Hyperinflation in Germany during the Early 1920's
Imagine that after a lifelong of hard work and saving, you find that your lifesavings will not buy more than one cup of coffee. For a majority of the middle class living in Germany during the early 1920’s this was precisely their experience. Of course, not all suffered during this period of hyperinflation. Those who owed money encouraged their government’s expansionary monetary policies, knowing the resulting inflation would effectively cancel their debt. In fact, it was the Reich itself who had the most to gain from inflation, for it was the biggest debtor of them all.
In this paper I will show that the German Government did have other options to finance its expenditures aside from simply printing money, but instead decided to implement inflation-causing policies to finance its own debt. I am not saying that the German Government is entirely responsible for the large extent of the inflation, but it certainly did start the ball rolling. Generally, once inflation starts, it is very hard to stop. It is like a domino effect that continues at faster and faster rates. The German Government should have thought of the future consequences and reversed its inflationary policies immediately after the war ended, as the other belligerent countries did. It is true that none of the other countries fared well during this interwar period, but at least citizens of other countries didn’t find their lifesavings to be utterly worthless.
The inflation problem actually began at the beginning of World War I. It was then that the German Government started to accumulate debt and to increase the money supply. Because they thought they would win the war and intended to force the...
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...e birth of the Euro), a main priority for the German Central Bank had been to keep inflation to a minimum.
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United States. National Park Service. "Jim Crow Laws." National Parks Service. U.S. Department of the Interior, 12 May 2014. Web. 20 May 2014.
"Germans Barter for Goods in Response to Hyperinflation, 1923." Historic World Events. Detroit: Gale, 2012. Student Resources in Context. Web. 25 Mar. 2014.
The official money in Germany became worthless in the 1920’s because of hyperinflation. According to Barnes (2009), hyperinflation occurs not only because a government prints unbacked money but also because citizens are no longer willing to hold money for fear of it losing its value (para. 4). Through a series of events, this is precisely the hyperinflation scenario that occurred in Germany in the 1920’s. First, Germany financed its war efforts in World War I by issuing bonds and printing money, on the premise that the countries it conquered would pay off the debts (Gethard, 2011, para. 5). However, Germany’s plans to repay its debts did not come to fruition. With the signing of the Treaty of Versailles, Germany was required to pay reparations to the Allies (Gethard, 2011, para. 6). With an already declining German mark, Germany defaulted on its reparation payments in the winter of 1922 to 1923, resulting in France and Belgium taking “over the Ruhr, Germany’s industrial powerhouse” (Gethard, 2011, para. 7). Germany then encouraged its workers to strike and supported them by printing even more money (Gethard, 2011, para. 8).
Hyperinflation is an economic condition characterized by “a rapid increase in the overall price level that continues over a significant period” and in this period the concept of inflation is essentially rendered meaningless (Kroon 90). The post-World War I German economy experienced a crippling period of hyperinflation which lasted nearly two years and had an enormous impact on the economy. The hyperinflation began inconspicuously as the inflation rate crept just a percent or two per year during the war years. In the post-war period inflation began to rise and in early- to mid-1922, inflation raged. During this period, businesses reached full operational capacity and unemployment nearly disappeared. While nominal wages increased, real wages dropped precipitously. Workers were paid two or three times a day, and they rushed home to pass the money to family members who could go and exchange the rapidly depreciating currency for real goods (clothing, food, etc.) before it became completely worthless. Prices rose so rapidly pe...
In the early 60s, President John F. Kennedy led America into a space race against the Soviet Union. American men and women across the nation backed this goal, allowing NASA to take great leaps in advancing its space exploration programs. This unified nation fulfilled its goal, and Neil Armstrong became the first man to walk on the moon. However, since then, America’s space exploration has only declined. Funding for NASA has been drastically cut, thus greatly limiting the opportunities for exploring the cosmos. Understanding and exploring the universe is detrimental to the advancement of the United States and opens the door for vast possibilities. If the government chooses to limits its own advancement, then that responsibility must fall into other hands. Privatizing America’s space program will extensively further capabilities for charting the cosmos, all while creating jobs for American citizens and saving the government some money along the way.
The effect of the Hyper-inflation was of sheer devastation in terms of economy. The German mark’s value decreased alarmingly within a short period of time and people literally started to burn the German mark notes just to make a fire as they thought this was of a much more bigger advantage than of its actual spending value. The rising cost for just one loaf of bread was unbelievable, in 1918 it sold at 0.63 marks, a normal price, until the end of the war hit. January 1923, a selling price of 250 marks and in the following months it rose in quick succession until in November one loaf actually cost 201,000,000,000 marks, just from this example we see the dire effects. People ended up having to take home “Daily” wages instead of weekly, with the help of a wheelbarrow. The w...
Severe economic problems arose in Germany essentially due to the punitive provisions of the Treaty of Versailles. “The German government began to print money to pay its bills.” (McKay, 872). In order to make up for the massive debt and reparations connected to the Treaty of Versailles, the government started to print loads of money. The influx of money across Germany due to newly printed bills caused prices to rise. Money became rather worthless with an abundance of it, which hurt many people’s incomes. Hyperinflation soon occurred, which put the economy in a weak position and further contributed to the downfall of the Weimar Republic.
feminine and uncertainty avoidance. Power distance means less powerful members and within a country expect and accept that power is distributed unequally. As of Latin American countries, Costa Rica has the lowest dimensions in the region a score of 35. Reason for this, because most of Latin America were ruled by military rule, but as for Costa Rica they abolished their army in 1948. In efforts to end the civil war in central American but also to receive peace. Individualism; the degree of interdependence a society maintains among its members. For individualism Costa Rica scored a 15 same as all the Latin American countries, they all share qualities of trust, loyalty, close relationships and communication. Costa Rica is very high on helping others in their own community and they highly value trust with people in their family/community. Then there is masculinity vs feminine; motivating people to be the best or liking what you do. Costa Rica is known to be the most feminine society in Latin America, geared towards women in society. In 1948 suffrage for women was introduced and most students are female. Uncertainty avoidance; members of a culture fell threatened by ambiguous or unknown
Fulbrook, Mary. A Concise History of Germany. 2nd ed. United Kingdom: Cambridge University Press, 2004. Print.
The National Space Policy has undergone changes throughout its new creation on August 31, 2006, under both the Obama administration and the Bush administration. The act originally was established for overarching national policies that governed the conduct of U.S space activities. President Dwight Eisenhower said “More than by any other imaginative concept, the mind of man is aroused by the thought of exploring the mysteries of outer space. Through such exploration, man hopes to broaden his horizons, add to his knowledge, improve his way of living on Earth.” With that statement, is where our time in space begins.
...he effect this has on the labour market. Highlighted in picture 2, the wage rate is above the market clearing equilibrium level. This shows the population wants to supply Q3 amount of labour in exchange for W2 wage rate. However businesses are unable to offer this, and respond by only hiring Q2 amount in exchange for W2 wage rate. This results in the supply of labour exceeding the demand for labour. The remaining surplus of labour is defined as real rage unemployment. Between 1929 and early 1932, Germany experienced severe real wage unemployment caused by severe deflation during the Great Depression. Consequently, Germany’s unemployment rose from little under 1.3 million to over 6 million within three years (Dimsdale et al, 2004).
McHale, J. (2009) Human space flight gets increase in 2010 NASA budget request. Military & Aerospace Electronics, 20(8), 11. General OneFile. Web. Retrieved 17 Nov. 2011, from http://go.galegroup.com.rap.ocls.ca/ps/i.do?id=GALE%7CA206395056&v=2.1&u=conestoga&it=r&p=GPS&sw=w
Space is unimaginably vast, and the problems keeping humans from mastering the exploration of and colonization of space is equally daunting. Impressive advances have been made within the past century, and dedicated efforts to make equally impressive strides in the next hundred years are in place. Space research will not yield resutls overnight, but the information obtained along the way will have a positive impact throughout the scientific community and the world's population in turn. With a goal of extraplanetary habitation, humans can prepare protective measures for neutralizing danger and managing resources underwater, in space, and on land, domestic and alien. The scientific and cultural unity required to reach this goal has the potential to propel mankind as a species and farther through the stars than ever imagined.
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