Comment by cyberax
11 hours ago
> Hyperinflation Heralded the Fall of German Democracy (2023)
No, it didn't. It was a crushing _deflation_. Germany actually did generally fine during the inflation period, with some economic growth.
Deflation completely killed that.
Seriously WTF?
The hyper inflation was in the aftermath of WWI when Germany's economy was broken by 4 years of war. An it was austerity at the beginning of the 29 financial crisis that brought on deflation and collapse. Followed by the election of Hitler. In the US the same thing resulted in the election of FDR and the end of Republican dominance for two generations.
The claim that 'austerity' resulted in the Great Depression is nonsense. I don't know of serious economist who actually believes that. Its the opposite actually, deflation causes some governments to adopt austerity, specifically governments who can't control their money. See Adam Tooze argument why Germany didn't want to leave the gold standard: https://www.youtube.com/watch?v=9Alx_JDpQio
The reality is, no matter if the German government had increased or decreased spending, the Great Depression was bigger then Germany and would have impacted Germany either way.
The deflation happened because of the massive accumulation of gold by the central banks of France and the US. France and the US manipulated the gold standard.
And the Financial crisis of 1929 wasn't really the bad part, that was a stock collapse. But this doesn't make a great depression, stock went down more in 1987 then in 1929.
The situation in 1929 caused many problems in the US horrifyingly organized banking system (that's its own topic) and further restricted the money supply. The Smoot–Hawley Tariff Act lead to banks collapsing in Europe and continued the restriction of the money supply.
The countries that left the gold standard early were more successful then those that left later. Economist like R. G. Hawtrey (one of the most famous economists at the time) spend literally 10 years warning people that this would happen because the Post-WW1 gold standard was so flawed. Had they listened to him, there might have still been some amount of stock collapse in 1929 but the real issue was not the 1929 stock collapse, but rather the 1930/1931 deflation.
So 'austerity' has nothing to do with it really, its only a background character.
Countries that stayed on the gold standard were practicing austerity bunky.