Page 4 - GC-Sept-Oct-23
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1923 Germany’s

                                                                    Klosettpapier economy

                                                                      by Daniel Schwarz
                                                                       f you are wondering what Klos-
                                                                       ettpapier  or  sometimes  just
                                                                    Icalled Klopapier means, its Ger-
                                                                    man  for  toilet  paper!  That  is  what
                                                                    most German citizens thought of the
                                                                    paper  currencies  as  the  economic
                                                                    inflation  turned  to  hyperinflation,
                                                                    and ravished Germany in the early
                                                                    1920s.  Eventually  to  keep  produc-
                                                                    ing the flurry of needed ever higher
                                                                    inflation  denomination  paper  cur-
                                                                    rencies,  the  government  printing
                                                                    presses started printing them on one
                                                                    side only to save on ink and time.
                                                                      Out  of  frustration  some  people
                                                                    even  started  to  call  them  Schmier-
                                                                    zettel, meaning smear tickets or pa-
                                                                    per, which was slang for the other
                                                                    word! Anger, frustration, uncertain-
                                                                    ty,  desperation,  was  the  norm  as
                                                                    people’s  wealth  disappeared  and
                                                                    people’s wages and pensions could
                                                                    not keep up with the  spiraling out of
                                                                    control inflation.
                                                                      This  year  2023  marks  the  cen-
                                                                    tennial  of  this  most  turbulent  eco-
                                                                    nomic  hyperinflation  that  peaked
                                                                    during the end of 1923 in the Ger-
                                                                    man  Weimar  Republic.  Economic
                                                                    disaster  had  hit  Germany!  By  No-
                                                                    vember  1923  the  Papiermark  that
                                                                    had  replaced  the  Goldmark  or  Re-
                                                                    ichmark  in  1914  when  Germany  Some people even joked that they were now millionaires
                                                                    went off the gold standard, was so   but couldn’t even afford to buy a cup of coffee.
                                                                    drastically  devalued  against  other
                                                                    world currencies that the conversion
                                                                    to   the   U.S.   dollar   was   In any event, the inflation story  system initiated in November 1923
                                                                    4,210,500,000,000 Papiermarken to  began at the start of WWI, but not  with a new currency called Renten-
                                                                    one U.S. dollar! That’s over 4.2 tril-  until about 1922 did it escalate fast-  mark, economic stability returned to
                                                                    lion to one USD. Besides financial  er  and  spiral  out  of  control  to  its  the German economy, and prices of
                                                                    ruin  of  its  citizens,  worthless  pen-  peak  in  November  /  December  goods and services allowed interna-
                                                                    sions,  savings,  investments,  world  1923.  Finally with a new banking  tional business to resume.
                                                                    trade  for  German  businesses  had
                                                                    come to a halt. Something had to be
                                                                    done, and immediately.
                                                                      If  I  tell  you  some  of  the  main
                                                                    reasons for this inflation, its escala-
                                                                    tion  to  hyperinflation,  and  how  it
                                                                    was finally resolved, I would need
                                                                    to include subjects such as: Germa-
                                                                    ny losing WWI (1914-1919); going
                                                                    off the gold standard that had kept
                                                                    the German Reich prosperous; issu-
                                                                    ing  unsecured  Papiermark  curren-
                                                                    cies  to  finance  the  war;  foreign
                                                                    occupation of the German Ruhr ar-
                                                                    ea; WWI Treaty of Versailles with
                                                                    extremely high reparations payment
                                                                    obligations of Germany in gold se-
                                                                    curities;  losing  German  territories;
                                                                    politics; and how financial stability
                                                                    was finally restored with U.S. sup-
                                                                    port, but the details of these topics
                                                                    are beyond the scope of this article.
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