We have come to learn that route out of the depression of the 1930s in the US owed more to the 2nd World War than to the much vaunted ‘New Deal’. But this does not tell us how Germany moved from being hyperinflationary basket case to a vibrant threatening economic powerhouse that could consider building an empire, in the space of a few years and, in a global downturn. This is a worthwhile question as governments and central banks walk the tight rope of monetary and fiscal policies between deflation versus hyperinflation.
Ellen Brown’s recent post in Web of Debt is a must read outline of what happened in Germany in the 1930s and by inference, what we must do to avoid hyperinflation in our experiment with quantitative easing now. Here is the main point;-
While Hitler clearly deserves the opprobrium heaped on him for his later atrocities, he was enormously popular with his own people, at least for a time. This was evidently because he rescued Germany from the throes of a worldwide depression – and he did it through a plan of public works paid for with currency generated by the government itself. Projects were first earmarked for funding, including flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals, and port facilities. The projected cost of the various programs was fixed at one billion units of the national currency. One billion non-inflationary bills of exchange called Labor Treasury Certificates were then issued against this cost. Millions of people were put to work on these projects, and the workers were paid with the Treasury Certificates. The workers then spent the certificates on goods and services, creating more jobs for more people. These certificates were not actually debt-free but were issued as bonds, and the government paid interest on them to the bearers. But the certificates circulated as money and were renewable indefinitely, making them a de facto currency; and they avoided the need to borrow from international lenders or to pay off international debts.6 The Treasury Certificates did not trade on foreign currency markets, so they were beyond the reach of the currency speculators. They could not be sold short because there was no one to sell them to, so they retained their value. Link to article.
Enough time has passed to evaluate Hitlers successful pre-War policies dispassionately. That there were undoubtedly considerable successes cannot be denied, otherwise that disciplined hard-saving nation that now controls ECB policy could not have been so fatally seduced but such an obvious madman. This is NOT an apologia for Nazi ideology. It is a moot point whether Hitler even fundamentally understood why his monetary policies worked and he did not (to my knowledge) promote them in a knowledgeable way in his published rants .
The essential point we make here is that Hitler renewed the German economy before he started preparing for War; the allied economies were still stuck in the depression doldrums until after War was unavoidable therefore thankfully, War is not necessary.
