German economic history: Where the angst comes from

Posted: September 13, 2013 in economy
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German economic history


Why Germans are so frightened of inflation

The Downfall of Money: Germany’s Hyperinflation and the Destruction of the Middle Class. By Frederick Taylor. Bloomsbury; 416 pages; $30 and £25. Buy from,
GERMANS are terrified of inflation. German politicians (and their colleagues in the euro zone) understand this, though mostly they ignore it as they try and steer their way out of the euro crisis. By the end of “The Downfall of Money” it is clear why these fears are so deeply embedded. At the root of the trauma lie the events of 1923, when the German currency plummeted from 7,500 Reichsmarks to the dollar to a rate of 2.5 trillion.

This is not just a story of financial mismanagement. The dice were loaded against Germany as soon as it became clear, late in 1918, that it would lose the first world war. As often happens, the winners wrote the history and set the terms for peace. The Treaty of Versailles, signed in 1919 but not finalised …

via Economic Crisis


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