Causes Of Hyperinflation

World War II is a great example of how war helped the US strengthen their economy because ending the policy of isolationism and joining the war ended the Depression. In the 1940’s, when the US was isolated from the rest of the world due to the Great Depression,

There are only a few ways to increase production, which include hire more workers, increase hours, buy more equipment, and take advantage of technology to produce more. The government must form a way that the economy doesn’t grow too slow or fast so they can prevent disastrous events. The importance of modern currency lies in its purchasing power. Inflation signals the rising prices, but the way to think about it isn’t like that, but that the currency’s purchasing power decreases. With hyperinflation, fixed loans are impossible because nobody wants to risk it when the money can potentially become worthless. With moderate inflation, it can destroy wealth if it isn’t managed properly. Inflation is good for those who owe debt, but bad for those who lend money. Inflation may be bad, but deflation is worse. Prices fall because the economy is broken, but now the economy is broken because the prices have fallen.

With fighting and war, it made the expenditures raise at an extremely rapid pace for all consumers in these countries. Great Britain, Germany, and France all have the most intense growth in prices. If these three countries want to have a superior navy and army, then they are going to have to have much expenditure towards this accomplishment. Great Britain has had a $4.69 increase (from year 1870 $3.74 to year 1914 - $8.23) for military and weapon purposes. For using this towards militarism, that is a cause of the World War. These increases of money prices have raised the chance of war because if people pay around you, you can advance in building your better army. (Document 1) All European Countries are responsible for the outbreak of World War 1 because all of these countries did things to lead up to war, but “failed to do certain thinks which might have prevented [the war]”. They think that every military group is the cause of the whole beginning of the war (Document 6).

The agriculture sector suffered as well, with the expansion of farms during WWI, tools, and the latest equipment was purchased, causing the price of food to raise. Farmers also borrowed money for their growth and when people wasn’t buying the over priced vegetables, meats and fruits. The financial institutions foreclosed on property and capital equipment.

It is a known fact that war causes inflation which makes the prices of everything go higher as well as taxes. After World War I instead of going back down the prices continued to rise which helped to contribute to the deep depression felt during the Great Depression.

-Some causes included the economic policies of President Jackson. By Jackson issuing the Specie Circular, simply removed the federal treasury as a dumping ground for the depreciating paper. Some of the causes were that local private banks called pet banks were printing money without any printing regulations which led to inflation. The effects were that many businesses failed, farmers lost their land, and there was a high surplus of unemployed

In the course of United States history there have been many instances when war and other situations have affected the way labor worked. Some of the changes in this field were positive and negative. World War I and II both affected the business and labor of America in ways such as decreased unemployment, strikes, and increased federal control of the economy.

Germany emerged from World War I with huge debts incurred to finance a costly war for almost five years. The treasury was empty, the currency was losing value, and Germany needed to pay its war debts and the huge reparations bill imposed on it by the Treaty of Versailles, which officially ended the war. The treaty also deprived Germany of territory, natural resources, and even ships, trains, and factory equipment. Germany’s population was undernourished and contained many widows, orphans, and disabled veterans living in poverty. The new German government struggled to deal with these crises, which had produced a serious hyperinflation.

When the war ended,world war one to be exact,surprisingly everything went back to normal.But the economy changed drastically. New technology and rations went away and the economy stabilized or started stabilizing, at least. I remember when it all happened. The end of World War I, and all the soldiers came home except the fallen, and yet all shall be remembered and honored even in death. But farming and food started back as normal, farming started again and rations were gone.

After the war, the regions that were involved found themselves being in financial constraint. This is because they had used all their resources in purchasing the war weapons. As a result, the spending by the government of the day during that time exceeded the country’s income. This meant poverty to the country and its citizens. Also, the rate of unemployment among citizens was rampant leading to widespread poverty.

After World War I Germany could make no money because all of these factories were bombed. They could not make any goods because they had no factories to make any in. Also a lot of farmland was destroyed so they had to get all that back and grow more food. They had no money so they couldn't buy anything from other countries. They had to get by with the little amount of things they have left. Germany had money but after the war there currency was just about worthless. This was the complete opposite for the United States seeing as World War I really helped our economy. After World War II Austria Hungary was no longer a country.

     When Hazlitt wrote about how war affects economics, he wrote about this subject brilliantly. The best example Hazlitt used had to do with the broken window. He said that if a window breaks for a certain business, it is better for the economy. If a window is broken for a certain business and takes a few thousand dollars to fix, it would be a small price to pay to increase the economy. The economy would give jobs and pay wages to the repair the window. Hazlitt’s point is that sometimes there is a blessing that comes out of destruction. For example, the Civil War had a positive affect on economics. During and after the war, there was tremendous growth in industry, railroads, and others. But this came at the price of destroying land and life as well. “The war, in short, changed the postwar direction of effort; it changed the balance of industries; it changed the structure of industry” (Hazlitt p27). The reason for this growth is because it takes a lot of energy and a lot of stimulation to get the economy back where it was before the war, because the money that the government used to supply the war came from certain industries. A commodity had to be subtracted in order to supply the needs for the war. After the war, it is a great chance that

War has influenced economic history profoundly across time and space. Winners of wars have shaped economic institutions and trade patterns. Wars have influenced technological developments. Above all, recurring war has drained wealth, disrupted markets, and depressed economical growth.

By the end of the war, the amount of currency in circulation had increased 400%. Although one might expect the price level to have increased by about the same amount, it was actually only about 140% higher than it was at the beginning of the war. This was due to the fact that, at first, people thought price increases were due to shortages and were waiting for prices to fall to make purchases. However, as soon as they realized the rise in prices was due not only to goods being less available, but also to inflation of the money supply, they began to spend at faster and faster rates.

There are different influences that cause inflation such as energy, food, commodities, and other goods and services. The entire economy is affected by rise of the cost of living. It also affects the cost of operating a business, borrowing money, mortgages, corporate and government bond yields, and every other aspect of the economy. There are several advantages of inflation in the economy. Some include moderate rates of inflation which allows prices to adjust. This is considered a sign of a healthy economy. With economic growth available we usually get a generous amount of inflation. Also moderate inflation rate reduces the actual value of debt. If there is a reduction, the real value of debt increase leads to a squeeze on usuable income.