What caused the deflation and inflation in Europe during the 1920s?

golden0000

Debts from the First World War and loans owed to Germany caused deflation. http://en.wikipedia.org/wiki/Europe#20th_century_to_present Apr 23 09, 7:58 AM

author

It is sometimes argued that Germany had to inflate its currency to pay the war reparations required under the Treaty of Versailles, but this is misleading. http://en.wikipedia.org/wiki/Inflation_in_the_Weimar_Republic Apr 26 09, 5:41 PM

author

The 1920s German inflation started when Germany had no goods with which to trade. The government printed money to deal with the crisis; this allowed Germany to pay war loans and reparations with worthless marks, and helped formerly great industrialists to pay back their own loans. This also led to pay raises for workers and for businessmen who wanted to profit from it. Circulation of money rocketed, and soon the Germans discovered their money was worthless. The value of the Papiermark had declined from 4.2 per US dollar at the outbreak of World War I to 1 million per dollar by August 1923. http://en.wikipedia.org/wiki/Wiemar_republic#Years_of_crisis_.281919.E2.80.931923.29 Apr 26 09, 5:58 PM

author

Other European countries, as the UK, experienced deflation during the 1920s and 1930s. http://en.wikipedia.org/wiki/Deflation#Examples_of_deflation Apr 26 09, 6:07 PM

author

Beginning late in the 1920s, European demand for US goods began to decline. That was partly because European industry and agriculture were becoming more productive, and partly because some European nations (most notably Germany, under the government of the Weimar Republic) were suffering serious financial crises and could not afford to buy goods overseas. However, the central issue causing the destabilization of the European economy in the late 20s was the international debt structure that had emerged in the aftermath of World War I. When the war came to an end in 1918, all European nations that had been allied with the United States owed large sums of money to American banks, sums much too large to be repaid out of their shattered treasuries. This is one reason why the Allies had insisted (to the consternation of the perhaps historically vindicated Woodrow Wilson) on demanding reparation payments from Germany and Austria. Reparations, they believed, would provide them with a way to pay off their own debts. But Germany and Austria were themselves in deep economic trouble after the war; they were no more able to pay the reparations than the Allies were able to pay their debts. http://knowledgerush.com/kr/encyclopedia/Causes_of_the_Great_Depression/ Apr 26 09, 6:13 PM