The German Inflation of 1922–1923: The Collective Nightmare

There is growing fear in Germany that the current debt crisis will lead to inflation. Few can remember the events of 1922–1922 first-hand but everyone is afraid that history will repeat itself.

The Wholesale Price Index was 1.0 in July 1914, 14.3 in July 1921, and 726,000,000,000.0 in November 1923.

Der Spiegel wrote on May 17:

“There is a growing fear that a gigantic wave of debt will soon roll over Europe and the euro-zone countries will deal with it as elegantly and unscrupulously as they have so often done in the past – by allowing inflation to reduce their debts. These concerns are shared by more than just the notorious paper money skeptics who predict the return of hyperinflation.

“Even serious experts like Joachim Fels, a top economist at Morgan Stanley, have no qualms about addressing the likelihood of such a development. Although it is an extreme scenario, says Fels, it certainly cannot be dismissed out of hand. At the very least, the central bank can apparently ‘no longer resist the temptation to use inflation to reduce the mounting public debt.’

“Max Otte, a professor from the German city of Worms who foresaw the crash of the financial markets before others, sees the supposed stability union as already being well on the road towards becoming an inflation union. According to Otte’s calculations, annual price increases of roughly 7 percent would be enough to reduce assets by one-half in just under 10 years. ‘We are eroding the euro from within,’ says the economist, ‘all the signs point towards inflation.’”

• • • •

One memory of the time is contained in an imaginary letter written in 1927 from a novel to be published in the fall. This is an excerpt:

“…In its later stages, the sky-rocketing, catastrophic inflation pulled the rug from under everyone’s feet and destroyed the last vestiges of stability. Its symbolism was devastating. At the same time, the experience was in some strange way exhilarating. There was delirious dancing at funerals. In fact, there was delirious dancing on every occasion. We went through a universal dance craze. Everyone felt dizzy in the head, as dizzy as the currency – one dollar worth a trillion marks. It’s convenient that we Germans have the same word – Schwindel – both for dizziness in the head and for, well, swindling, cheating. Since the state was swindling everyone, everyone went schwindlich with dancing. Not only with dancing – there was also a regular erotic explosion. When I think of it now I see scenes of copulation in her mind’s eye. Like a painting by Bruegel.

“In due course, the currency was stabilized, on the surface at least, and so have our love-lives.…”


11 responses to “The German Inflation of 1922–1923: The Collective Nightmare

  1. Plus ça change…but I do look forward to the erotic explosion…

  2. David Schatzky

    I certainly hope your novel is indeed about the past. I would love to experience financial chaos and collapse vicariously through your evocative prose, but not at all in real life. Perhaps you’d agree that once in a life-time is enough…

    • My forthcoming novel also describes pleasures that you wish to enjoy in the real world, rather than vicariously.

      Listening to music, for example….

  3. Robert Koch

    I remember the inflation of 1923. Not many do. I remember saying that I found the change in value very confusing. Remember I was barely five years old then ! But the inflation ruined the middle class, a major factor of the rise to power of Naziism.

  4. Ruth Kajander

    We have lived with creeping inflation for decades, I commented 10 yrs ago that my husband’s considerable assets from 1957 really did not increase substantially 50 yrs later in buying power considering that an icecream cone went from 5 cts to what? $2.-, both my grandparents lost their fortunes in 1922. However the hyperinflation was likely not the major reason for Hitler’s rise. The failure of the Weimar republic, the unemployment following the Wall st. crash of 38 were mor important. The Germans had actually woken up a bit and the last honest elections showed a decline in the votes for Hitler, there also was the general belief that he’d be gone in 6 months never thinking that 6 weeks later he’d declare something akin to Marchall law, what a time it was, I was born in 24.

    • You are absolutely right in everything you say and I congratulate for being so sensible after all these years. Had it not been for the Crash in 1929 Hitler would have remained a marginal figure in German politics, the inflation notwithstanding.

  5. …and what about Friedrich Schwindel (aka Schwindl), 1737-1786, composer of (among other things) several charming string quartets? We must stage a Schwindel festival! Perhaps it will arouse some of the other manifestations you mention.

  6. Yes, I promise to participate enthusiastically in a Schwindel orgy. When? I am free next Tuesday.

  7. Robert Koch

    It is certainly true that Hitler’s vote decreased in November 1932. “Everybody” wrote him off. But the Nazis still had the largest delegation in the Reichstag. Nobody else could gather a majority, not Schleicher, not von Papen. Von Papen then intrigued to have a coalition with Hitler. The rest is history.