Hyperinflation in Germany Essay Example | Topics and Well Written Essays - 1250 words

Hyperinflation in Germany - Essay Example Another factor which contributes to the cause was the reparations for the destruction caused after the World War I which had no returns. It was largely believed by Seflon Delmer that Germany's strategy of financing the war on credit basis leading to huge deficits caused the degradation of mark. The most important point to be noted is that Havenstien, Director of Reichsbank, whose inability to understand the causes for situation, instead of finding blamed it on reparations and increased the flow of money which is clear indication of deregulation from the economic point of view. Alex also argued on the role of industrialists in their effort to increase the inflation as most of the industrialists prospered during this period. All these factors laid the foundation for the rise of inflation in Germany during 1923 after World War I. (Alex De Jonge) During the period of hyperinflation, there was social unrest in the society. Alex in his articles using appropriate examples has tried to explain what the value of money was during this period and the government and capitalist intervention in regulation policies. Alex in his work mentioned that workers were paid five times a week due to weak performance of currency. From the economics perspective, the supply and demand are the most important factors and termed as wheels of the economy. Inflation is referred as a situation where level of prices increase and value of money declines. This was clearly reflected in the works of Alex De Jonge through an example of an author receiving advance payment for his work. But the time money reaches him, it is worth paying off the bills of postal charges. How much the value owed to the public can be understood from this example cited by Alex, wherein a Mayor presents a donation of 1,000,000,000,000 to Berlin couple, the value of which was no more t han half penny. The value of money was undervalued in such a way that currencies were found in gutter thrown away by the beggars. Due to the inflation crisis and loss on money value, many cities and individual firms started printing their own notes secured by food stocks and eventually gave rise to barter system of market trade after 500 years. This gives clear indication of laissez faire in the German economy where government's interference was almost negligible. Barter market gave rise to commodity value and commodities were exchanged giving rise to theft and burglary of mailboxes, door handle, telephone wires, shoes, etc. The article indentifies certain issues wherein government interference was necessary but did not act. The inflation was a period of prosperity wherein rich grew richer and poor were exploited heavily as in capitalist economy. Alex in his paper has tried to explain the causes and effects on Germany's economy which gave rise to once ancient barter system. The currency value lost its real value to such an extent that even beggars didn't had confidence in keeping it. According to Alex's view, Germany was cheaper to foreigners than to its own citizen. (Alex de Jonge) III. Socioeconomic and Political developments in Germany Post