It would certainly be easier if evil came so conveniently packaged in a single culture. It had to provide for its own casualties: 525,000 widows, 1.3 million orphans, 1.5 million disabled veterans. In large measure, this was owing to the stability of its legal order and, perhaps most importantly, strict enforcement of Germans’ contractual obligations. As Taylor writes:The last bit about the Reich’s trustworthiness, the bit about how the Kaiser and his Reichsbank would never do anything that endangered the soundness of the currency and the welfare of ordinary Germans, must have done the trick. There are previous examples—the currency issue following the American War of Independence was a major, if not primary, concern that eventually prompted James Madison to move for constitutional reform.But that was a cake walk compared to the 1920s. The Deutsche Mark remained fairly stable even through much of the turmoil of the Great War. Various institutions, formal and informal alike, are necessary to ensure that most of those plans will more or less work out acceptably.
To meet the first reparations payment deadline at the end of August 1921, the Republic had to scramble to cobble together a variety of revenue sources and financial instruments. Many Germans, because of the infirmities of disease, malnutrition, or an inability to adjust quickly to changing circumstances, were inexorably pushed down to subsistence levels.Taylor reviews many details, including the ascending incidence of rickets—a bone-deforming, growth-stunting disease to which malnourished children are prone.
Unfortunately, the ones blamed were not the ministers in the Kaiser’s authoritarian government who originally approved the loosening of the currency from its gold moorings in 1914, but the democratic government of Weimar. This led to a surge in the mark:By the end of 1921, workers had lost so much faith in the government that many just stopped voting. Far worse than the economic cost was the loss of faith among individual Germans that they could plan for and meet the future with hope.And the rest we know well enough.With defeat in 1945 and a stability born of occupation, an exhausted Germany could begin to take stock of what had happened. Thus, an inverse correlation was established:Walter Rathenau was a the German foreign minister, and he was often linked to the unpopular stance that Germany should find a way to pay its reparations. Taylor’s history is replete with the complexities of what can happen when otherwise ordinary people are confronted with extraordinarily bad circumstances.One particularly arresting story is that of Maximilian Bern, a man of literary education exemplary of Germany’s formerly middle-class Bildungsbürgertum.
Hyperinflation affected Germany and the citizens in a massive way. As the economies of Europe, in 1914 and thereafter, left the gold standard to embrace finance by inflation, the first effects seemed mild. They accepted the Kaiser’s pledge to uphold the integrity of the Deutsche Mark. To make matters worse, 1 billion of the total owed (50 billion marks) had to be made in a currency still convertible to gold: the U.S. dollar.
A leading-edge research firm focused on digital transformation.To this day, "Weimar" is always invoked as the ultimate hyperinflation horror story.Critics of the Federal Reserve's extraordinary attempts to stimulate the economy since the 2008 financial crisis and recession – like the program of large-scale bond purchases known as quantitative easing – have warned that the U.S. central bank's easy-money policies were dangerous and could eventually stoke unwanted inflation.Ever since earlier this year, when the Fed hinted that it could move to begin rolling back quantitative easing soon, inflation premiums have collapsed as real interest rates have soared.
And that is the story told in an important new book by Fredrick Taylor, It amazes me just how heavy a load of regulation and intervention a country can inflict on its economy so long as it learns one crucial lesson: don’t mess with money. Children use bundles of banknotes as building blocks. It needed not only to satisfy the victors, but to cover its inherited debts to its own people—to veterans, pensioners, and all the other various creditors. ... More: Germany Weimar Hyperinflation … It is a terrible thing to see what happens when that kind of capital breaks down. Bank notes, such the ones shown here from the Spurlock Museum’s collection, were printed at fever pitch by the government in an effort to keep up with a currency that was spiraling down in value.
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how did hyperinflation affect germany