Question by Liberty or Death: What does the current governmental policy regarding the American economy have to do with 1920's Germany?
Do you see any similarities between the current federal policies towards the American economy and what took place in Germany during from roughly 1915 - 1925 when that nation suffered a period of hyperinflation? During this period, the German Mark was so worthless that people used it for wallpaper and burned it as fuel in their fireplaces.

According to a history by Professor Emeritus Dr. Hans Sennholz:

"Like all the other banks, [the central bank] offered assistance to the central government in financing the war effort. Since taxes are always unpopular, the German government preferred to borrow the needed amounts of money rather than raise its taxes substantially. To this end it was readily assisted by the Reichsbank, which discounted most treasury obligations.

A growing percentage of government debt thus found its way into the vaults of the central bank and an equivalent amount of printing press money into people's cash holdings. In short, the central bank was monetizing the growing government debt.

By the end of the war the amount of money in circulation had risen fourfold and prices some 140 percent...

...the German government... embarked upon heavy expenditures for health, education, and welfare. The demands on the treasury were extremely heavy anyway because of demobilization expenses, the demands of the Armistice, the disorders of the revolution, and the staggering deficits of the nationalized industries, especially the railroads, postal services, telephone, and telegraph...

...Reparation payments, depreciating exchanges, rising import and export prices, rising domestic prices, consequent budgeting deficits, and at the same time an increased demand for bank credit; and finally increased note-issue...

When all other explanations are exhausted, modern governments usually fall back on the speculator, who is held responsible for all economic and social evils."

When you compare this to what has happened over the past few years in America, and the current federal response, are we running the risk of repeating history???

Best answer:

Answer by blueevent47
It is an interesting assessment, but there are two basic problems with the thesis.

First, many of the problems associated with reparations led to the broader economic problems affecting the Weimar republic. In particular, the onus of paying back the winners of the war combined with a largely destroyed infrastructure required the central bank to print more money. THAT led to the hyperinflation, loss of value of the Mark against other currencies, budget deficits and the like. I might note that by the late 20's, many of these problems had been solved and Germany started to return to prosperity. If not for the Stock Exchange crash in 1929 and the subsequent Depression, Germany would have fully recovered. It is also unlikely that the Nazis would have captured the state.

Second, as mentioned above, the German infrastructure--in terms of industrial output, transportation, and administrative apparatus--was largely wrecked as a result of the First World War. While America has some serious systemic problems, they are nothing compared to those facing Germany in 1919.

As I say, it's an interesting notion, but it is in the end not a very apt comparison.


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