Events
Weimar Republic Hyperinflation
Also Known As German Hyperinflation of 1923
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Facing reparations obligations from the Treaty of Versailles and a deficit financed by printing money, the Weimar Republic's currency depreciated from about 4.2 marks per United States dollar in 1914 to roughly 4.2 trillion per dollar by November 1923. Monthly inflation peaked near 29,500 percent that October and November, with prices reportedly doubling every three to four days at the worst of it. Currency Commissioner Hjalmar Schacht halted the collapse on November 15, 1923 by introducing the Rentenmark, a strictly capped new currency nominally backed by a mortgage on German land, exchanged at one Rentenmark per one trillion paper marks.
Facts
Event DateDated to the Rentenmark''s introduction, the currency reform that ended the hyperinflation, rather than to a peak date; the crisis itself built over 1922-23. LocationWeimar Republic (Germany) 1 Cross-Tradition Connections
Associated With
Fiat Currency, Concepts Weimar is the standard cautionary case cited against unconstrained fiat money creation.
Associated With School
Austrian economists (Mises, later Hayek) treated Weimar as the canonical case of hyperinflation caused by unconstrained central bank financing of deficits.
Held Differently
Why this is disputed. Keynes himself, in The Economic Consequences of the Peace, weighted reparations and the external transfer problem more heavily than domestic money creation as the crisis' root cause, a reading later monetary historians (e.g. Bresciani-Turroni) contested.
In the Other Atlases
Sources
1. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.Hyperinflation in the Weimar Republic (1922-23)
1. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.Associated With School: Austrian School
1. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.Associated With School: Keynesian Economics
2. Wikipedia
Wikimedia FoundationHyperinflation in the Weimar Republic, Stabilization sectionQuote, Hyperinflation in the Weimar Republic, Stabilization section
On 16 November 1923, the new Rentenmark was introduced to replace the worthless paper marks issued by the Reichsbank.
The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With: Fiat Currency
Dissenting Readings (1 dissenting reading)
Description
The standard framing above centers domestic money creation, but Bresciani-Turroni's classic study The Economics of Inflation argued the Reichsbank's policy of discounting government paper without limit, not reparations transfers themselves, was the proximate cause, since the mark had already begun collapsing before the London Schedule of Payments was even set. Keynes, by contrast, in The Economic Consequences of the Peace, weighted the external transfer burden of reparations more heavily. Both camps agree the mark collapsed; they disagree sharply about which mechanism did the damage, a live question in monetary history rather than a settled one.
A dissenting reading, from Costantino Bresciani-Turroni and later monetary historiansEncyclopaedia Britannica, Encyclopaedia Britannica, Inc.
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