The World’s Most Famous Case Of Hyperinflation (Part 1)

Tyler Durden's picture

The Great War ended on the 11th hour of November 11th, 1918, when the signed armistice came into effect.

Though this peace would signal the end of the war, it would also help lead to a series of further destruction: this time the destruction of wealth and savings.

The world’s most famous hyperinflation event, which took place in Germany from 1921 and 1924, was a financial calamity that led millions of people to have their savings erased.

Courtesy of: The Money Project


The Treaty of Versailles

Five years after the assassination of Archduke Franz Ferdinand, the Treaty of Versailles was signed, officially ending the state of war between Germany and the Allies.

The terms of the agreement, which were essentially forced upon Germany, made the country:

  1. Accept blame for the war
  2. Agree to pay £6.6 billion in reparations (equal to $442 billion in USD today)
  3. Forfeit territory in Europe as well as its colonies
  4. Forbid Germany to have submarines or an air force, as well as a limited army and navy
  5. Accept the Rhineland, a strategic area bordering France and other countries, to be fully demilitarized.

“I believe that the campaign for securing out of Germany the general costs of the war was one of the most serious acts of political unwisdom for which our statesmen have ever been responsible.”
– John Maynard Keynes, representative of the British Treasury

Keynes believed the sums being asked of Germany in reparations were many times more than it was possible for Germany to pay. He thought that this could create large amounts of instability with the global financial system.

The Catalysts

1. Germany had suspended the Mark’s convertibility into gold at the beginning of war.

This created two separate versions of the same currency:

Goldmark: The Goldmark refers to the version on the gold standard, with 2790 Mark equal to 1 kg of pure gold. This meant: 1 USD = 4 Goldmarks, £1 = 20.43 Goldmarks

Papiermark: The Papiermark refers to the version printed on paper. These were used to finance the war.
In fear that Germany would run the printing presses, the Allies specified that reparations must be paid in the Goldmarks and raw materials of equivalent value.

2. Heavy Debt

Even before reparations, Germany was already in significant debt. The country had borrowed heavily during the war with expectations that it would be won, leaving the losers repay the loans.

Adding together previous debts with the reparations, debt exceeded Germany’s GDP.

3. Inability to Pay

The burden of payments was high. The country’s economy had been damaged by the war, and the loss of Germany’s richest farmland (West Prussia) and the Saar coalfields did not help either.

Foreign speculators began to lose confidence in Germany’s ability to pay, and started betting against the Mark.

Foreign banks and businesses expected increasingly large amounts of German money in exchange for their own currency. It became very expensive for Germany to buy food and raw materials from other countries.

Germany began mass printing bank notes to buy foreign currency, which was in turn used to pay reparations.

4. Invasion of The Ruhr

After multiple defaults on payments of coal and timber, the Reparation Commission voted to occupy Germany’s most important industrial lands (The Ruhr) to enforce the payment of reparations.

French and Belgian troops invaded in January 1923 and began The Occupation of The Ruhr.

German authorities promoted the spirit of passive resistance, and told workers to “do nothing” to help the invaders. In other words, The Ruhr was in a general strike, and income from one of Germany’s most important industrial areas was gone.

On top of that, more and more banknotes had to be printed to pay striking workers.


Just two calendar years after the end of the war, the Papiermark was worth 10% of its original value. By the end of 1923, it took 1 trillion Papiermarks to buy a single Goldmark.

All cash savings had lost their value, and the prudent German middleclass savers were inexplicably punished.

Learn about the effects of German hyperinflation, how it was curtailed, and about other famous hyperinflations in Part 2 (released sometime the week of Jan 18-22, 2016).

Source: The Money Project via

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Ausonius's picture

By the time you publish Part II of Germany's Hyperinflation Saga, we may have our own saga in progress.

Debt must be repaid, and one way to "repay" it is with printed paper, or so thought the Weimar governments.  It "works," but destroys the economy.  Debt can be cancelled, bankrupting those holding the debt, and again destroying the economy.

How many years will it take to rebuild an economy after such events?

Or one can never repay the debt, and just keep increasing the debt, until the conditions explode.  I suspect this scenario is ours, and I also suspect that the damage will be greater and last much longer than in the other two.


Eeyores Enigma's picture

What is always left out is how they got wheelbarrows full of money out to the majority of the population enough to cause hyperinflation.

I have yet to see ANYONE explain how that could happen in this day and age.

Total BS!

The saying in the last depression was "there was plenty of everything but no one had any money to buy it". Thats our future BITCHES!!!

daveO's picture

"there was plenty of everything but no one had any money to buy it"

Bernanke, the great counterfeiter, said that the FED would never repeat that mistake again. Look at all the debt slaves around now compared to the 30's. Nearly all of them will vote for free money.

mkkby's picture

Let those bitchez vote all they want.  When SHTF, the fed will raise rates and support the dollar -- just like they are now.

The fed knows their entire franchise is based on the US dollar.  They have a good thing going.  They rule the world.  They aren't gonna let it hyperinflate away to shit.

And they aren't gonna let their multi billionaire/trillionaire friends/ownerns get hyperinflated out of their king's stash. 

Don't bet in US hyperinflation but hedge yourself just in case with some gold.

True Blue's picture

I disagree; they are getting ready to ditch the dollar, just as they ditched the Pound Sterling once they had a new host infected. They are all for hyperinflation -at the 'right' time; that is how you get actual, real assets for pennies of paper (or digital) fiat on the dollar. The final stage of the looting is getting private people to sell their gold, silver and other valueta in exchange for paper fiat with which to buy food. We will see a point of simultaneous inflation and deflation, as prices of necessities go up and the value of real or non consumable assets is forced down -a pawnbroker's market.

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered" -Thos. Jefferson

LowerSlowerDelaware_LSD's picture

Yeah, we have no choice but to outright default or inflate the debt, and future debt, away,  I doubt that we'll outright default.

mkkby's picture

Blue, that narrative is getting old and makes NO SENSE.  

Think about what you would do if you could print money.  There is nothing you cannot buy.  There is no need to play the hyperinflation/deflation game, because you already can have everything.  All you would be doing is taking a risk that your game blows up in your face and somebody else comes out on top.

Lower slower, what you said is total bullshit. 

It is still easy for the US to balance it's budget.  There is really no need for a $ trillion military, a $ trillion in socialized health care, etc...  This shit is all welfare.  At some point austerity will be forced.  You've already seen the playbook -- Greece.

LowerSlowerDelaware_LSD's picture

I'll let your votes speak for who makes sense and who doesn't.

mkkby's picture

Fail.  Feelings are not an argument, except of course for women.

LowerSlowerDelaware_LSD's picture

You are so cute(!!!) sweetie.  Now go to bed before your mommy catches you on the computer past your bed time.

True Blue's picture

The hyperinflation is baked into the fiat game from the very beginning. It ALWAYS reverts in value to Exactly what the paper it is printed on is worth. The 'money' in your pocket is backed by nothing but 'faith' that it will be accepted at (nearly) face value tomorrow. Eventually, they 2% (compounded yearly) that to death, which is when they look for a new, stronger host to infect; whilst pillaging the corpse of their previous victim.

It happens Every time fiat is used or coinage starts being debased. Sure, 'maybe' it won't here, 'maybe' this time it will be somehow 'different'... 'maybe' history has stopped, and we are in some new golden era of endless fiat... 'maybe' now that it is digital and they do not even have the hassle and expense of printing actual paper they will display some kind of fiscal restraint... Personally I won't bet on it. Within 10 years at the outside, your digital FRN 'dollars' won't be worth $.01010011 01001000 01001001 01010100 (yes, its binary.)

mkkby's picture

Fail.  You described inflation, not HYPER inflation which is the subject of this article.

HYPER inflation HAS NOT happened every time fiat was used.  If you are saying that then you are either ignorant of history or a liar.

Pheonyte's picture

And look at the shitstorm that's resulting from a mere 25 bps hike. If rates are brought up to a real level, it's lights out. The debt-deflationary vortex will swallow everyone, including those billionaire and trillionaire friends.

BarkingCat's picture

If you want to see current day equivalent take a look at the Belarus Ruble to US dollar exchange rate.

Everyone there is a millionaire. ...but that just means you have $100

gmak's picture

Hyperinflation happens when people lose confidence in the currency , not when there is too much of it. The loss of confidence causes everyone to demand ridiculous prices for things. If you had a choice of USD vs Zimbabwean Dollars 10 years ago, and someone wanted to pay with the latter - you would be asking for a lot more than the exchange rate indicated. Same for Venezuela recently. This spirals up and out of control.

Elan_Vital's picture

A debt that can't be repaid won't be repaid.

Chupacabra-322's picture

PNAC. Hundred year Phony War on Terror. Sounds familiar? Same group of Psychopathic Banksters perpetrating the exact same Rothchilds playbook. Arming, funding & training both sides of a Conflict indebting the Serfs to enrich the 1%.

"All Wars are Bankier Wars."
-Smeldly Butler.

ThirteenthFloor's picture

+1. To add the Dulles brothers drafted the Versailles Treaty settlement knowing it would bankrupt Germany.

They would later become director of CIA and Secretary of State in the US.

tarabel's picture



Where do you guys come up with these ludicrous and utterly unfounded assertions?

So far as I know, John Foster Dulles was indeed a member of the American Reparations Delegation but, like all others in the American contingent, he urged leniency towards the beaten Germans and was outvoted by the rapacious Allies, who wanted to stick it to Germany.

GhostOfDiogenes's picture

"do you guys come up with these ludicrous and utterly unfounded assertions?

Spoken like a true narcissist.

Squid-puppets a-go-go's picture

she followed that with a perfectly modest 'so far as i know'

don't sound overly auto-amorous to me

petolo's picture

Could we "coin" another word for narcissism. The narcissus is such a pretty flower and Narcissus' only crime was staring at himself in a pool of water. Suggestions?

Steroid's picture

Obama comes to mind.

I would suggest Obamia as a synonyme for narcissism.

Miss Expectations's picture

Go back even further and add Edward Mandell House.  A true spook.

House wanted to control more than Texas, House wanted to control the country. House would do so by becoming a king maker instead of a king. House learned by controlling two or three men in the Senate; two or three men in the House; and the President -- he could control the country. Edward saw his father, Thomas, become rich and avoid risk by hiring men to run the blockades while observing safely from shore. House would do the same in the political arena. He would find a candidate that he could influence. He would be instrumental in helping that candidate achieve office. He would influence the candidate from behind the scenes. The people would perceive one man was representing them, when in reality, an entirely different man was in control. House could influence that man to betray his constituents with no risk to himself. House had learned a great secret -- how to control a country. House didn't need to influence millions of people, he need only influence a handful of men. The less the people knew about him or what he was doing, the better off he was. House would profit from remaining in the shadows. House would help establish a secret society in America that would operate in the same fashion -- the Council on Foreign Relations.

In 1912, Woodrow Wilson (president of Princeton 1902-1910, governor of New Jersey 1911-13) ran as a Democrat in a three man presidential race. Howard Taft was the incumbent Republican. Former President Theodore Roosevelt ran on the Progressive party ticket. Wilson's main financial genius and support came from a group of directors of the House of Rockefeller's National City Bank including: Cleveland H. Dodge, J. Ogden Armour, James Stillman, and William Rockefeller. Otto Kahn, and Jacob Schiff of the House of Kuhn-Loeb & Co. provided additional financial support. The House of Morgan guided the Progressive campaign of Teddy Roosevelt. Morgan partner George Perkins provided Roosevelt with money, speeches, and men from Wall Street to help his campaign. The House of Morgan also gave money to the Wilson campaign. The republican vote was divided and Wilson was able to beat them both, won by a land slide, and became 28th President of the United States. After the election Wilson's financial backers provided him with their own agents to act as unofficial advisors. Among these advisors was a young lawyer named Felix Frankfurter. Frankfurter worked for the New York "establishment" law firm Hornblower, Byrne, Miller and Potter. Another adviser was Edward Mandell House. Without House, Wilson may never have become president. Wilson was nominated as Democratic candidate because of support from William Jennings Bryan. Colonel House obtained Bryan's support for Wilson. House became Wilson's closest unofficial advisor. The Round Table Group had four pet projects, a graduated income tax, a central bank, creation of a Central Intelligence Agency, and the League of Nations

On May 30, 1919 House participated in a meeting in Paris, which laid the groundwork for establishment of the Council on Foreign Relations (CFR). Throughout 1919, House urged Wilson to work with Senator Henry Cabot Lodge to achieve ratification of the Versailles Treaty, but Wilson refused to deal with Lodge or any other senior Republican.

However, the conference revealed serious policy disagreements between Wilson and House. Even worse were personality conflicts. Wilson had become much more intolerant and systematically broke with one after another of his closest advisors. He would also later dismiss House's own son-in-law, Gordon Auchincloss, from the American peace commission when it became known the young man was making derogatory comments about the President.[12] In February 1919, House took his place on the Council of Ten where he negotiated compromises unacceptable to Wilson. In mid-March 1919, Wilson returned to Paris and lost confidence in House, relegating him to the sidelines. In fact, after they returned to the U.S. later in 1919, the two men never saw or spoke to each other again.[12]

aurum4040's picture

I agree. Its precisely why Hitler wanted to eradicate the Jews 

ThroxxOfVron's picture

"Germany had suspended the Mark’s convertibility into gold "


Anyone have a chart of the price of OIL in papiermarks from 1920 through 1924 ?

I'm willling to bet that there are some similarities with the 'oil price shock' following the ceasation of convertibility in the US.

The US Dollar would probably have hyperinflated too if the Axis had won the war, no US Bankers were being repaid for loans to either side, Germany was occupying the manufacturing belt/Pennsylvania/New Jersey, and the US just resorted to the printing presses to pay nominal domestic bills & bennies...



tarabel's picture



Coal was really the name of the game in the 20s.

yogibear's picture

And were those that made a substantial amounts of money off of each war.

The countries could have forgave Germany's debts and perhaps circumvented Adolph Hitler.

Look at all the countries that were indebted to the banksters and how long it took

WW one:


Great Britain

Earlier in the week of Nov1,2014  , the UK announced it will repay £218 million ($349 million) from the £2 billion of debt that it incurred during the war. 


On Oct. 3, 2010, Germany finally paid off all its debt from World War One. 


besnook's picture

but what was the interest rate? and what did the chart look like?

booboo's picture

I believe Keynes was activly involved in determining what countries received what reparations so not unlike all eCONomist he was only willing to admit the mistake long after the damage had been done. Sound familiar?

tarabel's picture



Sorry, no. Keynes was a British Treasury representative at the Treaty. Smart man that he was, he realized what a colossal mistake the treaty was and did everything in his power to get the British delegation to reconsider.

Unable to make his views felt as a junior member of the delegation, he resigned and went back to Britain, where he immediately wrote a book entitled "The Economic Consequences of the Peace".


ebworthen's picture

All wars are Bakster wars.

Having said that I hope the Dollar suffers this fate, D.C. and Wall Street are so corrupt it is the only thing that will root out the corruption.  Hang 'em high!

MaxThrust's picture

History, in a way does repeat itself but it certainly does not Rhyme.


Son of Captain Nemo's picture

Certainly wish the United States of America could compare itself to Weimar Republic Germany but this simply will never be an accurate or fair comaprison.

Germany was under the brutal yoke of a war reparation through the Franco/Anglo-American powers of which the U.S. was a partner to the hostile blood letting...  Post-1945 "rinse and repeat" only with far greater consequences and casualties for Germany again as the loser.

We will never know how Germany might have prospered had the Rothschild/Rockefeller and other Anglo-American industrialists been unsuccessful in drawing Germany into Russia's "Eastern Front". But if German engineering and commerce between those two periods are any indication they would have taken the U.K. France and the U.S. to the cleaners on the technology front.  All you have to do is visit the Air and Space Museum in Washington D.C. to witness first hand what the allies took away in aviaition and everything else from the German war machine learning everything about it they could post-war to build the 2nd 3rd and 4th generation aircraft and space technology that Germany would have dominated the World with had it not squared off with the Soviet Union after 1939?... Could conceivably argue what might have also been had Japan refrained from it's attack at Pearl Harbor and found alternate sources for oil and had they no been so vigorously blockaded by the British and Americans which were the prelude to that event.

No. The United States is at the opposite end of this discussion and only benefited from it's 100 year history of war in Europe, Asia and the Middle East after it cemented itself firmly in place after 1913 and unfortunately never looked back as it had many opportunities to do so.

The U.S.A. is nothing more nothing less that a malignant Fascist State post WWI and WWII "metastasizing" and never seeing  comparable losses of it's own to the 80 million deaths suffered in both wars and has had many opportunities with the institutions it allegedly helped to create like the United Nations which are nothing more than a facade of requsitie subordinate states to the U.S. Empire that do it's bidding wherever and whenever they are told.

Bretton Woods 1971.  The end of the Cold War in 1989 (which should have been the end but of course wasn't).  The expansion of NATO and the subsequent violation(s) to the treaties post Soviet Russia into the 1990s were really the beginning of the end to the U.S. Empire.

Had the the U.S. taken a different course post-Cold War with Russia to downsize it's military footprint in Europe after the Fall of the Berlin Wall and around the World for that matter and focused it's innovative echnologies to alternative sources of energy and decided to relinquish it's predominance on controlling foreign oil by eliminating the USD as a "reserve currency" along with the European Union being scrapped their is no reason to believe that it could not have achieved continued financial and economic prosperity and "yes" dominance in key sectors such as information systems and electric and solar energy.

9/11 was the grave plot and the banker bailouts were the coffin and nails!


Bunghole's picture

Maybe ZH isn't for you.

Stick to comics and internet porn.

aurum4040's picture

Exactly, WWWII Germany had, by far, the strongest military in world history. It's no contest 

tarabel's picture



Sorry, no. The Wehrmacht peaked at 9 million in 1943. The United States Army, Army Air Force, Navy, Marine Corps, and Coast Guard peaked at 16 million in 1945. Not to mention Fat Man and Little Boy.

Quasi's picture

Sorry, no. False Comparison. You can not compare one sides military strength at the height of the war to the victor's army at the end of the war! That's like comparing fresh apples to month old oranges

If we do a fair comparison in 1943, those combined militarily branch numbers for the US were also 9 millionLet's not forget that the Germans were also much better trained, better equipped, and had more fighting experience. So yeah, the Germans did have the strongest military. Unfortunately for them, they were also fighting the 2nd , 3rd, and 4th place runner ups simultaneously.  

RabbitChow's picture

Sorr, no. The US war machine wasn't really going full blast until 1943. If the Germans, Japanese and Italians new what the US could produce, they wouldn't have even tried.

tarabel's picture



I was doing Germany the service of comparing her at the apogee of her military power. 

The original assertion was that she was the strongest military power on earth EVER (as in at any time). This is clearly not correct. Nazi Germany was a very strong power and had a highly-effective command and junior leadership cadre, but it should also be remembered that about 90% of the German Army in WWII was using horse power to move its supplies and weapons while the American Army was fully motorized to a degree of wasteful abundance. And had so much excess motor capacity that it also supplied much of the British Army and at least 50% of the motor vehicles of the Soviet Army on top of that. All while fighting another Great Power halfway across the world with its other hand.

Nor can you compare her very powerful, albeit increasingly poorly-equipped, land armies as an isolated factor representative of complete military power. Germany had nothing to match the two-ocean US Navy or the sky blackening air power that came out of Willow Run. The United States had to fight at a distance of several thousands of miles across the ocean away from its industrial base while Germany had convenient rail connections to all of its geographically contiguous fronts.

The German Army was world standard in 1940-41 but by 1943 was increasingly inferior both in tables of organization as well as in overall quality of equipment with the exception of certain marquee items such as the Panther and Tiger tanks. 

Nor should Clausewitz's maxim about war being an extension of policy by other means be forgotten. Ultimately, the Wehrmacht was a policy instrument that was used to bring Germany to a state of complete destruction and full-scale dismemberment at the hands of the man who was commander-in-chief. In that regard, it is one of the least successful armies that ever roamed the Earth.

tarabel's picture



The US refused to ratify the Treaty of Versailles and extracted no reparations from Germany, so far as I can recall offhand. Nor was it ever an official member of the "Allies".

"The Kings Depart" is a fabulous retelling of the end of the war, the Treaty of Versailles, and the German Revolution which followed. One of the best history books I have ever read.

Amun's picture

Add to it a few references on how Wall Street money financed bolshevik revolution in Russia and nazi rise to power in Germany and you would get a good idea in whose one name most of the blood was spilled in the 20th century.

luna_man's picture



I sure would like to read "Part 2" before I go to bed...You, MY MAIN MAN!


be waiting

Mr. Cynic's picture

But how cool to pay off your mortgage with an hour's wages.

Fester's picture

Or get BJ's for like a dime.  I would show up with a shit load on nickels.

JOHN 14.6's picture

Head over to Greece, I hear you can get a hooker for a sandwich

Golden Phoenix's picture

So countries which owe a debt which they can't pay back purposely trash the value of their currency so they can pay it back in worthless dollars. We don't need no stinking war, that's just business as usual for the US. But then victors are spoiled.

NoWayJose's picture

Germany's problem was similar to Argentina and Hungary today - the debt was denominated in foreign currency. This created the need print ever increasing amounts of your own currency in order to buy foreign currency. If your debt is in your own currency (like Japan and the United States), then money printing in your own currency in order to pay off your debt actually reduces your debt (or at least postpones it until Judgement Day).

Paracelsus's picture

   Hemingway,writing for the Toronto Star,stated that he could cross the river and

buy up the entire contents of a German Sporting goods store for $5.

There is another solution not mentioned much in the MSM. ICELAND.

Just Default and start over.Bailing out the 1% just pisses off the other 99%....

Fiat becomes a problem when there is no anchor (like gold) and no limit on printing.