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[EVENT] The German Giant
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Fenrir555 is in EVENT
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France had now occupied the industrial region of the Rhine alongside the Americans and Belgians. Huge sums of reparations were demanded, more than Germany even had in its vaults, and it's currency had been inflating slowly but surely since the Great War broke out. The Kaiser and his advisors had expected that by taking the Goldmark into fiat paper money called the Reichspapier they could finance the war entirely by borrowing and then paying it back by forcing the Entente to pay reparations and taking their industrial regions....well the irony is apparent. Regardless, Germany's currency is still off the gold standard and the central bank now at a conundrum. Moreso, the bank and it's owners, the government, had a bunch of angry Rhenish industrialists who had made incredible profits off the war and now were losing control of their factories and watched as it went to pay off French debt, not their home country's. These men were powerful ones, with powerful friends, and their complaints did not fall on unsympathetic ears. It was not long before the industrialists and the politicians of the Weimar Republic hatched a plan. As would only be fair, hundreds upon hundreds of thousands of Reichspapier would come hot off the presses and into the bank accounts of these industrialists to ensure that they would be paid back for their lost profits. This would ensure that they would support the fledgling democracy and understand the pressures they were under from the Entente. These industrialists then also took very large loans from the Reichsbank in order to finance expansion of industry in other regions of Germany not under foreign occupation and to pay for private purchases. A curious individual, Hugo Stinnes, was doing so at a level that was higher than any other and seemed to be expanding his already gigantic steel and coal companies in places both in Germany and outside like Luxembourg, Belgium, and Britain.

As money flowed out of the bank to repay for the occupation to industrialists, money also flowed out to pay for the reparations and the debt taken on during the war, which was primarily to American banking institutions. To counter this, the bank would begin to sell bonds at a much higher rate, at a heavily discounted rate. These bonds would be sold with the attached implicit pitch that the German economy would boom as the war period ended and the men returned to the factory. Germany would now be able to invest back into its economy and with its newfound democracy and labor reforms its productivity would increase significantly. This combined with the earlier printing will also weaken the Reichspapier on the global market relative to other currencies, making foreign imports more expensive and German exports equivalently cheaper in foreign markets. This would lead to the transition of the domestic German market to consume German-made products thus avoiding any increased costs associated with importing a good. It also means demand for German-made goods globally will increase, leading to an increase in gross sales and profits for German companies.

To avoid widespread complaints from the inflation that was doomed to come, max prices were put on primary goods like grain and salt. This would ensure that basic consumer goods' prices wouldn't increase at an unsustainable level and be resistant to global changes. It would also be very popular amongst the working and middle classes to the central government, something the SPD and USPD aim to maintain. This will also help again with German exports and to increase industrial production as the German economy enters a boom period against the French and British recessions. The weakening of the Mark and the strong and stable prices will allow German goods to flood foreign markets and provide significant income to the Weimar Republic and her workers.

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5 years ago