History: December 1, 2021. The German Hyperinflation (1921-1923)

[marcusantoniu26]

The German hyperinflation is the uncontrolled increase in prices which occurred in Germany from 1921 to 1923. in that period of time the prices increased as a very fast speed, however, the fastest rate occurred between June and November 1923, during which the inflation rate reached 850 billion percent.

What caused this? Several causes are listed. One of these was the uncontrolled printing of money which was not backed by anything. Germany, prior to World War I (WWI) was bound to the gold standard, which avoided problems such as hyperinflation, by having currency pegged to an asset, in this case, gold. In order to fund the German WWI effort, the German government incurred in a 150 billion mark debt.

After the end of WWI, Germany was obligated to pay war reparations. This further crippled the economy. The German government was almost forced to devalue its currency in order to favor exports. One other event can be included: the occupation of the Ruhr Valley by France and Belgium in January 1923. France and Belgium believed that by occupying the mineral and industrially rich Ruhr Valley they could force Germany to make war reparations payments. The occupation had the opposite effect. The occupation of the Ruhr Valley further crippled industrial output and made things more difficult for Germany. For further reading, read this article

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.

Comments

[seha76]

It is true that hyperinflation occurs due to the conditions of a very large increase in the inflation rate as it used to be in Germany but now in the modern world I think that is rarely the case.

[stefano.massari]

I did not know about this hyperinflation that took place in Germany. Thanks for all this interesting information

[kawsar8035]

At that time the inflation rate reached 850 billion percent. Today's German economy is much better. However, many countries are not able to recover from low inflation. German should be the idol for all those countries. Lots of nice posts. A beautiful subject is beautifully illustrated. Thanks

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