What Were The Causes And Consequences Of The Hyper

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What were the causes and consequences of the hyperinflation crisis of 1923? Germany’s economic problems came to a peak in 1923 when hyperinflation set in, meaning that prices soared whilst money values plummeted. This situation had been slowly but surely coming to a crescendo in the past months since the war started, but no one noticed until they were in the pinnacle of it. There are many factors that caused this inflation, and ultimately the consequences that followed. There were long term causes of the hyperinflation caused by the coast of war. The consequence of selling war bonds that lead to the inflation is one. Germany need to raise money to support its drawn-out war, and so instead of increasing taxation they encouraged war-bonds, were people would invest into government funds in the belief they were helping to finance the war, and their savings would be save. However this scheme proved insufficient in raising enough money, so people lost their savings, and because Germany had also borrowed the majority of the war expenditure, the national debt grew bigger. This means hyperinflation was caused by this, as the government needed more money to get rid of the national debt, and so printed out money that became worthless. Another long-term factor was the cost of goods being increased. Even thought there was nearly full employment, this still caused problems because the economy had concentrated in the supply of military weapons, and so the majority of workers fulfilled this work, leaving the production of civilian goods to run low. Therefore there was high demand for the limited amount of consumer goods on the market, and so prices went up. This lead to inflation as it meant more money was printed to cover the coast of the ever-rising prices. Medium-terms also caused inflation. The government adopted a policy of deficit financing, which would increase the
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