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Why did the German government print large amounts of paper money after World War 1?
Wiki User
∙ 12y ago
Under the Treaty of Versailles, the Germans were required to pay reparations to the winning Allied countries, primarily France. The amounts were denominated in French Francs which were pegged at a fixed rate of exchange against the German Mark. The German Chancellor of the Exchequer believed that by printing enough Deutschmarks, there would be enough money in circulation to pay off the French and have enough left over to finance the day-to-day needs of the German people, their businesses, and have enough left over to finance future business expansion.
It was a rather naive view of how currencies work together to derive a "real" value by comparing the rates of exchange with many currencies. When valued by the multiple exchange rate process, the German currency became almost worthless among European businesses and the German people suffered with out-of-control inflation and a near-total inability to trade with other countries.
Wiki User
∙ 12y ago
Wiki User
∙ 12y agoValue of money crashed
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