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Germany : Post War Anomaly

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Germany: Post War Anomaly Germany has quite an interesting (and difficult) economic development history from World War II and the Nazis into the modern EU power house it is today. Problems set into place by poor government management and an effects of war such as price controls and inflation set by Hitler in 1936 left the German economy in shambles after World War II (Henderson). These policies were typical during war times (also done by the United States and the United Kingdom), but had detrimental effects on the population. The end result was a currency that was almost worthless, there was a mass shortage of goods because the suppliers did not find it worth their time to produce when they face price controls that keep their products …show more content…

This means that the members of this school of thought hated the totalitarian mindset that was the Nazi Party. The members of the school believed in things such as free markets, with a basic income tax system, and limits on monopolies (Henderson). Two members of the school, Wilhelm Röpke and Ludwig Erhard, sought to try and fix this mess. Röpke and Erhard were both in agreement that the best way to try and tackle the repressed inflation was to undergo currency reform and to put an end to price controls (Henderson). This faced a lot of opposition because people were afraid that this would lead to a large central government. However, Ludwig Erhard wins the debate because of his anti-Nazi views, this meant that in 1945 Erhard was appointed to Bavarian minister of finance, then in 1947 he became the director of the bizonal Office of Economic Opportunity, permitting him to advise the U.S. General, Lucius D. Clay, governor of the U.S. Zone (Henderson). It was then that Erhard started down the road to a brilliant currency reform. Essentially, his plan was to take the current currency, reichsmarks, and exchange it for a smaller number of deutsche marks (DM) as the new legal currency. The currency reform took place Sunday, June 20, 1948 and was highly complex, after the change to DM many Germans saw reductions in their overall wealth, the net results after the swap was about 93% contraction in money supply (Henderson). Another policy that Erhard pushed on the same exact

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