Question

What is hyperinflation? Why did Germany experience hyperinflation in 1923 – 24?

Answer 1

Among the defining features of early twentieth-century Europe and one of the contributing factors to World War II, was the economic maelstrom known as “hyperinflation" that ravaged Germany from 1921 until 1923. Although the short period is often overlooked in popular histories of the period, there is no denying the impacts that the process had on Germany, Europe, and the world. Because of the hyperinflation of the 1920s, the effects of the later worldwide Great Depression were accentuated in Germany, which ultimately undermined the legitimacy – at least in the eyes of the German people – of the Weimar government.

Answer 2

Germany was already suffering from high levels of inflation due to the effects of the war and the increasing government debt.
‘Passive resistance’ meant that whilst the workers were on strike fewer industrial goods were being produced, which weakened the economy still further.
In order to pay the striking workers the government simply printed more money. This flood of money led to hyperinflation as the more money was printed, the more prices rose.
Prices ran out of control, for example a loaf of bread, which cost 250 marks in January 1923, had risen to 200,000 million marks in November 1923.
By autumn 1923 it cost more to print a note than the note was worth.
During the crisis, workers were often paid twice per day because prices rose so fast their wages were virtually worthless by lunchtime.