Dying of Money - Jens O Parsson

Some quotes from the Book - Dying of Money by Jens O Parsson

As for speculators, the most extraordinary feature of the Reichsmark's joyride was not any attack against it but quite the opposite, an incredible ("pathological," it was later called) willingness on the part of investors at

home and abroad to take and hold the torrents of marks and give real value for them. Until 1922 and the very brink of the collapse, Germans and especially foreign investors were absorbing marks in huge quantities. Only the international reputation of the Reichsmark, the faith that an economic giant like Germany could not fail, made this possible. The storage factor caused by the investor's willingness to save marks kept the marks from being dumped immediately into the markets, and thereby for a long while held prices in check. The precise moment when the inflation turned upward toward the vertical climb was undoubtedly timed by no event but by the dawning psychological awareness of the German and foreign investor that Germany was not going to back its money. With that, the rush to get out of the mark was on. Like a dam bursting, the seas of marks flooded into the markets and drove prices beyond all bounds. The German government strove mightily to outflood the sea.

The balance of payments problem was similarly misinterpreted. It was true that Germany had one. More of its cheap money was going out than hard money was coming in, in spite of constantly rising exports and constantly falling imports. This payments deficit actually helped hold the inflation problem at bay, because it kept the pressure of Germany's cheapening Reichsmarks off its own markets and prices. The existence of the payments deficit was an accurate indicator that Germany, while sick, was not yet dying. The reversal of the payments deficit was a sure signal that the end was near. In the collapsing stages, Germany ran a huge payments surplus as all her worthless marks came home from abroad in search of something to buy. This reversal of the balance of payments toward surplus was therefore not an occasion for hope, but for deepest fear.