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Weimar Republic Hyperinflation: A "Private" Affair

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  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    I've been posting a lot about MMT recently. It's basically all I'm interested in.

    As is usual, there's push back from people that don't understand how the monetary system works and buy into the fears of hyperinflation.

    Let me preemptively deal with their historically inaccurate argument about the Weimar Republic.

    #1) Hyperinflation did not lead to Hitler. The deflation that followed hyperinflation period did.

    Anyways, here's an article about German hyperinflation in 1923.

    Germany's 1923 Hyperinflation: A "Private" Affair by Stephen Zarlenga

    "Discussions of the dangers of inflation inevitably end up at the worst-ever case known - the German hyperinflation of 1923. Accompanied by economists' moralizing warnings of the dire results of governments' printing paper money, the German hyperinflation is used as a horror story by those who advocate a plutocratic control over money. However (as in other cases), when the monetary facts are actually examined, the argument falls apart as it becomes clear that the bankers themselves and speculators were the primary cause of the German hyperinflation, which was not stopped until the government took decisive action against them."
  • Democrat
    Lawrence, MA
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    Carlitos Wrote: I've been posting a lot about MMT recently. It's basically all I'm interested in.

    As is usual, there's push back from people that don't understand how the monetary system works and buy into the fears of hyperinflation.

    Let me preemptively deal with their historically inaccurate argument about the Weimar Republic.

    #1) Hyperinflation did not lead to Hitler. The deflation that followed hyperinflation period did.

    Anyways, here's an article about German hyperinflation in 1923.

    Germany's 1923 Hyperinflation: A "Private" Affair by Stephen Zarlenga

    "Discussions of the dangers of inflation inevitably end up at the worst-ever case known - the German hyperinflation of 1923. Accompanied by economists' moralizing warnings of the dire results of governments' printing paper money, the German hyperinflation is used as a horror story by those who advocate a plutocratic control over money. However (as in other cases), when the monetary facts are actually examined, the argument falls apart as it becomes clear that the bankers themselves and speculators were the primary cause of the German hyperinflation, which was not stopped until the government took decisive action against them."
    It will take someone more familiar and more expert than I am to discuss this.....but what from what I have read the thing that probably put the grease to the skids in Germany was the brutal economic sanctions placed on it after the war by the Allies ,and Clemenceau in particular. France demanded reparations from a country that was on its economic death bed. Had the Allies attempted to get Germany up on its feet the ascendency of Hitler may never have happened......This is why the Allies undertook the task of rebuilding Germany after WW!1. .....However, we have to look at historical reality and the debasement of German money certainly caused people to reach out in desperation toward anyone who offered them a way out of the disaster.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    The German private central bank was lending to bankers and speculators to short the currency, on top of all of the problems Germany had. Once the government cracked down, they got inflation under control, but as a consequence of the inflation, the government got blamed. So they turned everything back over to the CB, which insisted on an excessively tight monetary policy, resulting in massive deflation and destruction of German businesses, which is what led to Hitler. Same thing is happening in Greece today.