Indeed, in the years of World War I, Germany was hit by severe inflation, which stabilized for a while around and then ran rampant again, becoming hyperinflation in The measure was adopted to finance the war: Germany, unlike France, which financed itself by increasing taxation, planned to meet war expenses by issuing new debt the German government was convinced that it could repay it, and thus return to prewar normality, by winning the war: the plan was also to restore the gold standard at the end of the conflict.
Shortly before the war, along with the Goldmark , the currency in force under the gold standard system, Germany began issuing a banknote, the Papiermark , which was non-convertible and guaranteed with state assets. The abandonment of the gold system, which had ensured price stability throughout Europe in the early twentieth century, was heavily criticized even then because it was believed that it would lead to a sharp devaluation of the mark , which in fact occurred on time: the amount of money that the German central bank put into circulation to meet war expenses already led to steep price hikes in the years of the conflict, so that by the cost of living in Germany was already nine to ten times higher than in if before the war it took 4 marks to buy a dollar, by June it was up to 40 marks per dollar.
Reparations were then compounded by the many social benefits that Germany had to pay after the conflict. And hyperinflation became uncontrollable: at the beginning of January it took 6, marks for one dollar, and by the end of the month the exchange rate had risen to 48, marks for one dollar. And then again to , in June, to The mark, in essence, was depreciating day by day, which meant that one had to spend the money one earned immediately lest, as early as the next day, it was worthless.
And of course, the very strong demand for basic necessities, which everyone wanted to buy before the Papiermark depreciated further or they were bartered , continually aggravated the situation.
Hyperinflation destroyed savers and of course made saving impossible , since few were able to liquidate their assets to invest in gold or safe-haven currencies, and it came down on all fixed-income earners wage earners, employees, retirees and then later on the self-employed who could no longer find a clientele to pay for their services.
