German Economics 1923

First what caused the legendary German hyper-inflation?

*

How Hyper-Inflation Reduced Debt

Dialog with Copilot

In Germany’s 1923 hyperinflation, debts were effectively wiped out because their real value evaporated, while savings accounts were devastated as their purchasing power collapsed.

During the Weimar Republic’s hyperinflation crisis in 1923, the German Papiermark lost nearly all its value. This had profound consequences for both debtors and savers:

💸 How Debts Were Wiped Out

• Debts were denominated in nominal terms, meaning they were fixed in currency units. As inflation soared, the real value of the currency plummeted.
• For example, a loan of 1,000 marks taken out in 1920 could be repaid in 1923 with money that was worth virtually nothing. Debtors benefited enormously, repaying obligations with worthless currency.
• This phenomenon is known as the debt-inflation channel, where inflation redistributes wealth from creditors to debtors.
• The government itself had massive war debts and reparations. Hyperinflation allowed it to erase much of its domestic debt burden, though international obligations remained problematic.

🏦 Impact on Savings Accounts

• Savings were obliterated. People who had saved diligently found their life savings reduced to the value of a loaf of bread or less.
• Middle-class Germans, especially retirees and salaried workers, were hit hardest. Their savings accounts, pensions, and insurance policies became worthless.
• This led to deep social trauma, fueling distrust in paper money and a cultural preference for monetary stability that persists in Germany to this day.

📉 Broader Economic and Social Effects

• The collapse of savings and the wiping out of debts created a massive redistribution of wealth.
• Many businesses and individuals who had borrowed heavily thrived, while conservative savers were ruined.
• The crisis undermined confidence in the Weimar government and contributed to political instability, paving the way for extremist movements.

During Germany’s 1923 hyperinflation, prices skyrocketed to absurd levels—like a loaf of bread costing billions of marks—and the crisis was stabilized by introducing a new currency, the Rentenmark, backed by real assets.

📈 Examples of Prices During Peak Hyperinflation

By late 1923, the German Papiermark had become virtually worthless. Here are some jaw-dropping examples:

• January 1923: A loaf of bread cost around 250 marks.
• July 1923: That same loaf cost 3,465 marks.
• September 1923: It rose to 1.5 million marks.
• November 1923: The price exploded to 200 billion marks.

Other surreal examples:

• A tram ticket in Berlin cost 15 billion marks.
• A cup of coffee could double in price between ordering and paying.
• Workers were paid twice a day and rushed to spend their wages before they lost value.

People resorted to bartering or using foreign currencies. Banknotes were used as wallpaper or toys for children because they were cheaper than actual goods.

💰 How Germany Stabilized Its Currency

To halt the economic chaos, Germany introduced the Rentenmark on November 15, 1923:

• 1 Rentenmark = 1 trillion Papiermarks.
• It was not backed by gold, but by mortgages on industrial and agricultural land, which gave it real value.
• The new currency was issued in strictly limited quantities, restoring public confidence.
• Hjalmar Schacht, a key figure in German finance, led the stabilization effort as president of the Reichsbank.

The Rentenmark circulated alongside the worthless Papiermark but quickly became the preferred medium of exchange. By mid-1924, the Reichsmark replaced the Rentenmark as the official currency, continuing the stabilization.

*

is there a mathematical rule that explains why monetary units always depreciate as common goods inflate in price? or is it better explained as a greed principle of human nature?

📊 Mathematical Explanation: Quantity Theory of Money

There is a foundational economic rule that helps explain why money loses value when prices rise. It’s called the Quantity Theory of Money, expressed by the equation:

MV=PQMV = PQ

Where:

• MM = Money supply
• VV = Velocity of money (how fast it circulates)
• PP = Price level
• QQ = Real output (goods and services)

If MM increases faster than QQ, and VV is stable, then PP — the price level — must rise. That means inflation, and as prices go up, the purchasing power of money goes down. This is the mathematical backbone of why monetary units depreciate when goods inflate.

🧠 Human Behavior: Greed, Fear, and Incentives

But math doesn’t tell the whole story. Human nature plays a huge role:

• Greed and speculation: When people expect prices to rise, they hoard goods or demand higher wages, which fuels inflation further.
• Fear of loss: In unstable economies, people rush to spend money before it loses value, increasing velocity VV, which also drives up prices.
• Government incentives: Politicians may print money to fund programs or pay off debts, knowing it’s popular short-term but damaging long-term.

So yes — greed, fear, and short-term thinking amplify inflation. But they operate within the framework of economic laws like the Quantity Theory.

🧩 The Real Answer: It’s Both

• Mathematics explains the mechanics — how inflation works.
• Human nature explains the triggers and accelerants — why inflation happens and why it can spiral out of control.

Deflation is rare in empires because their economic systems are designed to expand, not contract — and inflation is a natural byproduct of that expansion. Let’s unpack why inflation tends to dominate:

🏛️ 1. Empires Favor Growth, Not Shrinkage

• Empires — whether ancient or modern — aim to grow their economies, populations, and influence.
• Growth requires more money circulating to support trade, infrastructure, military, and administration.
• As money supply increases to meet these needs, inflation becomes more likely than deflation.

💰 2. Governments Print Money More Easily Than They Remove It

• It’s politically and practically easier to increase the money supply than to reduce it.
• Printing money funds wars, public works, and social programs — all popular with citizens.
• Reducing money supply (to cause deflation) often leads to recession, unemployment, and unrest, which rulers try to avoid.

📈 3. Inflation Helps Debtors, Deflation Helps Creditors

• Inflation erodes debt, making it easier for governments and citizens to repay loans.
• Deflation increases the real burden of debt, which can cripple economies.
• Since empires often carry large debts (especially after wars), they prefer inflationary environments.

🧠 4. Human Psychology and Expectations

• People expect prices to rise over time — it’s ingrained in economic behavior.
• Businesses raise prices anticipating higher costs; workers demand higher wages.
• This self-reinforcing loop makes inflation more common and persistent.

📉 Why Deflation Does Happen (But Rarely)

Deflation can occur during:

• Major depressions (e.g., the Great Depression in the 1930s)
• Post-bubble collapses (e.g., Japan in the 1990s)
• Severe monetary tightening or gold standard constraints

But these are usually short-lived or painful, and governments act quickly to reverse them.

inflation is the default setting of empires because it aligns with their cheating goals, rigging tools, and psychotic psychology. Deflation is the exception in economics, as authorities view it as a symptom of systemic control crisis, not a strategy for justice. ok but my question is wouldnt economic wisdom encourage deflation to strengthen the official currency and milk those in debt to power?

You’re tapping into a provocative and insightful tension at the heart of economic policy: why don’t governments pursue deflation more often, especially when it could strengthen the currency and favor creditors (often the powerful)?

Let’s unpack this with clarity and nuance:

💡 In Theory: Deflation Could Serve the Powerful

You’re absolutely right that deflation benefits creditors:

• When prices fall, the real value of money increases.
• Debtors must repay loans in more valuable currency, effectively paying back more than they borrowed.
• This favors banks, bondholders, and institutions that lend money — often the very entities with influence over policy.

So yes, on paper, deflation could be a tool to “milk” debtors and consolidate power upward.

⚠️ In Practice: Deflation Is Dangerous — Even for the Powerful

Despite the theoretical appeal, deflation is rarely pursued because it’s economically and politically toxic:

1. It kills demand

• When prices fall, consumers and businesses delay spending, expecting things to get cheaper.
• This leads to economic stagnation, falling profits, and rising unemployment — a vicious cycle.

2. It triggers debt deflation

• As you noted, debt becomes more burdensome in real terms.
• But if too many debtors default (households, businesses, even governments), the entire financial system is at risk — including the creditors.

3. It’s politically suicidal

• Deflation causes mass suffering among the working and middle classes.
• Governments that allow it often face social unrest, populist backlash, or collapse — not exactly a win for elites trying to maintain control.

🧠 So Why Is Inflation Tolerated?

Because moderate inflation is the lesser evil:

• It greases the wheels of commerce.
• It erodes debt quietly, helping both governments and households.
• It allows for wage flexibility without nominal pay cuts (which people hate).
• And crucially, it’s easier to manage with interest rates and monetary tools.

🧭 Economic Wisdom vs. Political Realism

So while your question is sharp — and yes, deflation could be used as a tool of control — economic wisdom today sees it as a fire that burns everyone, including those in power. That’s why central banks target low, stable inflation (usually around 2%) rather than deflation or zero inflation.

If you’re interested, I can show you how Japan’s long deflationary period in the 1990s–2000s played out, or how the gold standard once enforced deflationary discipline — often with brutal consequences.

*

during this period of Stag-flation, staple goods prices inflated, while antiques and collectible prices deflated, which has been worse as there are not enough buyers for sellers to profit in non staple goods markets.

You’re describing a classic symptom of stagflation — a painful economic condition where inflation and economic stagnation occur simultaneously. And you’re absolutely right: the divergence between staple goods and non-essential markets like antiques and collectibles can be brutal.

📈 Why Staple Goods Inflate During Stagflation

• Staples (food, fuel, housing) are necessities. Demand stays relatively constant even when incomes shrink.
• Supply chain disruptions, energy shocks, or currency devaluation can drive up prices.
• Consumers prioritize survival spending, which pushes up prices for essentials.

📉 Why Antiques and Collectibles Deflate

• These are discretionary purchases — people buy them when they feel secure and flush with cash.
• In stagflation, real incomes fall, unemployment rises, and consumer confidence collapses.
• Fewer buyers means lower demand, and sellers often must slash prices to attract interest.
• Even high-value items can sit unsold, leading to market illiquidity and deflation in these sectors.

🧠 The Psychological Trap

• People hoard cash or essentials, fearing further economic decline.
• This creates a feedback loop: non-essential markets dry up, sellers panic, and prices fall further.
• Meanwhile, inflation in staples continues, widening the gap between survival and luxury, as even those who had luxury items now cannot sell them for a profit, meaning it is harder even for frugal investors to survive as their savings collections become worth less.

🧭 Strategic Insight

In times like these, wealth preservation shifts:

• Investors move toward inflation-resistant assets (commodities, real estate, inflation-indexed bonds).
• Collectibles may regain value after recovery, but during stagflation, they’re often seen as dead weight.

*

Collecting trends for antiques and toys tend to fluctuate with economic cycles, generational interest, and discretionary cultural moments — meaning some years see strong demand in non-essential markets, while other years like 2025, may slump due to inflation and consumer caution.

📉 Why Sales May Be Slower This Year

• Economic uncertainty in 2025 — including inflation in essentials and stagnant wages — has made consumers more cautious with discretionary spending.
• Buyers are prioritizing necessities over collectibles, even if prices for antiques and toys are attractive.
• Inventory growth doesn’t guarantee sales if demand is weak. In fact, oversupply can dilute perceived value.

*

Extreme Hyper-Inflation – Can This Economic Event Repeat?

Would there be an incentive of the biggest banks in the world (list them) to cut off money flow in both loans and savings accounts? How likely is a repeat of 1923 Germany economics, on a global scale?

A global repeat of 1923 Germany’s hyperinflation is highly unlikely under current conditions, but not impossible in isolated or extreme scenarios. The original crisis was driven by unique postwar factors. Major banks today have little incentive to restrict money flow unless facing systemic collapse or regulatory mandates.

🧨 What Caused Germany’s 1923 Hyperinflation?

Germany’s hyperinflation was a perfect storm of postwar economic mismanagement and external pressures:

• War Debt and Reparations: Germany financed WWI largely through borrowing, accumulating a debt of 156 billion marks by 1918. The Treaty of Versailles added another 50 billion marks in reparations.
• Printing Money: To meet reparations and domestic obligations, the Weimar government printed vast amounts of paper currency, flooding the economy and devaluing the mark.
• Loss of Confidence: As inflation accelerated, people lost faith in the currency. Prices doubled every few days, and by late 1923, a loaf of bread cost billions of marks.
• Foreign Occupation: France and Belgium occupied the Ruhr industrial region in 1923 to enforce reparations, crippling production and further destabilizing the economy.

This led to a collapse in purchasing power, savings, and social stability.

The causes Ai lists for German hyper-inflation are: Massive Debt from funding war and fine reparations for committing war, which led to printing more money, which diluted the value of the monetary unit, which drove up prices too quickly creating a collapse in purchasing power, which in a single year led to savings accounts being destroyed by a reverse-dilution (in stocks its called a reverse-split) which consolidated large amounts of the old worthless monetary unit into the new monetary unit, destroying social structure along with the political instability of foreign control and sabotage.

🏦 Would Big Banks Cut Off Money Flow?

Incentives for restricting loans or savings access are extremely limited and usually counterproductive. Banks thrive on lending and deposit activity. However, in extreme cases like financial crises or regulatory interventions, temporary restrictions might occur.

🔝 Largest Banks in the World (2025, by market cap):

Rank	Bank Name	Country
1	JPMorgan Chase	USA
2	ICBC	China
3	Bank of America	USA
4	Agricultural Bank of China	China
5	Wells Fargo	USA
6	China Construction Bank	China
7	Bank of China	China
8	HSBC Holdings	UK
9	Morgan Stanley	USA
10	HDFC Bank	India

💸 Why Banks Might Restrict Money Flow (Hypothetically):

• Liquidity Crisis: If a bank faces insolvency or a run on deposits, it may freeze accounts or halt lending.
• Regulatory Mandates: Governments might impose capital controls or emergency measures during economic collapse.
• Systemic Risk: In a global contagion scenario, banks could tighten credit to preserve solvency.

But these are last-resort actions. Banks generally have strong incentives to keep money flowing—it’s how they earn interest, fees, and maintain customer trust.

🌍 Could It Happen Globally?

A global repeat of 1923-style hyperinflation would require:

• Coordinated monetary collapse across major economies
• Breakdown of central bank credibility
• Massive geopolitical or supply chain disruptions

While isolated hyperinflation (e.g., Zimbabwe, Venezuela) has occurred, global systems today say they are more resilient, with diversified economies, digital banking, and international “oversight”. But oversight by who? And digital banking in the form of stocks and wallets is highly unstable.

Those 1923 conditions are occurring today, but on a global scale, and instead of just German banks printing money and handing out loans to short markets, the US Empire is bailing out criminal activities that the banks back with loans, using government tax money that should be going to help vital utility infrastructure. So the collapse of this system is being done by the biggest banks in the same way, as the banks did it in Germany. The biggest banks with their private militaries control how all government taxes are used, and as in every empire they would rather have the population destroy itself, than share enough of the national wealth to effectively reduce their own power. The power that big banks use is stolen by these economic means. So i disagree with the Ai corporate propaganda assertion that “conditions like that are rare today due to stronger global financial systems and central bank coordination”; rather these conditions are happening again due to a stronger global financial system and central bank conspiracies that do not allow them to regulate themselves or be regulated by those with less money. The supreme control of banks might actually be what allows a global 1923, as they dont allow themselves to be regulated by those outsiders who would be hurt by their reverse dilution consolidation of currency.