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What Caused Hyperinflation In Germanyand What Effects Did It Have On The Ordinary People?
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What Caused Hyperinflation In Germany and What Effects Did It Have On The Ordinary People? 30/04/2007 The inflation problem actually began at the beginning of World War I. It was then that the German Government started to accumulate debt and to increase the money supply. Because they thought they would win the war and intended to force the losers to pay for all costs, they chose to finance the war through borrowing, rather than through taxes. Furthermore, as soon as the war broke out, the central bank (Reichsbank) declared its currency notes no longer redeemable for gold. This prevented a run on its gold reserves and allowed it to concentrate on helping the central government finance the war. However, by suspending the redeemability of its notes, the Reichsbank was no longer restricted in the amount of money it could print. With this restriction lifted, the German Government ordered the Reichsbank to...
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