Saturday, February 6, 2021

The German Hyperinflation of the 1920's

 People I know have worried themselves about hyperinflation on the German model affecting us in the near future. They aren’t interested in my views since I disagree with their version of reality. I instead worry that the pandemic may not be contained. But their concern generated the following piece. It’s not about wargaming but is about 20th century history. I hope you don’t mind this digression.


The German hyperinflation of the 20’s was not caused by voluntary government spending, even though all nations involved in World War One (or as they called it, the Great War, unaware that the sequel was in the works) incurred massive debt. Germany’s problem was the vengeful Allies, who had lost millions of dead soldiers in the first industrial slaughter. They intended to hobble Germany enough so it could not rise again. The reparations were so onerous that the new, unstable Weimar government printed money in order to pay off the Allies with worthless cash. They also ruined their own economy. They printed so much that the ink devalued the paper. Artists used currency for collages since it was cheaper than blank paper. Germany (and their allies) had also gone through starvation caused by the British naval blockade. It continued for 6 months after the shooting stopped.


None of this applies to the United States. We do indeed have serious problems. But we have not been utterly defeated, had our government overthrown or had the majority of our population experience starvation, though too many have gone hungry. Foreign troops have not occupied a major region of our country to ensure we pay them off.


It should be noted that the peace treaty of 1919 wasn’t as harsh as that imposed in 1945. Germany was not broken into two nations. The defeated leaders were not put on trial to be executed or imprisoned. The victors did not impose governments on the defeated Germans. But the victors of 1945 knew better than to hamstring the defeated with enormous reparations. For one thing, it hadn’t worked.


There are other models of history other than the rise of Nazi Germany, but those don’t generate endless TV documentaries. Many happened before there was extensive film footage. The stories are often more complex than the tale of the Third Reich. Simpler stories make for more entertaining TV.


Back in the late 60’s I met a German Jew who lived through the hyperinflation. He told me those people with jobs were paid daily, before lunch. They would rush out and buy as much food as possible since the prices would rise by quitting time. This guy escaped the Holocaust. He fled to Switzerland where he lived as an illegal alien for the duration of the war.


I have over the years talked to people with interesting stories, who lived through WWI and WWII. If you would like to hear my versions of their tales, please indicate so in comments below. 

For that matter, if you prefer that this blog stay away from such tales, you can state that too.

I do intend to avoid commenting on current politics.


Stay safe, my friends. 


Jonathan Freitag said...

Printing money and creating government debt to pay the allies certainly seems like government spending to me.

vtsaogames said...

Yes, but forced spending intended to hobble tehm. No one has a gun to our heads. That said, would you like to hear the stories of the folks I have talked to over the years? One served in the Austro-Hungarian Army of WWI, another the Italian Army of WWII and the German fellow who escaped to Switzerland.

Mark Nichipor said...

Vtsaogames, great posting and very interesting. I would very much like to hear more information and stories you have. This is really great stuff. Thank you for sharing with us and I look forward to more.