What did people used to exchange for goods during the 1920s German hyperinflation while the official currency was not trusted

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The subject is covered in the book “Dying of Money”, by Jens O. Parssons.

Inflation started taking off in Germany in 1922. By the end of the inflation, near the end of 1923, prices were at least quadrupling every week. ‘Fair’ interest rates rose to 22% per day. For those who could afford restaurants, the price of the meal could increase by 20% between ordering and getting the bill. Printers did their best to keep up with the demand for money, and of course the face values of the notes increased dramatically, but even so money was always short.

People took to carrying money in bales, and were desperate to spend it before its value dropped. However, people with goods, particularly farmers, were reluctant to take soon-to-be-worthless money for their perfectly good food. Barter became prevalent, but not everyone had something useful to barter. The middle classes were almost wiped out, they pawned their possessions to survive, and looked for jobs in field or factory where real goods were produced. Malnutrition and even starvation were rife. Where possible businesses used foreign currencies for their dealings, but many closed leading to mass unemployment.

The problem was fixed by the introduction of the Rentenmark. The idea that was sold to the public was that only a fixed number of Rentenmarks would be printed, so they could not lose value. The rate was fixed in November 1923 as 1 trillion old Reichsmarks to 1 Rentenmark. It worked. The Rentenmark held its value.

There were winners and losers. A big winner was the German government. All their debts, denominated in Reichsmarks, were effectively wiped out. Others also benefited. The total prewar mortgage debt of Germany, totalling 40 billion marks, was worth less than 1 American cent by the end of the inflation. Effectively, everyone who owed money had those debts wiped out. Conversely, anyone who had monetised savings lost them all. This included pensioners, many of whom were forced back to work. Bonds became worthless, which affected many trustees who by law had to invest in bonds.

German hyperinflation was not the last or even the worst. That in Hungary in 1946 holds the record, with a monthly price increase of 4.19 * 10 to the power 16 in July of that year. These days, a common response in our globalised world is to resort to using foreign currency. At least then, some money circulates reliably. In Zimbabwe in 2009, the Zimbabwe dollar was actually completely taken out of circulation in favour of the American dollar.

The book “Hyperinflation: A World History” by He Liping is a good general reference.

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