> 00:46:15,070
example new machines to produce more okay so this is the real situation so

450
00:46:15,070 --> 00:46:19,329
this is the crisis the crisis has started the October 24 1929 the Black

451
00:46:19,329 --> 00:46:24,369
Thursday okay so the idea is many shareholders

452
00:46:24,369 --> 00:46:29,829
created actionistas knew that the prices of the shares acciones words much higher

453
00:46:29,829 --> 00:46:35,409
than the real value what I said remember there is going to be a company the

454
00:46:35,409 --> 00:46:40,110
photomaton company that is going to go into bankrupt thanks to that the

455
00:46:40,110 --> 00:46:44,889
shareholders want to sell all the shares but not only the shares of the

456
00:46:44,889 --> 00:46:51,190
photomaton company for different companies so that is going to make that

457
00:46:51,190 --> 00:46:55,809
is going to make or that is going to set the crisis okay for the financial system

458
00:46:55,809 --> 00:47:04,670
So, this is for example the production in this production industrial, this is what they

459
00:47:04,670 --> 00:47:13,010
are producing the companies, this is the value of the shares, if you check in the beginning

460
00:47:13,010 --> 00:47:16,989
the value of the shares and the production is more or less the same, but in a specific

461
00:47:16,989 --> 00:47:26,170
moment at the end of 1927 the price of the shares is going to increase while the production

462
00:47:26,170 --> 00:47:32,789
is going to keep more or less steady and in a specific moment in 1929 October is going

463
00:47:32,789 --> 00:47:41,349
to reach its peaks and the price of the shares are going to decrease really fast because

464
00:47:41,349 --> 00:47:51,550
everyone wants to sell these shares, that is, here you have the production, here you have the

465
00:47:51,550 --> 00:47:55,329
shares, the price of the shares, you see how at first they remain more or

466
00:47:55,329 --> 00:48:00,010
less balanced but from the middle of the 27 they begin to be the prices of the

467
00:48:00,010 --> 00:48:06,070
shares do not correspond to the production but are oversized, they are worth

468
00:48:06,070 --> 00:48:10,929
more than they should and in 29 when that company breaks down it is discovered that the

469
00:48:10,929 --> 00:48:16,690
actions are worth more than they should for production so that a

470
00:48:16,690 --> 00:48:22,789
brutal drop in the stock market and from there the crisis all this money does not exist

471
00:48:24,170 --> 00:48:28,570
therefore the banks do not have that money stop giving credit companies with no credit

472
00:48:28,570 --> 00:48:34,690
cannot survive unemployment that is, dismissals, low wages, low production and

473
00:48:34,690 --> 00:48:39,309
universal or global crisis because the United States the American banks had lent

474
00:48:39,309 --> 00:48:42,670
to European banks to rebuild itself after the First World War.

475
00:49:10,750 --> 00:49:14,710
of the search are higher than their value the real value the problem is the

476
00:49:14,710 --> 00:49:20,550
Photoshop company is going to go into it's going to go bankrupt so mistrust

477
00:49:20,550 --> 00:49:26,889
mistrust it means a love this coffee answer spread among the investors okay

478
00:49:26,889 --> 00:49:33,949
so these investors these shareholders want to sell all the shares they have so

479
00:49:33,949 --> 00:49:37,690
that's the problem well this is photo Photoshop the photo the photomaton

480
00:49:37,690 --> 00:49:44,710
machine okay so the company that created this type of machines is going to go

481
00:49:44,710 --> 00:49:50,380
into bankrupt so the problem is the shareholder showed the American

482
00:49:50,380 --> 00:49:55,900
financial system was weak it means that they knew this real this was real but

483
00:49:55,900 --> 00:50:00,480
they are going to suffer it in this moment so what they are going to say is

484
00:50:00,480 --> 00:50:06,300
I want to sell all of the shares at the same time if everyone wants to sell

485
00:50:06,300 --> 00:50:14,980
they serves at the same time okay no one wants to buy so they the value of the shares in valor de

486
00:50:14,980 --> 00:50:25,800
las de las cosas en castellano de las acciones bajar muy rapido y de manera brutal ok so this

487
00:50:25,800 --> 00:50:32,460
is for example the value of the shares in valor de las acciones you see 1925 start to increase

488
00:50:32,460 --> 00:50:39,500
1926 increase increase increase increase increase until 1929 and then with this crisis

489
00:50:41,739 --> 00:50:47,099
sharpen decrease is going to increase a little again but it's going to decrease and decrease

490
00:50:47,099 --> 00:50:54,860
and decrease and there is no stop okay so the crisis of 1929 is going to provoke this

491
00:50:54,860 --> 00:51:01,099
decrease in the value of the shares of the companies is going to lead to unemployment

492
00:51:01,099 --> 00:51:10,420
and it's going to lead to the diminish of trade and production the wall street stock market crash

493
00:51:10,420 --> 00:51:18,659
so this is the crash of the wall street stock market la bolsa stock market means bolsa so the

494
00:51:18,659 --> 00:51:24,280
wall street stock market crash quiere decir no pueden ya vender comprar se acabó o sea

495
00:51:24,280 --> 00:51:27,960
Prices have fallen to such a level that they are worthless

496
00:51:54,280 --> 00:52:01,219
nothing because everyone wants to sell so the companies are going to go into bankrupt and the

497
00:52:01,219 --> 00:52:06,940
banks are going to close so as a result the different banks started to close what i said

498
00:52:06,940 --> 00:52:12,639
the thing is the population is going to get in panic okay and they want their money back imagine

499
00:52:12,639 --> 00:52:19,739
now okay imagine we want to go all together to the banks to get our money back the bank has not

500
00:52:19,739 --> 00:52:27,500
all the money in the in the building so they cannot give you all that money if you add to this

501
00:52:27,500 --> 00:52:33,679
that these banks could not collect the loans it means no podían recuperar su dinero de los

502
00:52:33,679 --> 00:52:41,719
créditos they could not give back the money to the citizens so this is going to be a domino effect

503
00:52:41,719 --> 00:52:47,980
que quiere decir el banco no recupera su dinero de los créditos y el banco no tiene entonces

504
00:52:47,980 --> 00:52:53,920
enough money to return the money to the citizens the citizens in panic when they see that all

505
00:52:53,920 --> 00:53:00,159
the companies fall and that they are fired they decide to take all their money from the banks what happens

506
00:53:00,159 --> 00:53:05,360
the bank does not have the money it cannot be given therefore the bank closes the bank is going to

507
00:53:05,360 --> 00:53:12,239
shut down that a bank closes will have a domino effect because it does not give credit when it does not give credit

508
00:53:12,239 --> 00:53:18,059
cierran las empresas las empresas cierran piden todos los trabajadores en los distintos bancos

509
00:53:18,059 --> 00:53:24,539
el dinero los distintos bancos que no pueden recolectar los los los los estos los los

510
00:53:24,539 --> 00:53:29,280
créditos y no tiene el dinero no se lo pueden dar los trabajadores por tanto tampoco dan créditos

511
00:53:29,280 --> 00:53:34,380
las empresas afectadas a esos otros bancos tampoco pueden sobrevivir y tienen que cerrar etcétera

512
00:53:34,380 --> 00:53:42,300
so to try to increase the cash flow it means to try to avoid not to be able to try to get

513
00:53:42,300 --> 00:53:48,579
have money that is to say cash have metal money inside the metal in the bank and not

514
00:53:48,579 --> 00:53:54,360
to increase cash flow they stop giving credits that banks say ok ok ok let's see the citizens

515
00:53:54,360 --> 00:54:01,019
they ask us for the money we cannot collect these credits the only way to stop having money

516
00:54:01,019 --> 00:54:09,840
el banco es parar vale parar de dar créditos pero cuando paras de dar créditos que ocurre

517
00:54:09,840 --> 00:54:14,219
the unemployment is going to start to increase why because the companies without the credit

518
00:54:14,219 --> 00:54:20,400
cannot survive vale let's see the u.s unemployment is going to increase from 1929

519
00:54:20,400 --> 00:54:27,679
till 1932 and then it's going to reach the 25 unemployment in 1933 okay

520
00:54:27,679 --> 00:54:37,380
in the uk from 1929 till 1933 again is going to increase it's not going to be that hard it's going

521
00:54:37,380 --> 00:54:44,980
to be the 15 percent of the population but it's a high level imagine germany 1929 is going to

522
00:54:44,980 --> 00:54:54,619
increase till 1933 with more than the 30 percent of the of the population unemployed okay this is

523
00:54:54,619 --> 00:55:02,860
moment 1933 when hitler is going to reach power for tanto hay una relación clara entre el desempleo

524
00:55:02,860 --> 00:55:12,139
33 desempleo en 1933 y la llegada de hitler al poder and in austria the unemployment is going

525
00:55:12,139 --> 00:55:19,340
to be over the 16 percent in 1933 but you see if from 1929 is going to increase increase increase

526
00:55:19,340 --> 00:55:25,280
increase for years and years and years and years okay and it's going to start

527
00:55:25,280 --> 00:55:34,210
to decrease by 1938 okay so the consumption is going to decrease of

528
00:55:34,210 --> 00:55:39,309
course if you are unemployed you have no salary you are not going to consume okay

529
00:55:39,309 --> 00:55:43,929
so the companies that they can they cannot sell they are going to start

530
00:55:43,929 --> 00:55:48,110
shutting down so that unemployment is going to increase so everything is

531
00:55:48,110 --> 00:55:55,550
related finally as the USA helped Europe with credits after the First World War

532
00:55:55,550 --> 00:56:02,329
this crisis started in the US in New York okay is going to spread all over

533
00:56:02,329 --> 00:56:10,190
the world so you these banks in the US that give money to these European

534
00:56:10,190 --> 00:56:13,789
countries and these European countries that they are going to give money to

535
00:56:13,789 --> 00:56:20,710
to their colonies so the crisis started in the u.s but is going to spread to latin america is going

536
00:56:20,710 --> 00:56:27,510
to spread to europe africa and part of asia to the colonies what does it mean the united states

537
00:56:27,510 --> 00:56:31,469
had lent money to germany france great britain great britain and france have also lent

538
00:56:31,469 --> 00:56:36,989
money you see that great britain has lent money to all those who are in green france to all those

539
00:56:36,989 --> 00:56:55,289
The idea is the US is giving money or giving loans to all these countries and finally thanks

540
00:56:55,289 --> 00:57:01,210
to this crisis started in the US is going to spread to the European countries and from

541
00:57:01,210 --> 00:57:06,250
European countries to the colonies and from the US to the Latin American countries.

542
00:57:07,769 --> 00:57:14,010
So the crisis is going to spread all over the world. In 2008 and 2008 happened more or less the

543
00:57:14,010 --> 00:57:23,690
same. A company went into bankrupt because they were giving the credits really easy and thanks to

544
00:57:23,690 --> 00:57:30,489
this interrelation in the economy the crisis is going to start in the US but it's going to spread

545
00:57:30,489 --> 00:57:35,230
all over the world, ¿vale? En 2008 es lo mismo. Lo que pasa es que en vez de ser una empresa de

546
00:57:35,230 --> 00:57:41,289
fotomatón son hipotecas, hipotecas para comprar casas. La empresa quiebra y ese dinero desaparece

547
00:57:41,289 --> 00:57:51,280
y a partir de ahí efecto dominó con el resto del mundo. For example, these are the investments of

548
00:57:51,280 --> 00:58:00,820
the USA in the different countries in 1929. 5.3 billions of dollars invested in Latin America,

549
00:58:00,820 --> 00:58:05,860
5 billions in Europe, 3 billions in Canada or 2 billions in other countries

550
00:58:05,860 --> 00:58:09,579
So all these countries are going to lose all this money

551
00:58:09,579 --> 00:58:13,099
Because the US is stopping giving credits

552
00:58:13,099 --> 00:58:17,340
So everything is related

553
00:58:17,340 --> 00:58:22,880
When the crisis starts in the US is going to affect Latin America, Europe, Canada and other countries

554
00:58:22,880 --> 00:58:28,860
So let's see the consequences of the crash

555
00:58:28,860 --> 00:58:32,780
The most difficult moment during the crisis was this year

556
00:58:32,780 --> 00:58:40,079
1929 till 1932, these are the most difficult moments of this crash, ok?

557
00:58:40,079 --> 00:58:43,599
So the problem is, of course the prices are going to decrease, because the production

558
00:58:43,599 --> 00:58:45,840
is going to decrease, ok?

559
00:58:45,840 --> 00:58:49,300
So let's understand how this is going to work, ok?

560
00:58:49,300 --> 00:58:54,099
Remember we have a huge production, but the prices are going to decrease, so due to the

561
00:58:54,099 --> 00:58:58,440
crisis this is going to be even worse.

562
00:58:58,440 --> 00:59:00,099
So this is the situation.

563
00:59:00,099 --> 00:59:06,300
The farmers are earning less money, remember, they have produced a lot, but they are selling

564
00:59:06,300 --> 00:59:14,739
with low prices, so the farmers are earning less money, so they could not buy more machines

565
00:59:14,739 --> 00:59:16,340
in order to produce more.

566
00:59:16,340 --> 00:59:23,880
Ok, remember, they have produced a lot and the prices have decreased a lot too, so they

567
00:59:23,880 --> 00:59:33,260
They are going to stop earning money, they are going to stop buying more machines to

568
00:59:33,260 --> 00:59:38,260
the industries, so the industrial production is going to decrease.

569
00:59:38,260 --> 00:59:42,880
So the farmers earn less, so that they are not going to buy more machines, so if they

570
00:59:42,880 --> 00:59:47,199
do not buy more machines, the industrial factories are going to get affected, so the production

571
00:59:47,199 --> 00:59:48,199
is going to decrease.

572
00:59:48,199 --> 00:59:53,500
If the production decreases, unemployment is going to increase, because you do not need

573
00:59:53,500 --> 00:59:58,360
that much employees if you are producing less.

574
00:59:58,360 --> 01:00:04,840
So if the unemployment increases, it means that these people have no money to buy enough

575
01:00:04,840 --> 01:00:13,280
food, so the agricultural production is going to decrease and the prices are going to be

576
01:00:13,280 --> 01:00:18,860
even lower, so that the farmers are earning less, and so on.

577
01:00:18,860 --> 01:00:20,019
This is a circle.

578
01:00:20,019 --> 01:00:21,579
You see the circle?

579
01:00:21,579 --> 01:00:28,159
So the farmers earn less because the prices are really low in comparison with the production.

580
01:00:28,159 --> 01:00:30,219
So they could not buy more machines.

581
01:00:30,219 --> 01:00:34,340
As a result, the industrial production is going to decrease so that they do not need

582
01:00:34,340 --> 01:00:36,019
that much employees to produce.

583
01:00:36,019 --> 01:00:38,579
So unemployment is going to increase.

584
01:00:38,579 --> 01:00:43,820
And after that, this is going to affect the agricultural production.

585
01:00:43,820 --> 01:00:44,820
Why?

586
01:00:44,820 --> 01:00:50,599
Because the people with no money, with no salary, they have no job, they cannot buy

587
01:00:50,599 --> 01:00:56,420
agricultural products, or not in that much agricultural products.

588
01:00:56,420 --> 01:01:03,320
As a result, the farmers are going to sell even less so that they are going to earn less.

589
01:01:03,320 --> 01:01:07,480
You see the crisis, you see how everything is related?

590
01:01:07,480 --> 01:01:11,880
So the production, as I said, is going to decrease, the salaries of course are going

591
01:01:11,880 --> 01:01:17,920
to decrease, if the production is lower, the profit is going to be lower, so the salaries

592
01:01:17,920 --> 01:01:23,119
are going to be lower, and also unemployment is going to increase, because if the production

593
01:01:23,119 --> 01:01:30,000
decreases, we can pay less salaries and we are not going to need that much employees.

594
01:01:30,000 --> 01:01:39,179
Remember, unemployment is going to increase fast, from 1929 till 1933, in case of the

595
01:01:39,179 --> 01:01:52,039
US, also in case of the UK, 32 in this case, and Germany, that if you see with Hitler in

596
01:01:52,039 --> 01:02:01,260
power he is going to get unemployment to decrease steadily, this is before the war 1938, and

597
01:02:01,260 --> 01:02:05,440
of course the same with Austria.

598
01:02:05,440 --> 01:02:10,139
The world trade of course is going to decrease, if we are producing less we are not going

599
01:02:10,139 --> 01:02:15,639
to sell that much so the trade is going to decrease what is the problem the different

600
01:02:15,639 --> 01:02:24,900
countries are going to take two main measures to related with trade okay the first one is i want

601
01:02:24,900 --> 01:02:32,500
to sell more and buy less what does it mean i'm going to increase the exports and decrease the

602
01:02:32,500 --> 01:02:37,900
imports because because i know that if i increase the exports that is to say what i sell and

603
01:02:37,900 --> 01:02:44,079
disminuyó lo que compro las importaciones obtengo un mayor beneficio por tanto los países lo que

604
01:02:44,079 --> 01:02:51,579
tratan es de aumentar su beneficio vendiendo más y comprando menos cuál es la consecuencia si todos

605
01:02:51,579 --> 01:02:58,900
los países quieren vender y ninguno comprar la crisis se duplica y se duplica a nivel de comercio

606
01:02:58,900 --> 01:03:06,679
vale porque todos quieren vender y nadie comprar so what they are going to do in order to make

607
01:03:06,679 --> 01:03:13,500
it is possible they are going to carry out protectionist policies what case on political

608
01:03:13,500 --> 01:03:20,860
protectionistas it means for example imagine you are controlling spain and you want to foster

609
01:03:20,860 --> 01:03:28,760
to encourage no animar the population to buy spanish products imagine we have uh i don't know

610
01:03:28,760 --> 01:03:41,039
Imagine Cristina has a car company and she is selling the cars for 2000 euros, but if

611
01:03:41,039 --> 01:03:47,360
you buy a car to the UK you are paying 1000 euros, so of course if you are the consumer

612
01:03:47,360 --> 01:03:51,940
you are going to buy to the UK instead of buying to the Spanish product.

613
01:03:51,940 --> 01:03:56,780
So what they are going to establish is protectionist policies, that means I am going to establish

614
01:03:56,780 --> 01:04:09,400
a specific tax in order to make the international products, in this case the British cars, to

615
01:04:09,400 --> 01:04:13,760
be more expensive than the Spanish products.

616
01:04:13,760 --> 01:04:20,139
For example, imagine this case, Cristina is selling the cars in Spain for 2000 euros and

617
01:04:20,139 --> 01:04:24,900
the UK 1000 euros, so the government is going to say ok, all the British cars that they

618
01:04:24,900 --> 01:04:31,619
are going to get into Spain they need to pay a tax of 1,100 euros so that if you want to buy

619
01:04:31,619 --> 01:04:40,659
if you buy a car from the UK you need to pay 2,100 euros so this car the British car is going

620
01:04:40,659 --> 01:04:46,820
to be more expensive than the Spanish one so you are going to buy the Spanish one so this is one

621
01:04:46,820 --> 01:04:59,179
way in order to avoid importations and increase and try to increase the exportations.

622
01:04:59,179 --> 01:05:03,599
You are going to try to sell your products outside and you are going to try to stop the

623
01:05:03,599 --> 01:05:10,619
population to buy these products outside, that is, you try to increase the exportation

624
01:05:10,619 --> 01:05:24,559
The problem is that this is not going to work, because everyone wants to do the same, so

625
01:05:24,559 --> 01:05:29,760
if all the countries want to do the same, it is not possible that these policies are

626
01:05:29,760 --> 01:05:32,539
going to work.

627
01:05:32,539 --> 01:05:36,960
So for example, these are the billion dollars of trade.

628
01:05:36,960 --> 01:05:43,400
In 1929 is almost 70 billion dollars, it means the different transactions in the world are

629
01:05:43,400 --> 01:05:48,639
producing this much money, but after the crisis is going to decrease, decrease, decrease,

630
01:05:48,639 --> 01:05:51,360
decrease, decrease, decrease, why?

631
01:05:51,360 --> 01:05:57,880
Production is decreasing, the different countries are carrying out these protectionist policies,

632
01:05:57,880 --> 01:06:02,750
the salaries are decreasing, etc.

633
01:06:02,750 --> 01:06:05,150
So these are the main consequences, ok?

634
01:06:05,150 --> 01:06:10,150
The prices are going to decrease due to these relations, the production is going to decrease,

635
01:06:10,150 --> 01:06:15,510
the salary is going to decrease, the trade is going to decrease and the unique thing

636
01:06:15,510 --> 01:06:22,300
that is going to increase is going to be unemployment.

637
01:06:22,300 --> 01:06:28,699
So this is the last slide, is how to fight against this crisis and this is called the

638
01:06:28,699 --> 01:06:32,400
new deal, el nuevo contrato.

639
01:06:32,400 --> 01:06:36,539
So what they are going to do, do you think they are going to let them, the different

640
01:06:36,539 --> 01:06:39,539
the different companies to buy and