Explain the reasons that caused a situation of Hyperinflation in Germany. (5 marks)
Germany experienced hyperinflation between June 1921 and January 1924 during when, the value of the German currency, the Reichmark became absolutely worthless. The main cause of hyperinflation was that the German government printed the currency in massive amounts to pay the reparations that the victorious allied powers had demanded under the Treaty of Versailles.
The situation stabilized when Germany replaced the worthless Reichmark with a new currency, the Rentenmark. The Rentenmark was printed in limited quantity and was backed by hard assets such as agricultural land and industrial assets. Hence, it maintained a stable value.
The situation stabilized when Germany replaced the worthless Reichmark with a new currency, the Rentenmark. The Rentenmark was printed in limited quantity and was backed by hard assets such as agricultural land and industrial assets. Hence, it maintained a stable value.