Economic collapse-Hyperinflation 1923. Flashcards
why did the German mark decline in value?
The loss of the War and humiliation of defeat caused the mark to fall further and the situation was not helped by the government’s failure to balance its budget and live within its means. The overriding factor was the invasion of the Ruhr, passive resistance and the GOVs solution was simply to print more.
what happens when the GOV prints money it does not have?
the value of money goes down and prices go up the result was raging Hyperinflation, when the nation becomes flooded with worthless paper money that has lost virtually all its purchasing power.
how did hyperinflation affect Working class wage earners?
their living standards already cut to the bone, simply became poorer and then finally destitute. Yet if they had a job, they were to some extent protected as they were paid higher and higher wages to match the standard of living.
how did hyperinflation affect Pensioners living on a fixed income or those living on their savings?
their income was now worthless. However, those with debts or loans would have benefitted as they could pay their debts of at a fraction of the price.
how did hyperinflation affect the upper classes?
didnt have just money, but possessions, land and properties were also well protected. Many rich businessmen were able to take advantage of the situation by taking over smaller companies which were going bankrupt.
how did hyperinflation affect the middle class?
their savings and businesses destroyed. Living largely on fixed incomes, not only did the purchasing power of their salaries fall, but family savings put aside for retirement became worthless.
how did extremist parties take advantage of hyperinflation?
people were more prepared to listen to extremist parties. Poverty gave way to hopelessness and then to anger. In times of crisis people turn to extremist parties, the communists urged Germans to follow the example of the Russian Bolsheviks and unite in Revolution. The right- winged Nazis saw it as an opportunity to steal the limelight.
