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How Germany came into trap of hyperinflation situation after world war 2 ...how were they saved ? |
| Answer» \t\xa0In Germany had fought the war largely on loans and had to pay war reparation in gold.\tThis depleted gold reserves at a time when resources were scarce.\xa0\tIn 1932, Germany refused to pay, and the French occupied its leading industrial area ‘Ruhr’, to claim their coal.\xa0\tGermany retaliated with passive resistance and printed paper currency wrecklessly.\tWith too much printed money in circulation, the value of the German mark fell.\tAs the value of the mark collapsed, prices of goods soared.\tThe image of the Germany carrying cartloads of currency notes to buy a loaf of bread was widely publicised.\tThis crisis came to be known as ‘hyper-inflation’, a situation when prices rise phenomenally high.\t\xa0Eventually, the Americans intervened and bailed Germany out of the crisis by introducing ‘The Dawes Plan’ which reworked the terms of separation to ease the financial burden on Germany. | |