Hyperinflation

What caused hyperinflation?

After World War I, Germany faced a big problem on its economy. Germany faced the problem of poverty and high unemployment. Germany was also asked to pay a huge amount of money for all the damage caused in the war in the Treaty of Versailles . The reparation payments was a burden to the Germans people. The government kept up with the reparation payments by printing more money. However ,the more money was printed ,the more its value decreased. As the result of this, hyperinflation happened in Germany.

Effect of hyperinflation

Everything in Germany had increased its cost and it was a hard hit to the Germans, especially the poor. Many Germans felt very sad as their life-savings were lost virtually overnight. They bought anything, because otherwise their money would lose value immediately. As the price of the things in Germany had increased drastically,  the Germans people cannot afford the cost of the things. As an example, the price (marks) of 1kg loaf of bread in 1913 is only 0.29.However,it increased to a cost of 428,000,000,000 in November 1923.Pensioners who had worked hard for their retirement cannot even afford 1kg loaf of bread during the hyperinflation in Germany. People began to exchange goods (barter) rather than use money and shopkeepers tried to keep their shops closed and avoid selling anything.
Hyperinflation caused the Weimar Government to lose support of the middle and lower middle classes.The biggest beneficiaries of this hyperinflation were feudalistic industrial leaders who distrusted the democracy and who proved willing to deal with Hitler, thinking that they could control him. Business was booming and unemployment virtually vanished until the last stages of the inflation.
The monthly average exchange rate between 1922 and 1923 had increased drastically.

How did hyperinflation resolved?

Hyperinflation was resolve when Gustav Streseman served as Chancellor in the end of 1923.He used the plan which come out from Charles G.Dawes, an American banker. The plan helped Gustav Streseman to stabilise the economy in Germany.He replaced the currency with new Rentenmark.

sources:
http://www.johndclare.net/Weimar1_BBC.htm

http://www.historylearningsite.co.uk/modern-world-history-1918-to-1980/weimar-germany/hyperinflation-and-weimar-germany/

http://www.usagold.com/germannightmare.html

http://alphahistory.com/weimarrepublic/1923-hyperinflation/