"The Hyperinflation Nightmare"

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The book was published in 1975. After suffering a major defeat in World War I and being forced to pay huge reparations, the Weimar Republic printed endless amounts of mark banknotes, which led to hyperinflation of up to one trillion times the original price over the course of 23 years, and how this devastated the country. The book uses diaries, diplomatic documents, and testimonies from contemporaries to thoroughly trace how this led to hyperinflation. In recent years, inflation concerns have resurfaced in the global economy, especially in emerging countries, making the republication of this book a fitting time.

The chaos caused by hyperinflation was horrific: "A cup of coffee that cost 5,000 marks became 8,000 marks by the time you finished it."

"It encouraged all kinds of evils, and destroyed the chances remove background image of national recovery and individual success" (p. 29). Radicals on both the left and right encouraged rebellions against the state, and stoked conflicts between classes, races, families, and spouses. "Inflation had the capacity to incite discriminatory feelings, and brought out the worst in everyone" (ibid.).

Many people were driven into bankruptcy, resulting in massive unemployment. On the other hand, landlords, farmers, and tenant farmers in rural areas were able to revive. Because they steadfastly refused to exchange paper money for food, famine spread throughout the country, even though farmers' barns were overflowing with food.

The author is cautious about directly linking the Great Depression of 1929 and the rise of the Nazis to hyperinflation. However, he at least points out that "without inflation, Hitler would not have achieved anything" (page 301).


What is surprising is the author's point that "the amount of paper money issued was limited by the capacity and quality of the printing presses" (page 153), and that the country's top officials, cabinet ministers, parliament, financial circles, and journalists were completely unaware that the excessive printing of paper money was causing the depreciation of the mark. Reading the proud speech of Reichsbank Chairman Hafenstein announcing the mass issuance of high-value paper money, one is reminded of the terrible consequences that policies implemented based on erroneous theories can produce. There is much to learn from the German example, which perfectly embodies the truth that "money is merely a medium of exchange. It will only be used if one or more people recognize its value" and "if no one recognizes it, as the Germans learned, the paper money has no value or use -- except as wallpaper or darts" (page 306).