Why did hyperinflation happen in Weimar Germany?
The cause of the hyperinflation was a series of events: – The Allies force Germany to agree to crushing reparations – Germany’s gold supply dwindled as it tried to meet the reparation schedule – Germany defaulted on some reparation payments – In response, France and Belgian invaded and took over the Ruhr region, Germany’s most productive region – Germany suddenly found it lacked necessary revenue to pay its government workers. – The German government began printing “Papermarks” to pay its workers. – The non-backed currency immediately falls in value in foreign trade – As price of goods rose, German workers received raises which spilled over into private industry and it continue to spiral out of control The resolution to the hyperinflation – The Allies introduce the “Dawes Plan” to handle the crisis. The Dawes Plan called for: 1) Withdrawl of troops from Ruhr 2) Reduction in reparation payments 3) The Allies taking over supervision of the Reichsbank with the intent of further monetary r
