Why did East Germany fail? And why did DDR need hard currency 1986-1989?

(Putting this as answer, because while not extremely detailed and scarcely sourced - which would be hard to do effectively - this was an event I was following at the time, living in Europe).

I can't speak to your TV series, but Eastern Europe in general wasn't all that happy with Communism. Once the USSR under Gorbachev indicated that it would not fight to keep control over its satellites, things quickly spiraled out of control in 1989.

The exact economics of the Soviet bloc were always murky in any case with both overestimations of Soviet output by the CIA and overvaluations of their currencies when you compared official vs black market rates.

"Balancing the books" has a vastly different meaning in a command economy than it does in the West. Or even China *.

(note: the paragraph below is deliberately a bit provocative. Is it 100% correct? 80%? 60%? But it is not 100% incorrect either, a Communist state does not have a buy/sell market in the sense we normally understand it, is a centralized command economy. How much did this apply to the DDR vs USSR? Hard to say as well, but the DDR was still operating under a Communist government ultimately subservient to Moscow).

In true Communist economies, 5 year plans decide who produces what and who gets what. A tractor factory doesn't get paid for its tractors, it produces them. But it also doesn't buy the steel to make them, it gets it allocated. This is also another reason for Communism's failure: all this shuffling around of resources has to be planned, it can't self-organize, and it requires unrealistically competent top-government management, something that is often absent in Western systems too.

Some links:

https://warwick.ac.uk/fac/soc/economics/staff/mharrison/public/jce2011postprint.pdf

https://www.sjsu.edu/faculty/watkins/stalinmodel.htm

As a result, money, and accounting*, work differently, unless they are used to engage in foreign commerce. Local money, depending on how doctrinal the system was, might be used mostly by individuals to purchase minor luxuries. Foreign suppliers of needed goods/technology would demand payment in hard currency, or, failing that, would insist on barter arrangements.

In such a context, as a black market develops and shortages generalize, the official currency rate means less, and only hard foreign currency is trusted. Indeed, in some cases, some regimes run foreigner-only, dollar-only stores to soak up hard currency.

Communist governments had chronic shortages of hard currency and some Western companies had set themselves up as barter facilitators to benefit from the situation.

Also at the same time, the Economist was writing that some Soviet activities were subtracting value. I.e. a Lada might objectively be expected to sell for less in a free market than the value of its inputs such as steel, energy and labor. Trabants were off the roads within a few years of the collapse; they would have made a good investment for collectors.

Cuba was also the target of big Soviet wealth transfers, with, for example, oil, for the same reasons: showcasing Communist successes to the world. They suffered greatly, after the USSR collapsed, when those stopped.

So it would be very hard to reason in detail on what caused economic hardships for East Germany, besides the very nature of its economic governance under Communism. Books could certainly be written on forensic economic analysis of Communist systems.

* China currently is using normal currency and accounting, albeit in a totalitarian state.

** post-East Block collapse, The Economist would run articles bemusedly explaining how Western business consultants would struggle to explain the very notion of accounting to factory managers who had never thought in its terms. The implication wasn't that they were stupid, only that this was just not something they had been tasked with looking after.