Commanding Heights Video

24 02 2011

This video gives you an overview of the economic changes in the last 90 years.  We won’t be able to get through all of it in class but we can start.

Your homework is to respond to the questions below in the comments to this post.

Choose two of the following questions to respond to:  (answers should not repeat content)

  1. Based on the portion of the video played in class, do you agree more with Keynes or Hayek?   Give supporting reasons for your opinion.
  2. What are the differences between a communist system and a capitalist system?
  3. What is hyperinflation?  Why is it a problem?
  4. What did Roosevelt do to try to end the Great Depression?
  5. What did Keynes mean when he said ‘in the long run we are all dead’?



9 responses

24 02 2011

MISS!! Is this for tomorrow???? I just saw this post and its 10:15 and the video is 2 hours long :O.

24 02 2011

Relax, it’s for class tomorrow!

26 02 2011
Oleksandr Yesikov

Based on the portion of the video played in class, do you agree more with Keynes or Hayek? Give supporting reasons for your opinion.

I agree with Hayek rather than Keynes. I think that governments should not have total control over the economy.This eliminates the competitive side of the business world. Even though with keynsian beliefs it was still a democratic government in the US, it seemed like the government had too much control over the private businesses and it was starting to look like a socialist government. In order for the economy to evolve there has to be competition in order to improve. For example in the video Pan AM airlines basically didn’t not have to improve their service or even arrange for new flights to new destinations because the prices for flights were fixed and it was illegal to change them. However, if the rates were not fixed the smaller companies or the competitors would reduce their prices to compete with Pan AM, wich would force Pan AM to make some improvments.

What is hyperinflation? Why is it a problem?

Hyperinflation is when the inflation gets so bad that money becomes basically worthless. This could be a problem because any society needs a for of currency to trade goods for and if that currency isn’t worth more than a piece of regular paper than you have a problem. As they showed in the video when this happened in Germany people had to trade trillions of dollars for a loaf of bread and after a while cigarettes became somewhat of a substitute for money.

27 02 2011

1. I would have to agree with Oleks. The way economy grows is with competition. When you have no competition, there is no point for improvement. If the government tells you what you have to do, you have no new ideas or ways to improve your business as you are legally bound to follow the government rules. Technically speaking neither one of the two great economists are right. I think that a mix of both is best. Government still needs to regulate a little bit of the economy to keep a lid on inflation. In Canada, we have a thing called the Bank of Canada which regulates the rates at which banks give out money to the people and companies. This regulates the way the economy works and the Bank of Canada might change the rates to adjust the economy.
2. A communist government is a government that controls everything in a country. There are no privately owned businesses and no privately owned land. The government controls everything. A capitalist government is a government where there are privately owned businesses that are able to produce private earnings. The main difference between is two systems is the government involvement.
3. Hyperinflation is when the value of your currency drops by the hour. This creates high demand in the economy, which means the prices will constantly go up. The problem with this is that your currency is so weak, it becomes nearly worthless. During the world war 2, people would buy their groceries as soon in the day as possible as some prices could double between the hours of lunch and dinner.
4. Roosevelt started borrowing a lot of money to give out to the citizens. He thought this would create a bit of a momentum for the people to start buying and consuming goods. Like the video said, “Roosevelt worried about debt but was still doing it.” The fact that people would have money, would mean that companies would have to start to produce goods. That would mean that the companies would have to start hiring workers and lower the unemployment rate. This would create momentum in the economy and kill depression.
5. I wasn’t totally sure about this question but from what I understood from the movie is that Keynes believed in the economic consequences to peace. And those consequences usually mean that more violence was coming up. One of the reasons why world war 2 started was because Germany was just that poor and couldn’t deal with it anymore. Why was is it poor? Because after world war 1, the allies took all the money Germany had, leaving its people to starve to death. So the way I understand it, is that there can’t always be peace, as usually when one is better off, another is worse off (NOT ALWAYS!). So yes, in the long run, there will be more and more violence that will demolish our economic systems.

27 02 2011
Dylan Huber

2. The differences between capitalism and communism are that in communism the economy is determined by the government. Production is determined by the government and there is no private ownership, thus a monopoly owned by the government is the prevailing force in commerce. The entire economy is planned out by the government and there is no difference in prices in goods since the government owns the retailers. Capitalism is where government has little to no influence in the economy. The economy is directed by the market and ownership is private. In this system, there is competition between different companies.
3. Hyperinflation is where the value of a currency drops exponentially causing the government to print more money since the price of good increases. This causes the value of the currency to decrease further. This is a problem because once the value of the currency drops, the price of goods increases. This causes an inequality which leaves people unable to buy goods since their income has not changed. This leads to more inflation, unemployment, and a weakening economy.

27 02 2011


Hyperinflation is inflation but at a very accelerated rate. This occurs when prices of general goods rapidly increase and the value of the currency dramatically decreases at an hourly rate because money is being printed at the same rate at which the prices are increasing. The biggest problem associated with hyperinflation is the reallocation of wealth, it transfers wealth from the public (who has the money) to the government (who distributes the money). Another problem with hyperinflation is that it devalues the currency to a point where a new currency is created.

Franklin D. Roosevelt:

To fight the great depression Roosevelt created a program called The New Deal which gave relief to the unemployed and the hungry etc.. also he created a program to regulate capitalism it self in order to protect people from the unbalanced market. For example, the aviation industry was very unstable, competitive and had a lot of boom and bust, meaning many new companies would come into the industry and in a short period of time go bankrupt and other companies would do they same. when the New Deal stepped in, they regulated everything from prices of the tickets to the routes of airplanes. In the long the New Deal eliminated the competition which got rid of the continuous boom and bust and stabilized the aviation industry. This was the primary focus of the New Deal but to apply this to the whole country.

27 02 2011
Benjamin Gray

3. Hyperinflation is generally the increase in prices and decrease in the value of money due to the overproduction of it. This would mean that when attempting to buy something, very much money would have to be brought. The main problem with this situation is that middle class citizens would become unable to afford much anymore, ending up with virtually nothing. This would result in poverty and possible job loss. In the case of “Commanding Heights”, this situation caused a huge problem because citizens negatively affected by poverty turned to the Nazis for assistance.
4. In order to find a solution to the Great Depression, Roosevelt first rallied the nation together. He decided to enforce a number of programs in order to allow the citizens to begin working again and earn money, while at the same time contributing to the society. He did this by letting the unemployed work together to build railways, parks and dams. In addition to this, he put together a number of agencies to regulate banks, stock markets and capitalism.

28 02 2011
Susan Cui

1. Based on the portion of the video played in class, I agree more with Hayek because his idea in no government intervention in the natural flow of the economy seems to be a much more reliable solution for stabilizing the economy in the long run. Like he said, undesirable interventions by the government are the cause of the economic imbalance, which proves to be true, because in the history of economics, whenever the government tries to dominantly control the economic market, it usually results in little to no real positive effect on the huge market. Also, through government intervention in the economy, it can decrease the business rights and liberty of the citizens in the country, because it can slowly take a monopoly on the economy, robbing the profit of the private businesses.

2. The differences between a communist and capitalist system is that a communist economic system tends to have the government dominating the economy, while a capitalist economic system tends to allow the private businesses to compete for profit. A communist economic system is a system where the government owns all goods and businesses, and then redistribute the output equally to everyone. A capitalist economic system is a system where individuals can own goods and businesses and compete for the profit in the market without monopolizing.

28 02 2011
Linda Lei

1.What did Roosevelt do to try to end the Great Depression?
He created a series of economic programs which is New Deal.
more labor jobs, new agencies to regulate bank, stock market etc, relief program for unemployment, help people to repay their mortgage. He tried to rebuild American’s trust in public agencies. For example, airplane industry, the New Deal stepped in to controls the price of tickets.
2.What is hyperinflation? Why is it a problem?
Hyperinflation is inflation that is out of control. The value of money decreases quickly, as a result, people had to buy goods right after they get paid, also unemployment rate increases dramatically, factories shut down, hunger increases, instability of country occurs.

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